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UNITED
    STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C.
    20549
 Form 10-K
  þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For the Fiscal Year Ended
    December 31, 2006oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For the Transition Period
    from          to   Commission File Number:
    000-51299
 TALEO CORPORATION
 (Exact name of registrant as
    specified in its charter)
  Delaware

52-2190418(State or other jurisdiction
    of

(I.R.S. Employerincorporation or
    organization)

Identification Number)   4140
    Dublin Boulevard, Suite 400
    Dublin, California 94568 (Address
    of principal executive offices, including zip
    code)
  (925)
    452-3000
 (Registrants
    telephone number, including area code)
  Securities registered pursuant to Section 12(b) of the
    Act:
   Title of Each Class

Name of Each Exchange on Which RegisteredClass A Common Stock,
    $0.001 par value

The Nasdaq Stock Market LLC   Securities registered pursuant to Section 12(g) of the
    Act: None (Title of class)
  o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. o
  Rule 12b-2
 o þ o
  Rule 12b-2 o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE
  Form 10-K Form 10-K.




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##### 



TALEO
    CORPORATION
  FORM 10-K
 TABLE OF
    CONTENTS
  PART IITEM 1


Business


1ITEM 1A


Risk
    Factors


13ITEM 1B


Unresolved Staff
    Comments


29ITEM 2


Properties


29ITEM 3


Legal
    Proceedings


30ITEM 4


Submission of
    Matters to a Vote of Security Holders


30PART IIITEM 5


Market for
    Registrants Common Equity, Related Stockholder Matters and
    Issuer Purchases of Equity Securities


31ITEM 6


Selected Financial
    Data


33ITEM 7


Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations


34ITEM 7A


Quantitative and
    Qualitative Disclosures About Market Risk


49ITEM 8


Financial
    Statements and Supplementary Data


51ITEM 9


Changes in and
    Disagreements With Accountants on Accounting and Financial
    Disclosure


86ITEM 9A


Controls and
    Procedures


86ITEM 9B


Other
    Information


87PART IIIITEM 10


Directors and
    Executive Officers of the Registrant


87ITEM 11


Executive
    Compensation


87ITEM 12


Security Ownership
    of Certain Beneficial Owners and Management and Related
    Stockholder Matters


87ITEM 13


Certain
    Relationships and Related Transactions


87ITEM 14


Principal
    Accounting Fees and Services


87PART IVITEM 15


Exhibits, Financial
    Statements Schedules


88Signatures


89EXHIBIT 21.1EXHIBIT 23.1EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1




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ITEM 1.
    BUSINESS  Overview
    tm tm
  9090-5415 six-for-one 9090-5415
  tm tm
  (925) 452-3000, www.taleo.com Form 10-K, Form 10-Q, Form 8-K, www.taleo.com
 1




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1-800-SEC-0330. www.sec.gov
  Our
    Industry and Market
    time-per-hire time-to-productivity,
  The
    Benefits of Our Approach
      Systematic Approach to Talent Management
    Processes.
  Comprehensive Suite of Solutions.
  Embedded Domain Expertise.
 2




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Ease of Use and Integration. ease-of-use tm tm tm
  Talent Analytics.
  Increased Workforce Productivity. time-to-hire time-to-productivity,
    Ease of Deployment through the On Demand
    Model.
  Single Version of Application Source Code.
  Configurability.
 3




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Secure, Scalable Infrastructure. point-to-point
  Lower Total Cost of Ownership.
  Recurring Revenue.
  Our
    Strategy
    Extend our Technology Leadership.
  Expand our Solution Offerings. tm tm
    Build Upon our Domain Expertise.
  Increase Penetration of our Existing Customer
    Base.
  Partner with Additional Leading Human Resource Outsourcing
    Organizations.
 4




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Expand our Multinational Presence.
  Expand our Target Market Opportunity.
  Our
    Products
      Taleo
    Enterprise Edition
    Taleo
    Professional tm non-hourly many-to-many
  Taleo
    Hourly tm end-to-end
  Taleo
    Contingent tm
    Taleo
    Agencytm
 5




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Taleo
    Assessmenttm
  Taleo
    Campustm
  Taleo
    Compliancetm
  Taleo Connect
  Taleo
    Onboardingtm
  Taleo Passport
  Taleo
    Projectstm
  Taleo Reporting &
    Analyticstm
  Taleo Workforce
    Mobilitytm
  Taleo
    Business Edition
    Taleo Business Edition 
    Personaltm
  Taleo Business Edition 
    Standardtm
  Taleo Business Edition 
    Plustm
  Taleo Business Edition 
    Premiumtm
 6




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Technology
    tm
  The Structured Enterprise Talent Platform
  The Configurable Staffing Process Platform
        Professional
    Services
   7




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Taleo
    Methodologies
    Taleo Implementation Methodology.
  Talent Topologies.
  Implementation
    Services
    Solution
    Optimization
    Technical
    Services
   8




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Training
  Taleo University train-the-trainer
  Customer
    Support
  e-mail
  Customers
    Customer
    User Groups
    Sales and
    Marketing
    Sales
    Team
   9




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Marketing
    Taleo
    Research Institute
    Research
    and Development
    Competition
    
    Product performance and functionality;
    Breadth and depth of functionality;
    Ease of implementation and use;
    Security and data privacy; 10




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
    On demand business model;
    Ability to integrate;
    Scalability and reliability;
    Company reputation; and
    Price.      Geographic
    Information
    Intellectual
    Property
         11




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Employees
    Executive
    Officers of the Registrant
    Name

Age

PositionMichael Gregoire

41

President, Chief Executive Officer
    and DirectorLouis Tetu

42

Chairman of the Board of DirectorsBradford Benson

45

Executive Vice President, Products
    and TechnologyJeffrey Carr

48

Executive Vice President, Global
    Alliances and Americas SalesGuy Gauvin

39

Executive Vice President, Global
    ServicesKaty Murray

38

Executive Vice President and Chief
    Financial Officer   Michael Gregoire
  Louis Tetu
  Bradford Benson
  Jeffrey Carr
 12




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Guy Gauvin
  Katy Murray
  ITEM 1A.
    RISK
    FACTORS  Because of the following factors, as well as other variables
    affecting our operating results and financial condition, past
    performance may not be a reliable indicator of future
    performance, and historical trends should not be used to
    anticipate results or trends in future periods.
  We
    have a history of losses, and we cannot be certain that we will
    achieve or sustain profitability.
    If our
    existing customers do not renew their software subscriptions and
    buy additional solutions from us, our business will
    suffer.
    
    the price, performance and functionality of our solutions;
    the availability, price, performance and functionality of
    competing products and services;
    the effectiveness of our maintenance and support services;
    our ability to develop complementary products and
    services; and
    the stability, performance and security of our hosting
    infrastructure and hosting services.   13




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Because
    we recognize revenue from software subscriptions over the term
    of the agreement, a significant downturn in our business may not
    be reflected immediately in our operating results, which
    increases the difficulty of evaluating our future financial
    position.
    If our
    efforts to attract new customers are not successful, our revenue
    growth will be adversely affected.
      In
    connection with the December 31, 2005 year-end audit
    and in prior periods we identified deficiencies in our internal
    control over financial reporting that lead us to restate our
    consolidated financial statement and we cannot be certain such
    restatements will not occur again.
   14




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Form 10-K Form 10-Q.
  Failure
    to implement the appropriate controls and procedures to manage
    our growth could harm our ability to expand our business, our
    operating results, and our overall financial
    condition.
    
    implementation and documentation of new policies around closing
    processes;
    improvement of detective controls and greater financial analysis
    around operational metrics that are key to our
    performance; and
    Improvement of the process of benchmarking our internal
    financial operations and implementing best practices in various
    business processes.    The
    requirements of being a public company have been, and may
    continue to be, a strain on our resources, which may adversely
    affect our business and financial condition.
   15




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Our
    financial performance may be difficult to forecast as a result
    of our historical focus on large customers and the long sales
    cycle associated with our solutions.
    
    the complex nature of our solutions;
    the need to educate potential customers about the uses and
    benefits of our solutions;
    the relatively long duration of our contracts;
    the discretionary nature of our customers purchase and
    budget cycles;
    the competitive evaluation of our solutions;
    fluctuations in the staffing management requirements of our
    prospective customers;
    announcements or planned introductions of new products by us or
    our competitors; and
    the lengthy purchasing approval processes of our prospective
    customers.    If we
    fail to develop or acquire new products or enhance our existing
    products to meet the needs of our existing and future customers,
    our sales will decline.
     16




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Acquisitions
    and investments present many risks, and we may not realize the
    anticipated financial and strategic goals for any such
    transactions, which would harm our business, operating results
    and overall financial condition. In addition, we have limited
    experience in acquiring and integrating other
    companies.
    
    being unable to achieve the anticipated benefits from our
    acquisitions;
    discovering that we may have difficulty integrating the
    accounting systems, operations, and personnel of the acquired
    business, and may have difficulty retaining the key personnel of
    the acquired business;
    our ongoing business and managements attention may be
    disrupted or diverted by transition or integration issues and
    the complexity of managing geographically and culturally diverse
    locations;
    difficulty incorporating the acquired technologies or products,
    including our Taleo Contingent solution and the software
    acquired in the Recruitforce acquisition, into our existing code
    base;
    problems arising from differences in the revenue or licensing
    model of the acquired business;
    customer confusion regarding the positioning of acquired
    technologies or products;
    difficulty maintaining uniform standards, controls, procedures
    and policies across locations;
    difficulty retaining the acquired business
    customers; and
    problems or liabilities associated with product quality,
    technology and legal contingencies.  out-of-pocket
    Fluctuation
    in the processing of temporary workers will affect the revenue
    associated with our Taleo Contingent solution, which may harm
    our business and operating results.
   17




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If we
    do not compete effectively with companies offering talent
    management solutions, our revenue may not grow and could
    decline.
       18




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We may
    lose sales opportunities if we do not successfully develop and
    maintain strategic relationships to sell and deliver our
    solutions.
    The
    potential mergers of our competitors or other similar strategic
    alliances could weaken our competitive position or reduce our
    revenue.
      If we
    are required to reduce our prices to compete successfully, our
    margins and operating results could be adversely
    affected.
    If our
    security measures are breached and unauthorized access is
    obtained to customer data, customers may curtail or stop their
    use of our solutions, which would harm our reputation, operating
    results, and financial condition.
   19




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Defects
    or errors in our products could affect our reputation, result in
    significant costs to us and impair our ability to sell our
    products, which would harm our business.
      
    lost or delayed market acceptance and sales of our products;
    loss of customers;
    product liability suits against us;
    diversion of development and support resources;
    injury to our reputation; and
    increased maintenance and warranty costs.    We
    participate in a new and evolving market, which increases the
    difficulty of evaluating the effectiveness of our current
    business strategy and future prospects.
    Widespread
    market acceptance of the vendor hosted, or on demand, delivery
    model is uncertain, and if it does not continue to develop, or
    develops more slowly than we expect, our business may be
    harmed.
   20




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If we
    fail to manage our hosting infrastructure capacity
    satisfactorily, our existing customers may experience service
    outages and our new customers may experience delays in the
    deployment of our solution.
    Any
    significant disruption in our computing and communications
    infrastructure could harm our reputation, result in a loss of
    customers and adversely affect our business.
    
    human error;
    physical or electronic security breaches;
    telecommunications outages from third-party providers;
    computer viruses;
    acts of terrorism or sabotage;
    fire, earthquake, flood and other natural disasters; and
    power loss.     21




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We
    must hire and retain key employees and recruit qualified
    technical sales and finance personnel or our future success and
    business could be harmed.
    We
    currently derive a material portion of our revenue from
    international operations and expect to expand our international
    operations. However, we do not have substantial experience in
    international markets, and may not achieve the expected
    results.
    
    unexpected changes in regulatory requirements, taxes, trade
    laws, tariffs, export quotas, custom duties or other trade
    restrictions;
    differing regulations in Quebec with regard to maintaining
    operations, products and public information in both French and
    English;
    differing labor regulations, especially in the European Union
    and Quebec, where labor laws are generally more advantageous to
    employees as compared to the United States, including deemed
    hourly wage and overtime regulations in these locations;
    more stringent regulations relating to data privacy and the
    unauthorized use of, or access to, commercial and personal
    information, particularly in Europe and Canada; 22




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
    reluctance to allow personally identifiable data related to
    non-U.S. citizens
    to be stored in databases within the United States, due to
    concerns over the United States governments right to
    access personally identifiable data of
    non-U.S. citizens
    stored in databases within the United States or other concerns;
    greater difficulty in supporting and localizing our products;
    changes in a specific countrys or regions political
    or economic conditions;
    challenges inherent in efficiently managing an increased number
    of employees over large geographic distances, including the need
    to implement appropriate systems, policies, benefits and
    compliance programs;
    limited or unfavorable intellectual property protection; and
    restrictions on repatriation of earnings.    Fluctuations
    in the exchange rate of foreign currencies could result in
    currency transaction losses, which could harm our operating
    results and financial condition.
    If we
    fail to defend our proprietary rights aggressively, our
    competitive advantage could be impaired and we may lose valuable
    assets, experience reduced revenue, and incur costly litigation
    fees to protect our rights.
   23




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Current
    and future litigation against us could be costly and time
    consuming to defend.
    Our
    results of operations may be adversely affected if we are
    subject to a protracted infringement claim or a claim that
    results in a significant award for damages.
    
    require costly litigation to resolve and the payment of
    substantial damages;
    require significant management time;
    cause us to enter into unfavorable royalty or license agreements;
    require us to discontinue the sale of our products;
    require us to indemnify our customers or third-party service
    providers; or
    require us to expend additional development resources to
    redesign our products.        We
    employ technology licensed from third parties for use in or with
    our solutions, and the loss or inability to maintain these
    licenses or errors in the software we license could result in
    increased costs, or reduced service levels, which would
    adversely affect our business.
   24




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Difficulties
    that we may encounter in managing changes in the size of our
    business could affect our operating results
    adversely.
    Failure
    to manage our customer deployments effectively could increase
    our expenses and cause customer dissatisfaction.
    Unfavorable
    economic conditions and reductions in information technology
    spending could limit our ability to grow our
    business.
    Our
    reported financial results may be adversely affected by changes
    in generally accepted accounting principles or changes in our
    operating history that impact the application of generally
    accepted accounting principles.
   25




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Share-Based
    Payment,
    If tax
    benefits currently available under the tax laws of Quebec are
    reduced or repealed, or if we have taken an incorrect position
    with respect to tax matters under discussion with the Canadian
    Revenue Authority, our business could suffer.
      CRA Examination of Tax Year 1999.
 26




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CRA Examination of Tax Years 2000 and 2001.
  CRA Examination Impact to Future Tax
    Years.
  Availability of Deferred Tax Assets.
    Evolving
    regulation of the Internet may increase our expenditures related
    to compliance efforts, which may adversely affect our financial
    condition.
    If we
    fail to develop our brand cost-effectively, our customers may
    not recognize our brand and we may incur significant expenses,
    which would harm our business and financial
    condition.
   27




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Our
    stock price is likely to be volatile and could
    decline.
    
    our operating performance and the performance of other similar
    companies;
    the overall performance of the equity markets;
    developments with respect to intellectual property rights;
    publication of unfavorable research reports about us or our
    industry or withdrawal of research;
    coverage by securities analysts or lack of coverage by
    securities analysts;
    speculation in the press or investment community;
    terrorist acts; and
    announcements by us or our competitors of significant contracts,
    new technologies, acquisitions, commercial relationships, joint
    ventures, or capital commitments.  Our
    principal stockholders will have a controlling influence over
    our business affairs and may make business decisions with which
    you disagree and which may adversely affect the value of your
    investment.
    We may
    need to raise additional capital, which may not be available,
    thereby adversely affecting our ability to operate our
    business.
   28




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Provisions
    in our charter documents and Delaware law may delay or prevent
    an acquisition of our company.
      Holders
    of our Class B common stock vote with our Class A
    common stock, which dilutes the voting power of our Class A
    common stockholders.
  9090-5415
  We
    have recently relocated our headquarters. The lease for our new
    facility is incremental to an existing lease on our former
    headquarters facility in San Francisco, California. If the
    sublessor at our San Francisco facility is unable to meet
    its obligations under the sublease, it is likely we would need
    to recognize a loss for the expected sublease rental
    income.
    ITEM 1B.
    UNRESOLVED
    STAFF COMMENTS    ITEM 2.
    PROPERTIES   29




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ITEM 3.
    LEGAL
    PROCEEDINGS  Risk Factors
  ITEM 4.
    SUBMISSION
    OF MATTERS TO A VOTE OF SECURITY HOLDERS   30




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PART II  ITEM 5.
    MARKET
    FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS
    AND ISSUER PURCHASES OF EQUITY SECURITIES    High


LowFor the year ended
    December 31, 2006Fourth quarter

$
13.99


$
10.01Third quarter


11.87



7.85Second quarter


14.63



11.01First quarter


14.81



12.04For the year ended
    December 31, 2005Fourth quarter

$
13.91


$
10.95     Dividend
    Policy
    Sale of
    Unregistered Securities
   E-Services
    Use of
    Proceeds from Public Offering
  Form S-1 No. 333-114093)
   31




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ITEM 6.
    SELECTED
    FINANCIAL DATA  Financial Statements and
    Supplementary Data Managements Discussion and Analysis of Financial
    Condition and Results of Operations.
  Year Ended December 31,2006


2005


2004


2003


2002(In thousands, except per share data)Consolidated Statements of
    Operations Data(1):Revenue:Application

$
79,137


$
63,296


$
49,010


$
36,029


$
20,753Consulting


17,906



15,114



9,640



7,606



7,635Total revenue


97,043



78,410



58,650



43,635



28,388Cost of revenue:Application


19,317



16,419



14,627



7,691



3,987Consulting


12,785



11,058



8,276



6,462



6,504Total cost of revenue


32,102



27,477



22,903



14,153



10,491Gross profit


64,941



50,933



35,747



29,482



17,897Operating expenses:Sales and marketing


29,482



22,544



18,153



14,767



12,205Research and development


19,475



16,687



15,932



10,927



6,460General and administrative


21,113



10,725



7,096



4,726



3,372Restructuring charges


414



804











Charge for in-process research and
    development














150



Total operating expenses


70,484



50,760



41,181



30,570



22,037Operating income (loss)


(5,543
)


173



(5,434
)


(1,088
)


(4,140
)Other income (expense):Interest income


2,891



873



101



83



137Interest expense


(107
)


(1,273
)


(404
)


(152
)


(109
)Fees for early extinguishment of
    debt






(2,264
)






(62
)


(39
)Total other income (expense), net


2,784



(2,664
)


(303
)


(131
)


(11
)Net loss before provision for
    income taxes


(2,759
)


(2,491
)


(5,737
)


(1,219
)


(4,151
)Provision (benefit) for income
    taxes


(131
)


4



(11
)


(89
)


Net loss


(2,628
)


(2,495
)


(5,726
)


(1,308
)


(4,151
)Accrual of dividends and issuance
    costs on preferred stock






(2,984
)


(3,299
)


(2,744
)


(2,486
)Net loss attributable to
    Class A common stockholders

$
(2,628
)

$
(5,479
)

$
(9,025
)

$
(4,052
)

$
(6,637
)Net loss attributable to
    Class A common stockholders per share  basic and
    diluted(2)

$
(0.13
)

$
(1.19
)

$
(161.16
)

$
(162.08
)

$
(1,106.17
)Weighted-average Class A
    common shares  basic and diluted(2)


20,031



4,619



56



25



6   33




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December 31,2006


2005


2004


2003


2002(In thousands)Consolidated balance sheet
    data:Cash and cash equivalents

$
58,785


$
59,346


$
5,773


$
18,194


$
8,964Working capital (deficit)


57,795



58,497



(1,371
)


2,374



6,676Total assets


117,420



99,020



38,648



42,057



20,162Long-term debt


17



399



2,573



216



77Total preferred stock and
    exchangeable share obligation


796



1,715



52,073



48,659



38,471Total stockholders equity
    (deficit)


77,430



71,698



(42,996
)


(34,427
)


(30,191
)     (1)
    
    We acquired White Amber, Inc. in October 2003 and
    Recruitforce.com in March 2005. Our consolidated statement of
    operations and balance sheet data include the results of White
    Amber and Recruitforce.com only for periods subsequent to
    October 21, 2003 and March 10, 2005, respectively, see
    ITEM 7.  Managements Discussion and Analysis
    of Financial Condition and Results of Operationsand
    Note 3  Business Combinations in our Notes to
    Consolidated Financial Statements for additional information
    regarding our acquisition of White Amber and Recruitforce.com.(2)
    
    Per share numbers reflect only outstanding Class A Common
    Stock of the Company. Exchangeable Shares, redeemable
    convertible preferred stock, stock options, and warrants are
    antidilutive for the periods presented, see
    Note 9  Preferred Stock and
    Note 10  Common Stock in our Notes to
    Consolidated Financial Statements.  ITEM 7.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATION  This
    Form 10-K,
    including ITEM 7. , contains forward-looking statements within the
    meaning of Section 27A of the Securities Act of 1933, as
    amended, and Section 21E of the Securities Exchange Act of
    1934, as amended. These statements identify prospective
    information, particularly statements referencing our
    expectations regarding revenue and operating expenses, tax and
    accounting estimates, the demand and expansion opportunities for
    our products, our customer base and our competitive position. In
    some cases, forward-looking statements can be identified by the
    use of words such as may, could,
    would, might, will,
    should, expect, forecast,
    predict, potential,
    continue, anticipates,
    expects, intends, plans,
    believes, seeks, estimates,
    is scheduled for, targeted, and
    variations of such words and similar expressions. Such
    forward-looking statements are based on current expectations,
    estimates, and projections about our industry, managements
    beliefs, and assumptions made by management. These statements
    are not guarantees of future performance and are subject to
    certain risks, uncertainties and assumptions that are difficult
    to predict; therefore, actual results and outcomes may differ
    materially from what is expressed or forecasted in any such
    forward-looking statements. Such risks and uncertainties include
    those set forth herein under ITEM 1A.  RISK
    FACTORS or included elsewhere in this Annual Report on
    Form 10-K.
    Unless required by law, we undertake no obligation to update
    publicly any forward-looking statements, whether as a result of
    new information, future events or otherwise.
    Overview
     34




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Accounting for Costs
    Associated with Exit or Disposal Activities.
  Sources
    of Revenue
    Application
    Revenue
      Consulting
    Revenue
    Cost of
    Revenue and Operating Expenses
  Cost
    of Revenue
   35




---



##### Table of Contents



Sales
    and Marketing
    Research
    and Development
    General
    and Administrative
    Critical
    Accounting Policies and Estimates
     36




---



##### Table of Contents



Revenue
    Recognition
    No. 00-21, Revenue Arrangements with Multiple Deliverables No. 99-19, Reporting Revenue Gross as a Principal versus Net as an
    Agent
    Research
    and Development
  Accounting for the Costs of
    Computer Software to be Sold, Leased or Otherwise
    Marketed.
  Stock-based
    Compensation
  Share-Based Payment Accounting for Stock-Based
    Compensation,
  Goodwill,
    Other Intangible Assets and Long-Lived Assets
  Goodwill and Other
    Intangible Assets,
 37




---



##### Table of Contents



Accounting for the Impairment or
    Disposal of Long-Lived Assets,
  Income
    Taxes
     38




---



##### Table of Contents



Results
    of Operations
  Period-to-period
  Year Ended December 31,2006


2005


2004Consolidated Statement of
    Operations Data:Revenue:Application


82
%


81
%


84
%Consulting


18



19



16Total revenue


100



100



100Cost of revenue (as a percent of
    related revenue):Application


24



26



30Consulting


71



73



86Total cost of revenue (as a
    percent of total revenue)


33



35



39Gross profit


67



65



61Operating expenses:Sales and marketing


30



29



31Research and development


20



21



27General and administrative


22



14



12Restructuring






1



Total operating expenses


72



65



70Operating income (loss)


(5
)






(9
)Other income (expense):Interest income


3



1



Interest expense






(5
)


(1
)Total other income (expense), net


3



(4
)


(1
)Net loss before provision for
    income taxes


(3
)


(3
)


(10
)Provision (benefit) for income
    taxes










Net loss


(3
)%


(3
)%


(10
)%   Comparison
    of the Years Ended December 31, 2006 and 2005
    Revenue
  Year Ended December 31,2006


2005


$ Change


% ChangeApplication revenue

$
79,137


$
63,296


$
15,841



25
%Consulting revenue


17,906



15,114



2,792



18
%Total revenue

$
97,043


$
78,410


$
18,633



24
%    39




---



##### Table of Contents



period-to-period
    Cost
    of Revenue
  Year Ended December 31,2006


2005


$ Change


% ChangeApplication

$
19,317


$
16,419


$
2,898



18
%Consulting


12,785



11,058



1,727



16
%Total cost of revenue

$
32,102


$
27,477


$
4,625



17
%       Gross
    Profit and Gross Profit Percentage
  Year Ended December 31,2006


2005


$ Change


% ChangeGross profitApplications

$
59,820


$
46,877


$
12,943



28
%Consulting


5,121



4,056



1,065



26
%Total gross profit

$
64,941


$
50,933


$
14,008



28
%   Year Ended December 31,2006


2005


% ChangeGross profit
    percentageApplications


76
%


74
%


2
%Consulting


29
%


27
%


2
%Total gross profit percentage


67
%


65
%


2
%    40




---



##### Table of Contents



Operating
    expenses
  Year Ended December 31,2006


2005


$ Change


% ChangeSales and marketing

$
29,482


$
22,544


$
6,938



31
%Research and development


19,475



16,687



2,788



17
%General and administrative


21,113



10,725



10,388



97
%Restructuring costs and other
    charges


414



804



(390
)


(49
)%Total operating expenses

$
70,484


$
50,760


$
19,724



39
%   Sales and Marketing.
  Research and Development.
  General and Administrative.
  Restructuring charges.
  Interest
    income and interest expense
  Year Ended December 31,2006


2005


$ Change


% ChangeInterest income

$
2,891


$
873


$
2,018



231
%Interest expense


(107
)


(1,273
)


1,166



(92
)%Fees for early extinguishment of
    debt






(2,264
)


2,264



*Total other income (expense), net

$
2,784


$
(2,664
)

$
5,448



205
%     *
    
    not meaningful  Interest Income.
  Interest Expense.
 41




---



##### Table of Contents



Provision
    for Income Taxes
  Year Ended December 31,2006


2005


$ Change


% ChangeProvision (benefit) for income
    taxes

$
(131
)

$
4


$
(135
)


3,375
%   non-U.S. operations,
    CRA Examination of Tax Year 1999.
  CRA Examination of Tax Years 2000 and 2001.
  CRA Examination Impact to Future Tax
    Years.
 42




---



##### Table of Contents



Availability of Deferred Tax Assets.
    Comparison
    of the Years Ended December 31, 2005 and 2004
    Revenue
  Year Ended December 31,2005


2004


$ Change


% ChangeApplication revenue

$
63,296


$
49,010


$
14,286



29
%Consulting revenue


15,114



9,640



5,474



57
%Total revenue

$
78,410


$
58,650


$
19,760



34
%   period-to-period
    Cost
    of Revenue
  Year Ended December 31,2005


2004


$ Change


% ChangeApplication

$
16,419


$
14,627


$
1,792



12
%Consulting


11,058



8,276



2,782



34
%Total cost of revenue

$
27,477


$
22,903


$
4,574



20
%  43




---



##### Table of Contents



Gross
    Profit
  Year Ended December 31,2005


2004


$ Change


% ChangeGross profitApplications

$
46,877


$
34,383


$
12,494



36
%Consulting


4,056



1,364



2,692



197
%Total gross profit

$
50,933


$
35,747


$
15,186



42
%   Year Ended December 31,2005


2004


% ChangeGross profit
    percentageApplications


74
%


70
%


4
%Consulting


27
%


14
%


13
%Total gross profit percentage


65
%


61
%


4
%     Operating
    expenses
  Years Ended December 31,2005


2004


$ Change


% ChangeSales and marketing

$
22,544


$
18,153


$
4,391



24
%Research and development


16,687



15,932



755



5
%General and administrative


10,725



7,096



3,629



51
%Restructuring costs and other
    charges


804







804



*Total operating expenses

$
50,760


$
41,181


$
9,579



23
%     *
    
    not meaningful  Sales and Marketing.
 44




---



##### Table of Contents



Research and Development.
  General and Administrative.
  Restructuring charges.
  Severance and benefits.
  Excess facilities/asset impairments.
  Interest
    income and interest expense
  Year Ended December 31,2005


2004


$ Change


% ChangeInterest income

$
873


$
101


$
772



764
%Interest expense


(1,273
)


(404
)


(869
)


215
%Fees for early extinguishment of
    debt


(2,264
)






(2,264
)


*Total other income (expense), net

$
(2,664
)

$
(303
)

$
(2,361
)


779
%     *
    
    not meaningful  Interest Income.
 45




---



##### Table of Contents



Interest Expense
  Provision
    (benefit) for Income Taxes
  Year Ended December 31,2005


2004


$ Change


% ChangeProvision (benefit) for income
    taxes

$
4


$
(11
)

$
15



*     *
    
    not meaningful    Liquidity
    and Capital Resources
        Year Ended December 31,2006


2005


$ Change


% ChangeCash provided by (used in) by
    operating activities

$
9,262


$
(875
)

$
10,137



1,159
%Cash used in investing activities


(12,059
)


(8,457
)


(3,602
)


43
%Cash provided by financing
    activities


2,388



63,041



(60,653
)


(96
)%   Year Ended December 31,2005


2004


$ Change


% ChangeCash used in provided by operating
    activities

$
(875
)

$
(8,538
)

$
7,663



90
%Cash used in investing activities


(8,457
)


(3,577
)


(4,880
)


(136
)%Cash provided by (used in)
    financing activities


63,041



(194
)


63,235



*     *
    
    not meaningful  Net
    Cash Provided by/Used in Operating Activities
   46




---



##### Table of Contents



Net
    Cash Used in Investing Activities
       47




---



##### Table of Contents



Net
    Cash Provided by/ Used in Financing Activities
        9090-5415 9090-5415
       48




---



##### Table of Contents



Contractual
    Obligations
    Contractual
    obligations (in thousands)
  Less Than








More ThanTotal


1 Year


1-2 Years


3-5 Years


5 YearsCapital lease obligations

$
398


$
381


$
17


$



$
Interest payments


8



8











Facility leases(1)


8,101



2,329



2,437



2,879



456Operating equipment leases


4,106



3,047



1,051



8



Third party hosting facilities


1,449



916



533







Other contracts


186



172



14







Total contractual cash obligations

$
14,248


$
6,853


$
4,052


$
2,887


$
456     (1)
    
    Includes amounts associated with former headquarters facilities
    lease as described in ITEM 2  PROPERTIES.      ITEM 7A.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK  Foreign
    Currency Exchange Risk
   49




---



##### Table of Contents



Interest
    Rate Sensitivity
   50




---



##### Table of Contents



ITEM 8.
    FINANCIAL
    STATEMENTS AND SUPPLEMENTARY DATA  REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
            Share Based
    Payment
  Internal Control 
    Integrated Framework
      51




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
      Internal Control 
    Integrated Framework
        Internal
    Control  Integrated Framework Internal Control  Integrated
    Framework
  Share Based
    Payment
      52




---



##### Table of Contents



MANAGEMENTS
    REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
  Rules 13a-15(f)
  
    pertain to the maintenance of records that, in reasonable
    detail, accurately and fairly reflect the transactions and
    dispositions of the assets of Taleo;
    provide reasonable assurance that transactions are recorded as
    necessary to permit preparation of financial statements in
    accordance with generally accepted accounting principles, and
    that receipts and expenditures of Taleo are being made only in
    accordance with authorizations of management and directors of
    Taleo; and
    provide reasonable assurance regarding prevention or timely
    detection of unauthorized acquisition, use or disposition of
    Taleos assets that could have a material effect on the
    financial statements.          /s/  Michael
    GregoireMichael
    Gregoire
    President and Chief Executive Officer

/s/  Katy
    MurrayKaty
    Murray
    Chief Financial OfficerMarch 16, 2007

March 16, 2007  53




---



##### Table of Contents



TALEO
    CORPORATION
  CONSOLIDATED
    BALANCE SHEETS
  December 31,2006


2005(In thousands, except share data)ASSETSCurrent assets:Cash and cash equivalents

$
58,785


$
59,346Restricted cash


2,722



1,110Accounts receivable, less allowance
    for doubtful accounts of $585 and $350 at December 31, 2006
    and 2005, respectively


25,952



15,026Prepaid expenses and other current
    assets


3,657



3,010Investment credit receivable


4,395



4,944Total current assets


95,511



83,436Property and equipment, net


12,928



7,129Restricted cash


1,048



936Other assets


1,448



283Goodwill


6,028



5,947Other intangibles, net


457



1,289Total assets

$
117,420


$
99,020LIABILITIES AND
    STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable and accrued
    liabilities

$
18,708


$
13,063Contingent shares issuable






81Customer deposits


80



342Deferred revenue


18,547



10,870Capital lease obligation, short-term


381



583Total current liabilities


37,716



24,939Non-current liabilities:Customer deposits and long-term
    deferred revenue


360



114Other liabilities


1,101



155Capital lease obligation, long-term


17



399Commitments and contingencies
    (Note 13)Class B redeemable common
    stock, $0.00001 par value, 24,229,762 shares
    authorized; 1,873,811 and 4,038,287 shares outstanding at
    December 31, 2006 and December 31, 2005, respectively






Total liabilities


39,194



25,607Exchangeable share obligation


796



1,715Stockholders equity:Class A common stock; par
    value, $0.00001 per share; 250,000,000 shares authorized;
    22,253,127 and 18,755,071 shares outstanding at
    December 31, 2006 and December 31, 2005, respectively






Additional paid-in capital


133,610



124,947Accumulated deficit


(56,329
)


(53,701
)Deferred compensation






(21
)Treasury stock, at cost, 14,413 and
    0 shares outstanding at December 31, 2006 and
    December 31, 2005, respectively


(158
)Accumulated other comprehensive
    income


307



473Total stockholders equity


77,430



71,698Total liabilities and
    stockholders equity

$
117,420


$
99,020    54




---



##### Table of Contents



TALEO
    CORPORATION
  CONSOLIDATED
    STATEMENTS OF OPERATIONS
  Year Ended December 31,2006


2005


2004(In thousands, except per share data)Revenue:Application

$
79,137


$
63,296


$
49,010Consulting


17,906



15,114



9,640Total revenue


97,043



78,410



58,650Cost of revenue:Application


19,317



16,419



14,627Consulting


12,785



11,058



8,276Total cost of revenue


32,102



27,477



22,903Gross profit


64,941



50,933



35,747Operating expenses:Sales and marketing


29,482



22,544



18,153Research and development


19,475



16,687



15,932General and administrative


21,113



10,725



7,096Restructuring costs and other
    charges


414



804



Total operating expenses


70,484



50,760



41,181Operating income (loss)


(5,543
)


173



(5,434
)Other income (expense):Interest income


2,891



873



101Interest expense


(107
)


(1,273
)


(404
)Fees for early extinguishment of
    debt






(2,264
)


Total other income (expense), net


2,784



(2,664
)


(303
)Net loss before provision for
    income taxes


(2,759
)


(2,491
)


(5,737
)Provision (benefit) for income
    taxes


(131
)


4



(11
)Net loss


(2,628
)


(2,495
)


(5,726
)Accretion of dividends and
    issuance costs on preferred stock






(2,984
)


(3,299
)Net loss attributable to
    Class A common stockholders

$
(2,628
)

$
(5,479
)

$
(9,025
)Net loss attributable to
    Class A common stockholders per share  basic and
    diluted

$
(0.13
)

$
(1.19
)

$
(161.16
)Weighted-average Class A
    Common Shares:Basic and diluted


20,031



4,619



56    55




---



##### Table of Contents



TALEO
    CORPORATION
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
 Years Ended December 31, 2006, 2005, and 2004
  Common Stock


Additional











Other


Total


ComprehensivePar


Paid-In-


Treasury


Deferred


Accumm


Income


Stockholders


(Loss)Shares


Value


Capital


Stock


Comp


Deficit


(Loss)


Equity


Income(In thousands, except share data)Balances, December 31, 2003


35,907






$
4,671


$



$
(283
)

$
(39,197
)

$
382


$
(34,427
)

$
(819
)Employee stock options exercised


30,120







107



















107



Cashless exercise of warrants


1,388































Warrants issued for professional
    services










93



















93



Modification of warrants in
    connection with litigation










217



















217



Forfeiture of Series D
    Preferred Stock Options










(49
)






55











6



Amortization of deferred
    compensation


















191











191



Accrued dividend on Series C
    and Series D Preferred Stock






















(3,007
)






(3,007
)


Accrual of issuance costs of
    Series C Preferred Stock






















(292
)






(292
)


Net loss






















(5,726
)






(5,726
)

$
(5,726
)Foreign currency translation
    adjustments


























(158
)


(158
)


(158
)Balances, December 31, 2004


67,415







5,039







(37
)


(48,222
)


224



(42,996
)

$
(5,884
)Employee stock options exercised


148,351







490



















490



Warrants exercised


2,584







8



















8



Conversion of preferred shares into
    common shares at initial public offering


12,335,597







41,399



















41,399



Issuance of common shares in lieu
    of cash payment of accreted dividends on preferred shares at
    initial public offering


841,124







11,776



















11,776



Initial public offering (net of
    costs)


5,360,000







65,881



















65,881



Stock based compensation










372



















372



Forfeiture of Series D
    Preferred Stock options and contingent shares issuable as
    acquisition consideration










(18
)






3











(15
)


Amortization of deferred
    compensation


















13











13



Accrued dividend on Series C
    and Series D Preferred Stock






















(2,412
)






(2,412
)


Accrual of issuance costs of
    Series C Preferred Stock






















(572
)






(572
)


Net loss






















(2,495
)






(2,495
)

$
(2,495
)Foreign currency translation
    adjustments


























249



249



249Balances, December 31, 2005


18,755,071







124,947







(21
)


(53,701
)


473



71,698


$
(2,246
)Employee stock options exercised


917,918







2,355



















2,355Issuance of ESPP shares


64,513







616



















616



Warrants exercised


53,801







1



















1



Shares issued to former
    stockholders of White Amber


30,753







162



















162



Class B Common stock exchanged
    for Class A Common Stock


2,164,476







961



















961Shares acquired from payroll tax
    payments


(14,413
)










(158
)














(158
)


Restricted shares reacquired or
    forfeited


(9,063
)






























Issuance of Restricted shares


290,071







82



















82



Reversal of deferred compensation
    due to adoption of SFAS 123(R)










(21
)






21















IPO related cost










3



















3



Stock based compensation










4,504



















4,504



Net loss






















(2,628
)






(2,628
)

$
(2,628
)Foreign currency translation
    adjustments


























(166
)


(166
)


(166
)Balances, December 31, 2006


22,253,127






$
133,610


$
(158
)

$



$
(56,329
)

$
307


$
77,430


$
(2,794
)  56




---



##### Table of Contents



TALEO
    CORPORATION
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
  Year Ended December 31,2006


2005


2004(In thousands)Cash flows from operating
    activities:Net loss

$
(2,628
)

$
(2,495
)

$
(5,726
)Adjustments to reconcile net loss
    to net cash (used in) provided by operating activities:Depreciation and amortization


4,789



4,853



4,388Loss on disposal of fixed assets


390



190



97Tenant inducement from landlord


1,063



(97
)


Amortization of tenant inducements


(266
)






Stock-based compensation expense


4,504



385



501Director fees settled with stock


82







Bad debt expense


254



225



100Adjustment to goodwill










73Amortization and write-off of
    deferred financing fees






822



Changes in working capital accounts:Interest earned on restricted cash


2



43



Accounts receivable


(11,134
)


(211
)


(6,417
)Prepaid expenses and other assets


(1,793
)


(1,480
)


(381
)Investment credit receivable


563



(2,147
)


(452
)Accounts payable and accrued
    liabilities


5,808



1,642



(7,394
)Deferred revenues and customer
    deposits


7,628



(2,605
)


6,673Net cash provided (used in) by
    operating activities


9,262



(875
)


(8,538
)Cash flows from investing
    activities:Acquisition of property and
    equipment


(10,335
)


(3,222
)


(3,382
)Restricted cash 
    decrease (increase)


(1,724
)


(1,382
)


(195
)Acquisition of business, net of
    cash acquired






(3,853
)


Net cash used in investing
    activities


(12,059
)


(8,457
)


(3,577
)Cash flows from financing
    activities:Proceeds from long-term debt






20,230



7,575Principal payments of long-term debt






(24,298
)


(5,542
)Principal payments on capital lease
    obligations


(583
)


(535
)


(331
)Debt issuance costs






(822
)


Offering costs










(2,003
)Proceeds from stock options, ESPP
    Shares and warrants exercised


2,971



498



107Proceeds from initial public
    offering of common stock, net of offering costs






68,191



Dividends paid on preferred stock
    (Note 9  Preferred Stock)






(223
)


Net cash provided by (used in)
    financing activities


2,388



63,041



(194
)Effect of exchange rate changes on
    cash and cash equivalents


(152
)


(136
)


(112
)Increase (decrease) in cash and
    cash equivalents


(561
)


53,573



(12,421
)Cash and cash equivalents:Beginning of year


59,346



5,773



18,194End of year

$
58,785


$
59,346


$
5,773Supplemental cash flow disclosures:Cash paid for interest

$
41


$
1,027


$
303Cash paid for loan prepayment
    penalties

$



$
1,570


$
Cash paid for income taxes

$



$



$
76Supplemental disclosure of non-cash
    financing and investing activities:Property and equipment acquired
    under capital lease

$



$
27


$
996Property and equipment purchases
    included in accounts payable and accrued liabilities

$
586


$
836


$
Accrual of dividends on
    Series C and Series D Preferred Stock

$



$
2,189


$
3,007Amortization of issuance costs on
    Series C Preferred Stock

$



$
572


$
292Conversion of preferred shares into
    common shares at initial public offering

$



$
41,399


$
Issuance of common shares in lieu
    of cash payment of accrued dividends on preferred shares at
    initial public offering

$



$
11,776


$
Offering costs included in accounts
    payable

$



$
308


$
Contingent shares issuable

$
(81
)

$
81


$
Contingent shares issued

$
162


$



$
Class B common stock exchanged
    for Class A common stock

$
961


$



$
Treasury stock acquired to settle
    payroll taxes

$
158


$



$
  57




---



##### Table of Contents



TALEO
    CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  1.
    Nature of
    Business and Basis of Presentation  Nature of Business
    Basis of Presentation
  Stock Split one-for-six
  Allocation of Overhead Costs
  Recent Accounting Pronouncements
   58




---



##### Table of Contents



TALEO CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
   2.
    Summary
    of Significant Accounting Policies  Use of Estimates
  Revenue Recognition
  Set-up
  No. 99-19
      Deferred Revenue
 59




---



##### Table of Contents



TALEO CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Commission Expense
  Goodwill and Other Intangible Assets
  Impairment of Long-Lived Assets
  Income Taxes
   60




---



##### Table of Contents



TALEO CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
     Taleo Contingent Accounts Receivable and Staffing Suppliers
    Payable
  Allowance for Doubtful Accounts
  2006


2005


2004(In thousands)Balance at January 1

$
350


$
150


$
50Provision charged to expense


254



225



100Write-offs charged against
    allowance


(19
)


(25
)


Balance at December 31

$
585


$
350


$
150   Cash and Cash Equivalents
  Restricted Cash
  Concentration of Credit and Market Risk
 61




---



##### Table of Contents



TALEO CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Fair Value of Financial Instruments
  Foreign Currency Translation
  Property and Equipment
  Computer hardware and software

3 to 5 yearsFurniture and equipment

5 yearsLeasehold improvements

shorter of lease term or useful
    life of asset   Investment Credits
  Advertising Expense
  Product and Software Development Costs
  Stock-Based Compensation
 62




---



##### Table of Contents



TALEO CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  Accounting for Stock
    Issued to Employees Accounting for Stock-Based Compensation.
  Share-Based Payment,
  Comprehensive Income (Loss)
  3.
    Business
    Combinations  Acquisition
    of Recruitforce.com, Inc.
        Description

Amount


Assigned Life(In thousands)Goodwill

$
3,051



Existing technology


623



5 yearsCustomer relationships


93



5 years3,767Cash acquired


51Other assets


222Liabilities assumed


(136
)Total purchase price

$
3,904  63




---



##### Table of Contents



TALEO CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
      Acquisition
    of White Amber, Inc.
          4.
    Intangible
    Assets and Goodwill   64




---



##### Table of Contents



TALEO CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    2006


2005Weighted-Average


Gross





GrossPeriod of


Carrying


Accumulated


Carrying


AccumulatedAmortization


Amount


Amortization


Amount


Amortization(In thousands)


(In thousands)Identifiable intangible assets:Existing technology


3.5 years


$
2,311


$
(1,914
)

$
2,311


$
(1,335
)Customer relationships


3.2 years



967



(907
)


967



(654
)Subtotal






3,278



(2,821
)


3,278



(1,989
)Goodwill






6,028







5,947



Total





$
9,306


$
(2,821
)

$
9,225


$
(1,989
)       Estimated Amortization Expense

Amount(In thousands)2007

$
1432008


1432009


1432010


28Total

$
457   5.
    Property
    and Equipment    2006


2005(In thousands)Computer hardware and software

$
20,106


$
12,687Furniture and equipment


2,462



2,324Leasehold improvements


2,661



1,20625,229



16,217Less accumulated depreciation and
    amortization


(12,301
)


(9,088
)Total

$
12,928


$
7,129    65




---



##### Table of Contents



TALEO CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    6.
    Other
    Assets    2006


2005(In thousands)Deferred tax asset net of
    valuation allowance

$
1,284


$
Other


164



283Total

$
1,448


$
283   7.
    Accounts
    Payable and Accrued Liabilities    2006


2005(In thousands)Accrued compensation

$
7,092


$
5,205Accounts payable


2,388



3,698Accrued liabilities and other


9,228



4,160Total

$
18,708


$
13,063   8.
    Debt
    Refinancing       66




---



##### Table of Contents



TALEO CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Amount(In thousands)Principal

$
19,000Prepayment penalty


950Yield maintenance penalty


620Total

$
20,570   Accounting for Derivative Instruments and Hedging
    Activities
  9.
    Preferred
    Stock    Preferred
    Stock Warrants
    10.
    Common
    Stock   67




---



##### Table of Contents



TALEO CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Class A
    Common Stock
    Class B
    Common Stock and Exchangeable Shares
  9090-5415 9090-5415 9090-5415
        9090-5415
  Class A
    Common Stock Warrants
   68




---



##### Table of Contents



TALEO CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
             69




---



##### Table of Contents



TALEO CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
   Class A
    Common Stock Option Plans
      Weighted-AverageNumber of


Exercise PriceOptions


per ShareOutstanding 
    January 1, 2004


2,472,675



3.02Additional shares reservedGranted


697,256



16.25Exercised


(30,120
)


3.55Forfeited


(114,871
)


6.20Outstanding 
    December 31, 2004


3,024,940


$
5.95Additional shares reservedGranted


1,634,942



13.58Exercised


(148,351
)


3.30Forfeited


(297,905
)


9.09Outstanding 
    December 31, 2005


4,213,626


$
8.78Additional shares reservedGranted


1,162,425



11.94Exercised


(857,203
)


2.69Forfeited


(362,734
)


13.55Outstanding 
    December 31, 2006


4,156,114


$
10.52      70




---



##### Table of Contents



TALEO CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  EITF 96-18
    Weighted-AverageRemaining


Number ofNumber of Options


Contractual Life


OptionsRange of Exercise Prices

Outstanding


(Years)


Exercisable$  1.26 -  1.92


30,333



2.71



30,3333.00 -  3.00


943,990



5.03



932,9693.84 - 11.90


978,412



8.24



286,30311.90 - 12.56


99,692



9.03



14,77912.56 - 13.50


1,130,481



8.31



525,43513.50 - 13.75


161,832



9.11



35,51613.75 - 13.94


100,000



9.09



14.00 - 14.00


426,298



8.71



139,18814.10 - 14.10


29,316



9.35



18.00 - 18.00


255,760



7.24



195,4554,156,114



7.56



2,159,978Average exercise price per share









$
8.36     White
    Amber Stock Option Plan
   71




---



##### Table of Contents



TALEO CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
     Weighted-AverageNumber of


Exercise PriceOptions


per ShareOutstanding 
    January 1, 2004


206,487



0.78Forfeited


(23,076
)


0.78Outstanding 
    December 31, 2004


183,411



0.78Exercised


(1,191
)


0.78Forfeited


(1,569
)


0.78Outstanding 
    December 31, 2005


180,651


$
0.78Exercised


(60,715
)


0.78Forfeited


(6,125
)


0.78Outstanding 
    December 31, 2006


113,811


$
0.78           Employee
    Stock Purchase Plan
   72




---



##### Table of Contents



TALEO CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
   Impact
    of the Adoption of SFAS No. 123(R)
    2006(In thousands)Cost of revenues

$
414Sales and marketing


1,048Research and development


694General and administrative


2,348$
4,504         Determining
    Fair Value
   73




---



##### Table of Contents



TALEO CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
     2006

2005

2004Stock OptionsExpected volatility

48 to 55%

70.5 to 79%

68 to 79%Risk-free interest rate

4.5 to 5.13%

3.1 to  4.07%

2.72 to 3.10%Expected life (in years)

5.0 to 6.25

4.0

4.0 to 5.0Weighted-average exercise price
    per share of options granted

$11.94

$13.58

16.25Weighted-average fair value per
    share of option granted

$6.83

$7.81

$8.22Forfeiture rate

12.3 to 24.21%



Expected dividend yield

0%

0%

0%   2006Employee Stock Purchase PlanExpected volatility

53 to 55%Risk-free interest rate

5.09 to 5.24%Expected life (in weeks)

24.0 to 26.0Expected dividend yield

0%       2005


2004(In thousands)Net loss attributable to
    Class A common stockholders As reported

$
(5,479
)

$
(9,025
)Add: Stock-based compensation
    expense included in reported net loss


13



246Less: Stock-based compensation
    expense determined under fair value based method for all awards,
    net of related tax effects


(2,683
)


(659
)Pro-forma net loss

$
(8,149
)

$
(9,438
)Net loss attributable to
    Class A common shareholders per share Basic and diluted as reported

$
(1.19
)

$
(161.16
)Pro forma

$
(1.76
)

$
(168.54
)   No. 96-18,
 74




---



##### Table of Contents



TALEO CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Restricted
    Stock and Performance Shares
      Weighted-AveragePerformance


Restricted


Grant-Share


Stock


Date Fair ValueAwards


Awards


per ShareRepurchasable/nonvested
    balance  January 1, 2006










Awarded


66,179



282,017


$
11.48Released/vested


(8,054
)


(38,579
)


9.74Forfeited/cancelled


(4,375
)


(9,063
)


11.90Repurchasable/nonvested
    balance  December 31, 2006


53,750



234,375


$
11.75     Reserved
    Shares of Common Stock
    Exchange of exchangeable shares
    and redemption of Class B common stock


1,873,811Class A Common Stock Plans
    (excluding the White Amber Stock Plan)


4,411,510White Amber Stock Plan


113,811Employee Stock Purchase Plan


435,487Warrants


523,588Total


7,358,207  75




---



##### Table of Contents



TALEO CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  11.
    Related-Party
    Transactions      12.
    Income
    Taxes    Year Ended December 31,2006


2005


2004(In thousands)Domestic

$
(5,786
)

$
(5,120
)

$
(3,543
)Foreign


3,027



2,629



(2,194
)Total

$
(2,759
)

$
(2,491
)

$
(5,737
)     Year Ended December 31,2006


2005


2004(In thousands)CurrentFederal

$



$



$
State










(9
)Foreign


1,153



4



(2
)Total

$
1,153


$
4


$
(11
)DeferredFederal

$



$



$
State










Foreign


(1,284
)






Total

$
(1,284
)

$



$
Total provision (benefit) for
    income taxes

$
(131
)

$
4


$
(11
)   2006


2005


2004Federal tax at statutory rate


(34
)%


(34
)%


(34
)%State income taxes, net


(12
)


(8
)


(4
)Foreign tax rate


44



(3
)


Non-deductible share based payments


31







Non-deductible other expenses


21



11



3Change in valuation allowance


(55
)


34



35Total


(5
)%



%



%  76




---



##### Table of Contents



TALEO CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    2006


2005(In thousands)Deferred tax assets:Tax loss carry forwards

$
14,074


$
14,104Reserves and accruals


1,041



708Property and equipment


1,040



2,131Warrants issued for services


1,321



1,323Deferred revenue


36



42Alternative Minimum Tax credit


35



35Stock based compensation


834



Other, net


146



145Total deferred tax assets

$
18,527


$
18,488Deferred tax liabilities:Canadian investment credits

$
(1,426
)

$
(1,637
)Acquired intangible assets


(181
)


(489
)Total deferred tax liabilities

$
(1,607
)

$
(2,126
)Net deferred tax asset

$
16,920


$
16,362Valuation allowance


(15,636
)


(16,362
)Deferred tax asset, net

$
1,284


$
     non-U.S. income
   77




---



##### Table of Contents



TALEO CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
       CRA Examination of Tax Year 1999.
  CRA Examination of Tax Years 2000 and 2001.
  CRA Examination Impact to Future Tax
    Years.
  Availability of Deferred Tax Assets.
 78




---



##### Table of Contents



TALEO CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
     13.
    Commitments
    and Contingencies  Leases
  Operating LeasesThirdParty





TotalEquipment


Facility


Hosting


Other


Operating


CapitalLeases


Leases


Facilities


Contracts


Leases


Leases


Total(In thousands)








(In thousands)


(In thousands)2007

$
3,047


$
2,329


$
916


$
172


$
6,464


$
389


$
6,8532008


974



1,292



533



14



2,813



17



2,8302009


77



1,145











1,222







1,2222010


8



939











947







9472011






960











960







9602012






980











980







980Thereafter






456











456







456Total

$
4,106


$
8,101


$
1,449


$
186


$
13,842


$
406


$
14,248Less amounts representing interest






















(8
)Present value of minimum lease
    payments






















398Less current portion






















(381
)Noncurrent portion





















$
17     Litigation
   79




---



##### Table of Contents



TALEO CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Indemnification
      14.
    Employee
    Benefit Plans    15.
    Net Loss
    Per Share   80




---



##### Table of Contents



TALEO CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  Earnings Per
    Share No. 03-6, Participating Securities and the Two Class Method
    under FASB Statement No. 128,
      Year Ended December 31,2006


2005


2004Class A


Class B





Class A


Class B





Class A


Class BCommon


Common(1)


Total


Common


Common(1)


Total


Common


Common(1)


Total(In thousands)Allocation of net loss

$
(2,628
)





$
(2,628
)

$
(5,479
)





$
(5,479
)

$
(9,025
)





$
(9,025
)Weighted-average shares outstanding


20,031



3,140







4,619



4,038







56



4,038Net loss per share

$
(0.13
)









$
(1.19
)









$
(161.16
)     (1)
    
    Class B common shares are non-participating in periods of
    net income or net losses and as a result have no attribution of
    earnings or losses for the purposes of calculating earnings per
    share. Exchangeable shares are participating securities but are
    not presented in the table since the Company incurred losses for
    all reported periods and exchangeable shares have no legal
    requirement to fund such losses, making them antidilutive for
    all periods presented.  16.
    Segment
    and Geographic Information, International Operations, and
    Customer Concentrations  Disclosures About Segments of an Enterprise and Related
    Information,
   81




---



##### Table of Contents



TALEO CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
         Application


Consulting


Total(In thousands)2004:Revenue

$
49,010


$
9,640


$
58,650Contribution margin(1)


18,451



1,364



19,8152005:Revenue


63,296



15,114



78,410Contribution margin(1)


30,190



4,056



34,2462006:Revenue


79,137



17,906



97,043Contribution margin(1)


40,345



5,121



45,466     (1)
    
    The contribution margins reported reflect only the expenses of
    the line of business and do not represent the actual margins for
    each operating segment since they do not contain an allocation
    for selling and marketing, general and administrative, and other
    corporate expenses incurred in support of the line of business.  Profit
    Reconciliation
  Year Ended December 31,2006


2005


2004(In thousands)Contribution margin for reportable
    segments

$
45,466


$
34,246


$
19,815Sales and marketing


(29,482
)


(22,544
)


(18,153
)General and administrative


(21,113
)


(10,725
)


(7,096
)Restructuring charges


(414
)


(804
)


Interest and other income,
    expense, net


2,784



(2,664
)


(303
)Loss before provision for income
    taxes

$
(2,759
)

$
(2,491
)

$
(5,737
)  82




---



##### Table of Contents



TALEO CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
      United States


Canada


Europe


Other


Total(In thousands)Year ended December 31,
    2004 Revenues

$
50,033


$
5,272


$
2,159


$
1,186


$
58,650Assets

$
25,081


$
10,903


$
1,445


$
1,219


$
38,648Year ended December 31,
    2005 Revenues

$
69,077


$
5,542


$
2,610


$
1,182


$
78,410Assets

$
85,025


$
12,402


$
1,105


$
488


$
99,020Year ended December 31,
    2006 Revenues

$
88,404


$
5,716


$
1,939


$
984


$
97,043Assets

$
102,114


$
12,383


$
1,703


$
1,220


$
117,420       17.
    Severance
    and Exit Costs  Accounting for Costs Associated with
    Exit or Disposal Activities.
  Summary
  Six Months Ended December 31,2006LiabilityBalanceLiability for the Remaining Net Lease Payments

Cease Use Date





December 31,for the San Francisco Facility

July 03, 2006


Cash Payments


2006(In thousands)Lease payments

$
1,160


$
(181
)

$
979Sublease rental income


(691
)






(691
)Net liability

$
469


$
(181
)

$
288   83




---



##### Table of Contents



TALEO CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  Costs Associated with the Exit from the San Francisco
    Facility

Amount(in thousands)Establishment of initial net
    liability for net lease payments (from above)

$
469Reversal of accrued rent from
    original lease


(237
)Adjustment for tenant inducements
    from original lease


(102
)Write-off of fixed assets


217Commissions and legal costs


79Total exit expense

$
426   Relocation
    of Accounting and Finance Department
     84




---



##### Table of Contents



TALEO CORPORATION
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
   18.
    Selected
    Quarterly Financial Data (Unaudited)    1st Quarter


2nd Quarter


3rd Quarter


4th Quarter


Fiscal Year(In thousands, except per share data)2006Revenue

$
22,164


$
23,472


$
24,883


$
26,524


$
97,043Gross profit


14,357



15,439



16,795



18,350



64,941Operating loss


(1,265
)


(2,585
)


(1,658
)


(35
)


(5,543
)Net income (loss)


(594
)


(1,828
)


(757
)


551



(2,628
)Net income (loss) attributable to
    Class A common stockholders per share  basic

$
(0.03
)

$
(0.10
)

$
(0.04
)

$
0.03


$
(0.13
)Net income (loss) attributable to
    Class A common stockholders per share  diluted

$
(0.03
)

$
(0.10
)

$
(0.04
)

$
0.02


$
(0.13
)Weighted average Class A
    common shares outstanding  basic


18,789



19,229



20,384



21,667



20,031Weighted average Class A
    common shares outstanding  diluted


18,789



19,229



20,384



25,848



20,0312005Revenue


18,157



19,307



19,903



21,043



78,410Gross profit


11,893



12,469



12,938



13,633



50,933Operating income (loss)


(676
)


(33
)


365



517



173Net loss


(772
)


(417
)


(1,617
)


(2,673
)


(5,479
)Net loss attributable to
    Class A common stockholders per share  basic and
    diluted

$
(23.17
)

$
(14.45
)

$
(16.74
)

$
(0.58
)

$
(1.19
)Weighted average Class A
    common shares outstanding  basic and diluted


70



89



149



18,168



4,619   19.
    Subsequent
    Events  E-Services
     85




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##### Table of Contents



ITEM 9.
    CHANGES
    IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
    FINANCIAL DISCLOSURE    ITEM 9A.
    CONTROLS
    AND PROCEDURES  Evaluation
    of disclosure controls and procedures
  Form 10-K.
  Managements
    annual report on internal control over financial
    reporting
    Changes
    in internal control over financial reporting
      
    purchased a new general accounting system, which went into
    production during the three months ended September 30, 2006;
    purchased new systems for accounting for revenue and deferred
    revenue, and for accounting for stock options, both of which
    went into production during the first nine months of 2006;
    completed the process of transferring our accounting function to
    our principal executive offices located in California;
    hired personnel with more experience in financial reporting and
    accounting processes than the incumbent group, and continued to
    seek additional technical accounting resources;
    continued the implementation and documentation for new policies
    around closing processes;
    improved detective controls with greater financial analysis
    around operational metrics that are key to our
    performance; and
    improved benchmarking our internal financial operations and
    implemented best practices in various business processes.   86




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ITEM 9B.
    OTHER
    INFORMATION   PART III  ITEM 10.
    DIRECTORS,
    EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE  Form 10-K
  ITEM 11.
    EXECUTIVE
    COMPENSATION    ITEM 12.
    SECURITY
    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
    RELATED STOCKHOLDER MATTERS    ITEM 13.
    CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
    INDEPENDENCE    ITEM 14.
    PRINCIPAL
    ACCOUNTING FEES AND SERVICES   87




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PART IV  ITEM 15.
    EXHIBITS,
    FINANCIAL STATEMENT SCHEDULES    Financial Statements.  FINANCIAL
    STATEMENTS AND SUPPLEMENTARY DATA.
  Financial Statement Schedules.
   FINANCIAL STATEMENTS AND
    SUPPLEMENTARY DATA.
  Exhibits. Form 10-K.
    Form 10-K.
     88




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SIGNATURES    TALEO CORPORATION
  By:
    /s/  Katy
    Murray       POWER OF
    ATTORNEY
  attorney-in-fact, Form 10-K, attorneys-in-fact,
    Signature

Title

Date/s/  Michael
    GregoireMichael
    Gregoire

President, Chief Executive Officer
    and Director(Principal Executive Officer)

March 16, 2007/s/  Katy
    MurrayKaty
    Murray

Chief Financial
    Officer(Principal Accounting 
    and Financial Officer)

March 16, 2007/s/  Louis
    TetuLouis
    Tetu

Chairman of the 
    Board of Directors

March 16, 2007/s/  Gary
    BloomGary
    Bloom

Director

March 16, 2007/s/  Patrick
    GrossPatrick
    Gross

Director

March 16, 2007/s/  Howard
    GwinHoward
    Gwin

Director

March 16, 2007/s/  Eric
    HerrEric
    Herr

Director

March 16, 2007 89




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##### Table of Contents



Signature

Title

Date/s/  Greg
    SantoraGreg
    Santora

Director

March 16, 2007/s/  Jeffrey
    SchwartzJeffrey
    Schwartz

Director

March 16, 2007/s/  Michael
    TierneyMichael
    Tierney

Director

March 16, 2007  90




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##### Table of Contents



EXHIBIT INDEX
   ExhibitNumber

Description2
.1

Agreement and Plan of Merger,
    dated October 21, 2003, between the Registrant, Kangaroo
    Acquisition Corporation and White Amber, Inc. (incorporated
    herein by reference to Exhibit 2.1 to the Registrants
    Registration Statement on
    Form S-1,
    Commission File
    No. 333-114093,
    filed on March 31, 2004)2
.2

Agreement and Plan of Merger,
    dated March 10, 2005, between the Registrant, Butterfly
    Acquisition Corporation and Recruitforce.com, Inc.
    (incorporated herein by reference to Exhibit 2.2 to the
    Registrants Registration Statement on
    Form 10-12G,
    Commission File
    No. 000-51299,
    filed on May 2, 2005)2
.3

Asset Purchase Agreement dated as
    of March 2, 2007, by and among the Registrant, JobFlash,
    Inc., and, with respect to Article X, Article XI and
    Article XII thereof only, U.S. Bank National
    Association as Escrow Agent (incorporated herein by reference
    to Exhibit 2.1 to the Registrants Current Report on
    Form 8-K,
    filed on March 8, 2007)3
.1

Amended and Restated Certificate
    of Incorporation (incorporated herein by reference to
    Exhibit 3.1 to the Registrants Registration Statement
    on
    Form S-1,
    Commission File
    No. 333-114093,
    filed on September 13, 2005)3
.2

Bylaws (incorporated herein by
    reference to Exhibit 3.2 to the Registrants
    Registration Statement on
    Form S-1,
    Commission File
    No. 333-114093,
    filed on May 13, 2004)4
.1

Form of Class A common stock
    certificate (incorporated herein by reference to
    Exhibit 4.1 to the Registrants Registration Statement
    on
    Form S-1,
    Commission File
    No. 333-114093,
    filed on September 13, 2005)4
.2

Form of Class B common stock
    certificate (incorporated herein by reference to
    Exhibit 4.2 to the Registrants Registration Statement
    on
    Form S-1,
    Commission File
    No. 333-114093,
    filed on September 13, 2005)4
.3

Second Amended and Restated
    Investor Rights Agreement, dated October 21, 2003
    (incorporated herein by reference to Exhibit 4.3 to the
    Registrants Registration Statement on
    Form S-1,
    Commission File
    No. 333-114093,
    filed on March 31, 2004)4
.4

Covenant Agreement, dated
    November 24, 1999, between the Registrant and ViaSite Inc.
    (incorporated herein by reference to Exhibit 4.4 to the
    Registrants Registration Statement on
    Form 10-12G,
    Commission File
    No. 000-51299,
    filed on May 2, 2005)10
.1*

1999 Stock Plan and form of
    agreement thereunder (incorporated herein by reference to
    Exhibit 10.1 to the Registrants Registration
    Statement on
    Form S-1,
    Commission File
    No. 333-114093,
    filed on March 31, 2004)10
.2*

ViaSite Inc. Stock Plan
    (incorporated herein by reference to Exhibit 10.2 to the
    Registrants Registration Statement on
    Form S-1,
    Commission File
    No. 333-114093,
    filed on March 31, 2004)10
.3

2003 Series D Preferred Stock
    Plan and form of agreement thereunder (incorporated herein by
    reference to Exhibit 10.3 to the Registrants
    Registration Statement on
    Form S-1,
    Commission File
    No. 333-114093,
    filed on March 31, 2004)10
.4*

2004 Stock Plan and form of
    agreement thereunder (incorporated herein by reference to
    Exhibit 10.4 to the Registrants Registration
    Statement on
    Form S-1,
    Commission File
    No. 333-114093,
    filed on January 28, 2005)10
.5*

2004 Employee Stock Purchase Plan
    (incorporated herein by reference to Exhibit 10.5 to the
    Registrants Registration Statement on
    Form S-1,
    Commission File
    No. 333-114093,
    filed on January 28, 2005)10
.6*

2005 Stock Plan and form of
    agreement thereunder (incorporated herein by reference to
    Exhibit 10.24 to the Registrants Registration
    Statement on
    Form S-1,
    Commission File
    No. 333-114093,
    filed on September 13, 2005)10
.7*

Employment Agreement, dated
    March 14, 2005, between the Registrant and Michael Gregoire
    (incorporated herein by reference to Exhibit 10.16 to
    the Registrants Registration Statement on
    Form 10-12G,
    Commission File
    No. 000-51299,
    filed on May 2, 2005) 91




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ExhibitNumber

Description10
.8*

Employment Agreement, dated
    March 8, 2006, between the Registrant and Divesh Sisodraker
    (incorporated herein by reference to Exhibit 10.8 to the
    Registrants Annual Report on
    Form 10-K,
    filed on April 17, 2006)10
.9*

Amendment to Employment Agreement
    between the Registrant and Divesh Sisodraker dated July 7,
    2006 (incorporated herein by reference to Exhibit 10.2
    to the Registrants Quarterly Report on
    Form 10-Q,
    filed on November 14, 2006)10
.10*

Employment Agreement, dated
    March 8, 2006, between the Registrant and Bradford Benson
    (incorporated herein by reference to Exhibit 10.9 to the
    Registrants Annual Report on
    Form 10-K,
    filed on April 17, 2006)10
.11*

Employment Agreement, dated
    March 8, 2006, between the Registrant and Jeffrey Carr
    (incorporated herein by reference to Exhibit 10.10 to
    the Registrants Annual Report on
    Form 10-K,
    filed on April 17, 2006)10
.12*

Employment Agreement, dated
    March 8, 2006, between Taleo (Canada) Inc. and Guy Gauvin
    (incorporated herein by reference to Exhibit 10.11 to
    the Registrants Annual Report on
    Form 10-K,
    filed on April 17, 2006)10
.13*

Cessation of Employment and Board
    Compensation Agreement, dated March 8, 2006, between the
    Company and Louis Tetu (incorporated herein by reference to
    Exhibit 10.12 to the Registrants Annual Report on
    Form 10-K,
    filed on April 17, 2006)10
.14*

Executive Incentive Bonus Plan
    (incorporated herein by reference to Exhibit 10.1 to the
    Registrants Current Report on
    Form 8-K
    filed on February 28, 2006)10
.15*

Form of Indemnification Agreement
    entered into by the Registrant and each of its directors and
    executive officers (incorporated herein by reference to
    Exhibit 10.6 to the Registrants Registration
    Statement on
    Form S-1,
    Commission File
    No. 333-114093,
    filed on March 31, 2004)10
.16*

Description of Director
    Compensation (incorporated herein by reference to
    Exhibit 10.1 to the Registrants Current Report on
    Form 8-K
    filed on December 20, 2005)10
.17

Agreement, dated September 1,
    2002, between the Registrant and Internap Network Services
    Corporation (incorporated herein by reference to
    Exhibit 10.13 to the Registrants Registration
    Statement on
    Form S-1,
    Commission File
    No. 333-114093,
    filed on January 28, 2005)10
.18

Lease for 575 Market Street,
    Eighth Floor, San Francisco, California (incorporated
    herein by reference to Exhibit 10.9 to the
    Registrants Registration Statement on
    Form S-1,
    Commission File
    No. 333-114093,
    filed on September 13, 2005)10
.19

Lease for 330 St. Vallier East,
    Suite 400, Quebec, QC, Canada (incorporated herein by
    reference to Exhibit 10.10 to the Registrants
    Registration Statement on
    Form S-1,
    Commission File
    No. 333-114093,
    filed on May 13, 2004)10
.20

Lease for 4140 Dublin Blvd.,
    Suite 400, Dublin, California (incorporated herein by
    reference to Exhibit 10.1 to the Registrants Current
    Report on
    Form 8-K
    filed on March 22, 2006)10
.21

Master Services Agreement dated
    April 14, 2006, by and between the Registrant and Equinix
    Operating Co., Inc. (incorporated herein by reference to
    Exhibit 10.1 to the Registrants Current Report on
    Form 8-K,
    filed on April 20, 2006)10
.22

Form of Taleo Corporation 2004
    Stock Plan Restricted Stock Agreement (incorporated herein by
    reference to Exhibit 10.1 to the Registrants Current
    Report on
    Form 8-K,
    filed on June 6, 2006)10
.23

Form of Taleo Corporation 2004
    Stock Plan Performance Share Agreement (incorporated herein
    by reference to Exhibit 10.2 to the Registrants
    Current Report on
    Form 8-K,
    filed on June 6, 2006)10
.24

Employment Agreement between the
    Registrant and Katy Murray dated August 4, 2006
    (incorporated herein by reference to Exhibit 10.1 to the
    Registrants Current Report on
    Form 8-K,
    filed on August 10, 2006) 92




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ExhibitNumber

Description10
.25

Sublease Agreement dated
    October 19, 2006 by and between the Registrant, as
    sublessor, and Cyworld, Inc., as sublessee, for the premises
    located at 575 Market Street, San Francisco, California
    (incorporated herein by reference to Exhibit 10.1 to the
    Registrants Current Report on
    Form 8-K,
    filed on October 25, 2006)21
.1

List of Subsidiaries23
.1

Consent of Deloitte &
    Touche LLP, Independent Registered Public Accounting Firm24
.1

Power of Attorney (see the
    signature page of this Annual Report)31
.1

Certification of Chief Executive
    Officer pursuant to Section 302 of the Sarbanes-Oxley Act
    of 200231
.2

Certification of Chief Financial
    Officer pursuant to Section 302 of the Sarbanes-Oxley Act
    of 200232
.1

Certification of Chief Executive
    Officer and Chief Financial Officer pursuant to 18 U.S.C.
    Section 1350, as adopted pursuant to Section 906 of
    the Sarbanes-Oxley Act of 2002     *
    
    Indicates management compensatory plan, contract or arrangement. 93