Our typical subscription contract term is 12 to 36 months, although terms range
from one to 60 months, so during any fiscal reporting period only a subset of
active subscription contracts are available for renewal. We calculate our
renewal rates as of the end of each reporting period. Renewal rates remained in
the high 80's percentage range as of July 31, 2013, improving slightly from the
renewal percentage as of January 31, 2013. We expect our renewal rates to
continue to improve slowly over time, as we continue to expand our enterprise
business and invest in customer success and other related programs.
We expect marketing and sales costs, which were 51 percent of our total revenues
for the six months ended July 31, 2013 and 53 percent for the same period a year
ago, to continue to represent a substantial portion of total revenues in the
future as we seek to add and manage more paying customers, and build greater
On March 18, 2013, we issued at par value $1.15 billion of 0.25% convertible
senior notes due April 1, 2018. In connection with the issuance of the debt, we
entered into convertible note hedge transactions that cover the number of shares
of our common stock that are underlying the notes. The note hedge transactions
are designed, but not guaranteed, to reduce or eliminate the potential economic
dilution arising upon conversion.
On March 20, 2013, our certificate of incorporation was amended to increase the
number of authorized shares of common stock from 400.0 million to 1.6 billion in
order to provide for a four-for-one stock split of the common stock effected in
the form of a stock dividend. The record date for the stock split was April 3,
2013, and the additional shares were distributed on April 17, 2013. Each
stockholder of record on the close of business on the record date received three
additional shares of common stock for each share held. All share and per share
data presented herein reflect the impact of the increase in authorized shares
and the stock split, as appropriate.
On July 12, 2013, we acquired for cash the outstanding stock of ExactTarget,
Inc. ("ExactTarget"), a leading global provider of cross-channel, digital
marketing solutions. We acquired ExactTarget for the assembled workforce,
expected synergies and to create a world-class marketing platform across the
channels of email, social, mobile and the web. The financial results of
ExactTarget are included in our condensed consolidated financial statements from
the date of acquisition. The total purchase price for ExactTarget was
approximately $2.6 billion.
On July 12, 2013, we entered into a credit agreement which provides for a $300.0
million term loan due on July 11, 2016. All amounts borrowed under the term loan
were used to pay a portion of the total purchase price for ExactTarget.
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In June 2013, we entered into a large capital lease agreement for software for a
period of nine years, which consists of the contractual term of six years and a
renewal option of three years.