SANTA CLARA, Calif.--(BUSINESS WIRE)--ServiceNow® (NYSE:NOW) today announced the financial results for its second quarter 2017.
Second Quarter 2017 GAAP Results:
- Subscription revenues of $411.0 million, representing 41% year-over-year growth.
- Professional services and other revenues of $60.7 million, representing 20% year-over-year growth.
- Total revenues of $471.7 million, representing 38% year-over-year growth.
- Subscription gross profit of $335.2 million, representing 82% of subscription revenues.
- Professional services and other gross profit of $14.8 million, representing 24% of professional services and other revenues.
- Total gross profit of $350.0 million, representing 74% of total revenues.
- Loss from operations of $38.7 million, representing negative 8% of total revenues.
- Net loss of $56.5 million, or loss of $0.33 per basic and diluted share.
- Net cash provided by operating activities of $128.7 million, representing 27% of total revenues.
Second Quarter 2017 Non-GAAP Results:
We report non-GAAP financial measures in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. For the following non-GAAP results, see the section entitled “Statement Regarding Use of Non-GAAP Financial Measures” for an explanation of non-GAAP measures and the corresponding growth rates, and the table entitled "GAAP to Non-GAAP Reconciliation” for a reconciliation of GAAP to non-GAAP measures and corresponding growth rates.
- Subscription revenues of $417.0 million, representing 43% year-over-year growth adjusted for constant currency.
- Professional services and other revenues of $61.5 million, representing 21% year-over-year growth adjusted for constant currency.
- Total revenues of $478.5 million, representing 40% year-over-year growth adjusted for constant currency.
- Subscription billings of $456.6 million, representing 37% year-over-year growth (or $468.0 million, representing 41% year-over-year growth adjusted for constant currency and constant billings duration).
- Professional services and other billings of $48.3 million, representing 15% year-over-year growth (or $49.1 million, representing 16% year-over-year growth adjusted for constant currency).
- Total billings of $504.9 million, representing 35% year-over-year growth (or $517.1 million, representing 38% year-over-year growth adjusted for constant currency and constant billings duration).
- Subscription gross profit of $347.9 million, representing 85% of subscription revenues.
- Professional services and other gross profit of $22.4 million, representing 37% of professional services and other revenues.
- Total gross profit of $370.3 million, representing 78% of total revenues.
- Income from operations of $65.3 million, representing 14% of total revenues.
- Net income of $39.9 million, or earnings of $0.23 per basic share and $0.22 per diluted share.
- Free cash flow of $92.8 million, representing 20% of total revenues.
“ServiceNow reported another strong quarter today, demonstrating steady growth of new customers and maintaining our high renewal rate,” said John Donahoe, president and chief executive officer, ServiceNow. “Our growth through upsells represents deeper enterprise integration and expansion of our capabilities. We are solving real challenges for enterprises today, while also enabling their transformation to a digital future.”
“We now count 403 customers with an annual contract value of greater than $1 million, a 44% year-over-year increase,” said Michael Scarpelli, chief financial officer, ServiceNow. “We ended the quarter with nearly 800 customers from the Global 2000, adding 29 new logos.”
Financial Outlook
Our guidance is based on foreign exchange rates as of June 30, 2017 and includes GAAP and non-GAAP financial measures. See the section entitled “Statement Regarding Use of Non-GAAP Financial Measures” for an explanation of non-GAAP measures and the corresponding growth rates, and the table entitled "Reconciliation of Non-GAAP Financial Guidance” for a reconciliation of GAAP to non-GAAP metrics and corresponding growth rates.
For the third quarter of 2017, we expect:
- GAAP subscription revenues between $442 and $446 million, representing 39% to 40% year-over-year growth (or non-GAAP subscription revenues between $440 and $444 million, representing 38% to 39% year-over-year growth adjusted for constant currency).
- GAAP professional services and other revenues between $46 and $47 million, representing 19% to 21% year-over-year growth (or non-GAAP professional services and other revenues between $45 and $46 million, representing 16% to 19% year-over-year growth adjusted for constant currency).
- GAAP total revenues between $488 and $493 million, representing 36% to 38% year-over-year growth (or non-GAAP total revenues between $485 and $490 million, representing 36% to 37% year-over-year growth adjusted for constant currency).
- Non-GAAP subscription billings between $491 and $495 million, representing 35% to 36% year-over-year growth (or between $495 and $499 million, representing 36% to 38% year-over-year growth adjusted for constant currency and constant billings duration).
- Non-GAAP professional services and other billings between $49 and $50 million, representing 18% to 20% year-over-year growth (or between $48 and $49 million, representing 16% to 18% year-over-year growth adjusted for constant currency).
- Non-GAAP total billings between $540 and $545 million, representing 34% to 35% year-over-year growth (or between $543 and $548 million, representing 34% to 36% year-over-year growth adjusted for constant currency and constant billings duration).
- Non-GAAP operating margin of 17%.
- Non-GAAP weighted average shares used to compute diluted net income per share of approximately 181 million shares.
For the full year 2017, we expect:
- GAAP subscription revenues between $1,708 and $1,716 million, representing 40% year-over-year growth (or non-GAAP subscription revenues between $1,710 and $1,718 million, representing 40% to 41% year-over-year growth adjusted for constant currency).
- GAAP professional services and other revenues and non-GAAP professional services and other revenues adjusted for constant currency between $193 and $195 million, representing 14% to 15% year-over-year growth.
- GAAP total revenues between $1,901 and $1,911 million, representing 37% year-over-year growth (or non-GAAP total revenues between $1,903 and $1,913 million, representing 37% to 38% year-over-year growth adjusted for constant currency).
- Non-GAAP subscription billings between $2,066 and $2,074 million, representing 37% year-over-year growth (or between $2,074 and $2,082 million, representing 37% to 38% year-over-year growth adjusted for constant currency and constant billings duration).
- Non-GAAP professional services and other billings and non-GAAP professional services and other billings adjusted for constant currency between $205 and $207 million, representing 14% to 15% year-over-year growth.
- Non-GAAP total billings between $2,271 and $2,281 million, representing 34% to 35% year-over-year growth (or between $2,279 and $2,289 million, representing 35% year-over-year growth adjusted for constant currency and constant billings duration).
- Non-GAAP subscription gross margin of 84%.
- Non-GAAP professional services and other gross margin of 15%.
- Non-GAAP total gross margin of 77%.
- Non-GAAP operating margin of 16%.
- Non-GAAP free cash flow margin of 25%.
- Non-GAAP weighted average shares used to compute diluted net income per share of approximately 179 million shares.
Conference Call Details
The conference call will begin at 2 p.m. Pacific Time (21:00 GMT) on Wednesday, July 26, 2017. Interested parties may listen to the call by dialing 844.464.3153 (passcode: 49567471), or if outside North America, by dialing +1.508.637.5575 (passcode: 49567471). Individuals may access the live teleconference from the investor relations section of the ServiceNow website at http://investors.servicenow.com.
An audio replay of the conference call and webcast will be available two hours after its completion and will be accessible for 30 days. To hear the replay, interested parties may go to the investor relations section of the ServiceNow website or dial 855.859.2056 (passcode: 49567471), or if outside North America, by dialing +1.404.537.3406 (passcode: 49567471).
Investor Presentation Details
An investor presentation providing additional information and analysis can be found at http://investors.servicenow.com.
Statement Regarding Use of Non-GAAP Financial Measures
We report non-GAAP financial measures in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP.
We present revenues adjusted for constant currency and corresponding growth rates to provide a framework for assessing how our business performed excluding the effect of foreign currency rate fluctuations. To present this information, current period results for entities reporting in currencies other than U.S. Dollars are converted into U.S. Dollars at the exchange rates in effect during the prior period presented, rather than the actual exchange rates in effect during the current period. We believe the presentation of revenues adjusted for constant currency facilitates the comparison of revenues year-over-year.
We believe billings is a useful leading indicator regarding the performance of our business. We present subscription billings, professional services and other billings, and total billings, and corresponding growth rates, as the applicable revenue plus the applicable change in deferred revenue as presented or derived from the statement of cash flows. While we typically bill customers annually for our subscription services, customers sometimes request, and we accommodate, multi-year billings, which are billings with durations in excess of the typical 12 month term. Accordingly, to facilitate greater comparability in our billings information, we further present billings adjusted for constant billings duration, in addition to adjusting for constant currency. To present this information, we adjust subscription billings and total billings for constant currency as described above, and adjust for constant duration by replacing the portion of multi-year billings in excess of twelve months during the current period with the portion of multi-year billings in excess of twelve months during the prior period presented. We also present professional services and other billings and corresponding growth rates adjusted for constant currency as described above.
Our non-GAAP presentation of gross profit, income from operations and net income measures exclude stock-based compensation expense, amortization of debt discount and issuance costs related to the convertible senior notes, amortization of purchased intangibles, legal settlements, business combination and other related costs, and the related income tax effect of these adjustments. We believe the presentation of operating results that exclude these non-cash or non-recurring items provides useful supplemental information to investors and facilitates the analysis of our operating results and comparison of operating results across reporting periods.
Free cash flow, which is a non-GAAP financial measure, is calculated as net cash provided by (used in) operating activities plus cash paid for legal settlements, reduced by purchases of property and equipment. Free cash flow margin is calculated as free cash flow as a percentage of total revenues. We believe information regarding free cash flow and free cash flow margin provides useful information to investors because it is an indicator of the strength and performance of our business operations. However, our calculation of free cash flow and free cash flow margin may not be comparable to similar measures used by other companies.
The company encourages investors to carefully consider its results under GAAP, as well as its supplemental non-GAAP information and the reconciliation between these presentations, to more fully understand its business. Please see the tables included at the end of this release for the reconciliation of GAAP and non-GAAP results.
Use of Forward-Looking Statements
This release contains “forward-looking statements” regarding our performance, including but not limited to the section entitled “Financial Outlook.” Forward-looking statements are subject to known and unknown risks and uncertainties and are based on potentially inaccurate assumptions that could cause actual results to differ materially from those expected or implied by the forward-looking statements. If any such risks or uncertainties materialize or if any of the assumptions prove incorrect, our results could differ materially from the results expressed or implied by the forward-looking statements we make.
Among the important factors that could cause actual results to differ materially from those in any forward-looking statements include: (i) errors, interruptions, delays, or security breaches in or of our service or web hosting, (ii) our ability to grow at our expected rate of growth, including our ability to convert deferred revenue and backlog into revenue, add and retain customers, sell additional subscriptions to existing customers and enter new geographies and markets, (iii) our ability to continue to release, and gain customer acceptance of, improved versions of our services, (iv) our ability to develop and gain customer acceptance of new products and services, including our platform, and (v) our ability to compete successfully against existing and new competitors.
Further information on these and other factors that could affect our financial results are included in our Form 10-Q for the quarter ended March 31, 2017 and in other filings we make with the Securities and Exchange Commission from time to time, including our Form 10-Q that will be filed for the quarter ended June 30, 2017.
We undertake no obligation, and do not intend, to update these forward-looking statements, to review or confirm analysts’ expectations, or to provide interim reports or updates on the progress of the current financial quarter.
About ServiceNow
Your enterprise needs to move faster, but lack of process and legacy tools hold you back. Every day, thousands of customer requests, IT incidents, and HR cases follow their own paths—moving back and forth between people, machines and departments. Unstructured. Undocumented. Unimproved for years. With the ServiceNow® System of Action™ you can replace these unstructured work patterns of the past with intelligent workflows of the future. Now every employee, customer and machine can make requests on a single cloud platform. Every department working on these requests can assign and prioritize, collaborate, get down to root cause issues, gain real-time insights and drive to action. Your employees are energized. Your service levels improve. And you realize game-changing economics. Work at Lightspeed™. To find out how, visit www.servicenow.com.
© 2017 ServiceNow, Inc. All rights reserved. ServiceNow, the ServiceNow logo, and other ServiceNow marks are trademarks and/or registered trademarks of ServiceNow, Inc., in the United States and/or other countries. Other company and product names may be trademarks of the respective companies with which they are associated.
| ServiceNow, Inc. | |||||||||||||||||||||
| Condensed Consolidated Statements of Operations | |||||||||||||||||||||
| (in thousands, except share and per share data) | |||||||||||||||||||||
| (unaudited) | |||||||||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||||||||
| June 30, 2017 | June 30, 2016 | June 30, 2017 | June 30, 2016 | ||||||||||||||||||
| Revenues: | |||||||||||||||||||||
| Subscription | $ | 411,007 | $ | 290,679 | $ | 787,142 | $ | 558,101 | |||||||||||||
| Professional services and other | 60,696 | 50,633 | 101,344 | 89,090 | |||||||||||||||||
| Total revenues | 471,703 | 341,312 | 888,486 | 647,191 | |||||||||||||||||
| Cost of revenues (1): | |||||||||||||||||||||
| Subscription | 75,793 | 56,360 | 146,168 | 109,141 | |||||||||||||||||
| Professional services and other | 45,892 | 40,289 | 91,964 | 81,768 | |||||||||||||||||
| Total cost of revenues | 121,685 | 96,649 | 238,132 | 190,909 | |||||||||||||||||
| Gross profit | 350,018 | 244,663 | 650,354 | 456,282 | |||||||||||||||||
| Operating expenses (1): | |||||||||||||||||||||
| Sales and marketing | 247,224 | 186,506 | 459,310 | 345,116 | |||||||||||||||||
| Research and development | 90,005 | 70,364 | 174,494 | 136,288 | |||||||||||||||||
| General and administrative | 51,526 | 36,071 | 97,777 | 77,308 | |||||||||||||||||
| Legal settlement | — | — | — | 270,000 | |||||||||||||||||
| Total operating expenses | 388,755 | 292,941 | 731,581 | 828,712 | |||||||||||||||||
| Loss from operations | (38,737 | ) | (48,278 | ) | (81,227 | ) | (372,430 | ) | |||||||||||||
| Interest expense | (11,337 | ) | (8,248 | ) | (20,015 | ) | (16,357 | ) | |||||||||||||
| Interest income and other income (expense), net | (7,830 | ) | 2,260 | (114 | ) | 2,962 | |||||||||||||||
| Loss before income taxes | (57,904 | ) | (54,266 | ) | (101,356 | ) | (385,825 | ) | |||||||||||||
| Benefit from income taxes | (1,431 | ) | (4,641 | ) | (4,221 | ) | (2,868 | ) | |||||||||||||
| Net loss | $ | (56,473 | ) | $ | (49,625 | ) | $ | (97,135 | ) | $ | (382,957 | ) | |||||||||
| Net loss per share - basic and diluted | $ | (0.33 | ) | $ | (0.30 | ) | $ | (0.57 | ) | $ | (2.35 | ) | |||||||||
| Weighted-average shares used to compute net loss per share - basic and diluted | 170,419,083 | 163,838,755 | 169,585,356 | 162,952,721 | |||||||||||||||||
| (1) Includes total stock-based compensation expense for stock-based awards as follows: | |||||||||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||||||||
| June 30, 2017 | June 30, 2016 | June 30, 2017 | June 30, 2016 | ||||||||||||||||||
| Cost of revenues: | |||||||||||||||||||||
| Subscription | $ | 8,942 | $ | 6,951 | $ | 16,880 | $ | 13,558 | |||||||||||||
| Professional services and other | 7,617 | 6,136 | 14,566 | 12,895 | |||||||||||||||||
| Sales and marketing | 42,287 | 32,861 | 80,688 | 63,859 | |||||||||||||||||
| Research and development | 22,731 | 21,047 | 44,532 | 41,580 | |||||||||||||||||
| General and administrative | 16,489 | 11,070 | 31,343 | 21,481 | |||||||||||||||||
| ServiceNow, Inc. | |||||||||
| Condensed Consolidated Balance Sheets | |||||||||
| (in thousands) | |||||||||
| (unaudited) | |||||||||
| June 30, 2017 | December 31, 2016 | ||||||||
| ASSETS | |||||||||
| Current assets: | |||||||||
| Cash and cash equivalents | $ | 1,173,457 | $ | 401,238 | |||||
| Short-term investments | 518,719 | 498,124 | |||||||
| Accounts receivable, net | 279,088 | 322,757 | |||||||
| Current portion of deferred commissions | 85,097 | 76,780 | |||||||
| Prepaid expenses and other current assets | 54,666 | 43,636 | |||||||
| Total current assets | 2,111,027 | 1,342,535 | |||||||
| Deferred commissions, less current portion | 67,984 | 61,990 | |||||||
| Long-term investments | 319,795 | 262,658 | |||||||
| Property and equipment, net | 213,501 | 181,620 | |||||||
| Intangible assets, net | 72,587 | 65,854 | |||||||
| Goodwill | 104,430 | 82,534 | |||||||
| Other assets | 35,082 | 36,576 | |||||||
| Total assets | $ | 2,924,406 | $ | 2,033,767 | |||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||
| Current liabilities: | |||||||||
| Accounts payable | $ | 24,478 | $ | 38,080 | |||||
| Accrued expenses and other current liabilities | 173,508 | 171,636 | |||||||
| Current portion of deferred revenue | 1,019,304 | 861,782 | |||||||
| Total current liabilities | 1,217,290 | 1,071,498 | |||||||
| Deferred revenue, less current portion | 47,491 | 33,319 | |||||||
| Convertible senior notes, net | 1,140,063 | 507,812 | |||||||
| Other long-term liabilities | 37,136 | 34,177 | |||||||
| Stockholders’ equity | 482,426 | 386,961 | |||||||
| Total liabilities and stockholders’ equity | $ | 2,924,406 | $ | 2,033,767 | |||||
| ServiceNow, Inc. | |||||||||||||||||||||
| Condensed Consolidated Statements of Cash Flows | |||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||
| (unaudited) | |||||||||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||||||||
| June 30, 2017 | June 30, 2016 | June 30, 2017 | June 30, 2016 | ||||||||||||||||||
| Cash flows from operating activities: | |||||||||||||||||||||
| Net loss | $ | (56,473 | ) | $ | (49,625 | ) | $ | (97,135 | ) | $ | (382,957 | ) | |||||||||
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |||||||||||||||||||||
| Depreciation and amortization | 27,181 | 20,000 | 52,407 | 37,452 | |||||||||||||||||
| Amortization of premiums on investments | 761 | 1,309 | 1,706 | 2,799 | |||||||||||||||||
| Amortization of deferred commissions | 24,407 | 18,924 | 50,587 | 36,957 | |||||||||||||||||
| Amortization of debt discount and issuance costs | 11,337 | 8,248 | 20,015 | 16,357 | |||||||||||||||||
| Stock-based compensation | 98,066 | 78,065 | 188,009 | 153,373 | |||||||||||||||||
| Deferred income tax | (1,460 | ) | (6,426 | ) | (4,751 | ) | (6,426 | ) | |||||||||||||
| Other | (1,502 | ) | 862 | (3,720 | ) | 532 | |||||||||||||||
| Changes in operating assets and liabilities, net of effect of business combinations: | |||||||||||||||||||||
| Accounts receivable | 4,018 | (8,844 | ) | 51,039 | 6,967 | ||||||||||||||||
| Deferred commissions | (34,092 | ) | (24,426 | ) | (61,287 | ) | (48,397 | ) | |||||||||||||
| Prepaid expenses and other assets | 10,827 | 9,807 | (11,945 | ) | (10,001 | ) | |||||||||||||||
| Accounts payable | (8,535 | ) | (3,659 | ) | (7,860 | ) | (272 | ) | |||||||||||||
| Deferred revenue | 33,215 | 33,596 | 145,662 | 104,399 | |||||||||||||||||
| Accrued expenses and other liabilities | 20,975 | (226,002 | ) | (6,578 | ) | 19,733 | |||||||||||||||
| Net cash provided by (used in) operating activities | 128,725 | (148,171 | ) | 316,149 | (69,484 | ) | |||||||||||||||
| Cash flows from investing activities: | |||||||||||||||||||||
| Purchases of property and equipment | (35,917 | ) | (23,852 | ) | (69,103 | ) | (52,929 | ) | |||||||||||||
| Business combinations, net of cash acquired | (6,502 | ) | (33,797 | ) | (21,537 | ) | (34,297 | ) | |||||||||||||
| Purchases of other intangibles | (6,170 | ) | (5,000 | ) | (6,170 | ) | (10,750 | ) | |||||||||||||
| Purchases of investments | (132,094 | ) | — | (354,690 | ) | (180,365 | ) | ||||||||||||||
| Purchases of strategic investments | (2,900 | ) | — | (3,900 | ) | — | |||||||||||||||
| Sales of investments | 56,179 | — | 77,968 | 92,885 | |||||||||||||||||
| Maturities of investments | 99,686 | 66,662 | 221,949 | 158,520 | |||||||||||||||||
| Restricted cash | (141 | ) | (154 | ) | (830 | ) | (611 | ) | |||||||||||||
| Net cash (used in) provided by investing activities | (27,859 | ) | 3,859 | (156,313 | ) | (27,547 | ) | ||||||||||||||
| Cash flows from financing activities: | |||||||||||||||||||||
| Net proceeds from borrowings on convertible senior notes | 772,127 | — | 772,127 | — | |||||||||||||||||
| Proceeds from issuance of warrants | 54,071 | — | 54,071 | — | |||||||||||||||||
| Purchases of convertible note hedges | (128,017 | ) | — | (128,017 | ) | — | |||||||||||||||
| Proceeds from employee stock plans | 6,085 | 14,278 | 40,892 | 34,151 | |||||||||||||||||
| Taxes paid related to net share settlement of equity awards | (34,326 | ) | (31,333 | ) | (87,349 | ) | (59,786 | ) | |||||||||||||
| Repurchases of common stock from stockholders | (55,000 | ) | — | (55,000 | ) | — | |||||||||||||||
| Payments on financing obligations | (1,145 | ) | (113 | ) | (2,560 | ) | (223 | ) | |||||||||||||
| Net cash provided by (used in) financing activities | 613,795 | (17,168 | ) | 594,164 | (25,858 | ) | |||||||||||||||
| Foreign currency effect on cash and cash equivalents | 18,881 | (2,857 | ) | 18,219 | (303 | ) | |||||||||||||||
| Net increase (decrease) in cash and cash equivalents | 733,542 | (164,337 | ) | 772,219 | (123,192 | ) | |||||||||||||||
| Cash and cash equivalents at beginning of period | 439,915 | 453,450 | 401,238 | 412,305 | |||||||||||||||||
| Cash and cash equivalents at end of period | $ | 1,173,457 | $ | 289,113 | $ | 1,173,457 | $ | 289,113 | |||||||||||||
| ServiceNow, Inc. | |||||||||||||||||||||||||||
| GAAP to Non-GAAP Reconciliation | |||||||||||||||||||||||||||
| (in thousands, except share and per share data) | |||||||||||||||||||||||||||
| (unaudited) | |||||||||||||||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||
| June 30, 2017 |
June 30, 2016 (3) |
Growth Rates | June 30, 2017 |
June 30, 2016 (3) |
Growth Rates | ||||||||||||||||||||||
| Subscription revenues: | |||||||||||||||||||||||||||
| GAAP subscription revenues | $ | 411,007 | $ | 290,679 | 41% | $ | 787,142 | $ | 558,101 | 41% | |||||||||||||||||
| Effects of foreign currency rate fluctuations | 6,040 | 12,561 | |||||||||||||||||||||||||
| Non-GAAP adjusted subscription revenues (1) | $ | 417,047 | 43% | $ | 799,703 | 43% | |||||||||||||||||||||
| Subscription billings: | |||||||||||||||||||||||||||
| GAAP subscription revenues | $ | 411,007 | $ | 290,679 | 41% | $ | 787,142 | $ | 558,101 | 41% | |||||||||||||||||
| Increase in subscription deferred revenue | 45,599 | 42,079 | 148,157 | 105,952 | |||||||||||||||||||||||
| Non-GAAP subscription billings | $ | 456,606 | $ | 332,758 | 37% | $ | 935,299 | $ | 664,053 | 41% | |||||||||||||||||
| Effects of foreign currency rate fluctuations | 7,980 | 16,811 | |||||||||||||||||||||||||
| Effects of fluctuations in billings duration | 3,437 | (17,865 | ) | ||||||||||||||||||||||||
| Non-GAAP adjusted subscription billings (2) | $ | 468,023 | 41% | $ | 934,245 | 41% | |||||||||||||||||||||
| Professional services and other revenues: | |||||||||||||||||||||||||||
| GAAP professional services and other revenues | $ | 60,696 | $ | 50,633 | 20% | $ | 101,344 | $ | 89,090 | 14% | |||||||||||||||||
| Effects of foreign currency rate fluctuations | 787 | 1,481 | |||||||||||||||||||||||||
| Non-GAAP adjusted professional services and other revenues (1) | $ | 61,483 | 21% | $ | 102,825 | 15% | |||||||||||||||||||||
| Professional services and other billings: | |||||||||||||||||||||||||||
| GAAP professional services and other revenues | $ | 60,696 | $ | 50,633 | 20% | $ | 101,344 | $ | 89,090 | 14% | |||||||||||||||||
| Decrease in professional services and other deferred revenue | (12,384 | ) | (8,483 | ) | (2,495 | ) | (1,553 | ) | |||||||||||||||||||
| Non-GAAP professional services and other billings | 48,312 | 42,150 | 15% | 98,849 | 87,537 | 13% | |||||||||||||||||||||
| Effects of foreign currency rate fluctuations | 787 | 1,481 | |||||||||||||||||||||||||
| Non-GAAP adjusted professional services and other billings (2) | $ | 49,099 | 16% | $ | 100,330 | 15% | |||||||||||||||||||||
| Total revenues: | |||||||||||||||||||||||||||
| GAAP total revenues | $ | 471,703 | $ | 341,312 | 38% | $ | 888,486 | $ | 647,191 | 37% | |||||||||||||||||
| Effects of foreign currency rate fluctuations | 6,827 | 14,042 | |||||||||||||||||||||||||
| Non-GAAP adjusted total revenues (1) | $ | 478,530 | 40% | $ | 902,528 | 39% | |||||||||||||||||||||
| Total billings: | |||||||||||||||||||||||||||
| GAAP total revenues | $ | 471,703 | $ | 341,312 | 38% | $ | 888,486 | $ | 647,191 | 37% | |||||||||||||||||
| Increase in total deferred revenue from condensed consolidated statements of cash flows | 33,215 | 33,596 | 145,662 | 104,399 | |||||||||||||||||||||||
| Non-GAAP total billings | 504,918 | 374,908 | 35% | 1,034,148 | 751,590 | 38% | |||||||||||||||||||||
| Effects of foreign currency rate fluctuations | 8,767 | 18,292 | |||||||||||||||||||||||||
| Effects of fluctuations in billings duration | 3,437 | (17,865 | ) | ||||||||||||||||||||||||
| Non-GAAP adjusted total billings (2) | $ | 517,122 | 38% | $ | 1,034,575 | 38% | |||||||||||||||||||||
| Cost of revenues: | |||||||||||||||||||||||||||
| GAAP subscription cost of revenues | $ | 75,793 | $ | 56,360 | $ | 146,168 | $ | 109,141 | |||||||||||||||||||
| Stock-based compensation | (8,942 | ) | (6,951 | ) | (16,880 | ) | (13,558 | ) | |||||||||||||||||||
| Amortization of purchased intangibles | (3,696 | ) | (3,106 | ) | (7,268 | ) | (5,874 | ) | |||||||||||||||||||
| Non-GAAP subscription cost of revenues | $ | 63,155 | $ | 46,303 | $ | 122,020 | $ | 89,709 | |||||||||||||||||||
| GAAP professional services and other cost of revenues | $ | 45,892 | $ | 40,289 | $ | 91,964 | $ | 81,768 | |||||||||||||||||||
| Stock-based compensation | (7,617 | ) | (6,136 | ) | (14,566 | ) | (12,895 | ) | |||||||||||||||||||
| Non-GAAP professional services and other cost of revenues | $ | 38,275 | $ | 34,153 | $ | 77,398 | $ | 68,873 | |||||||||||||||||||
| Gross profit: | |||||||||||||||||||||||||||
| GAAP subscription gross profit | $ | 335,214 | $ | 234,319 | $ | 640,974 | $ | 448,960 | |||||||||||||||||||
| Stock-based compensation | 8,942 | 6,951 | 16,880 | 13,558 | |||||||||||||||||||||||
| Amortization of purchased intangibles | 3,696 | 3,106 | 7,268 | 5,874 | |||||||||||||||||||||||
| Non-GAAP subscription gross profit | $ | 347,852 | $ | 244,376 | $ | 665,122 | $ | 468,392 | |||||||||||||||||||
| GAAP professional services and other gross profit | $ | 14,804 | $ | 10,344 | $ | 9,380 | $ | 7,322 | |||||||||||||||||||
| Stock-based compensation | 7,617 | 6,136 | 14,566 | 12,895 | |||||||||||||||||||||||
| Non-GAAP professional services and other gross profit | $ | 22,421 | $ | 16,480 | $ | 23,946 | $ | 20,217 | |||||||||||||||||||
| GAAP gross profit | $ | 350,018 | $ | 244,663 | $ | 650,354 | $ | 456,282 | |||||||||||||||||||
| Stock-based compensation | 16,559 | 13,087 | 31,446 | 26,453 | |||||||||||||||||||||||
| Amortization of purchased intangibles | 3,696 | 3,106 | 7,268 | 5,874 | |||||||||||||||||||||||
| Non-GAAP gross profit | $ | 370,273 |
|
$ | 260,856 |
|
|
$ | 689,068 |
|
$ | 488,609 |
|
|
|||||||||||||
| Gross margin: | |||||||||||||||||||||||||||
| GAAP subscription gross margin | 82 | % | 81 | % | 81 | % | 80 | % | |||||||||||||||||||
| Stock-based compensation as % of subscription revenues | 2 | % | 2 | % | 2 | % | 3 | % | |||||||||||||||||||
| Amortization of purchased intangibles as % of subscription revenues | 1 | % | 1 | % | 1 | % | 1 | % | |||||||||||||||||||
| Non-GAAP subscription gross margin | 85 | % | 84 | % | 84 | % | 84 | % | |||||||||||||||||||
| GAAP professional services and other gross margin | 24 | % | 20 | % | 9 | % | 8 | % | |||||||||||||||||||
| Stock-based compensation as % of professional services and other revenues | 13 | % | 13 | % | 15 | % | 15 | % | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
| Non-GAAP professional services and other gross margin | 37 | % | 33 | % | 24 | % | 23 | % | |||||||||||||||||||
| GAAP gross margin | 74 | % | 71 | % | 73 | % | 70 | % | |||||||||||||||||||
| Stock-based compensation as % of total revenues | 3 | % | 4 | % | 4 | % | 4 | % | |||||||||||||||||||
| Amortization of purchased intangibles as % of total revenues | 1 | % | 1 | % | 1 | % | 1 | % | |||||||||||||||||||
| Non-GAAP gross margin | 78 | % | 76 | % | 78 | % | 75 | % | |||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||||||
| GAAP sales and marketing expenses | $ | 247,224 | $ | 186,506 | $ | 459,310 | $ | 345,116 | |||||||||||||||||||
| Stock-based compensation | (42,287 | ) | (32,861 | ) | (80,688 | ) | (63,859 | ) | |||||||||||||||||||
| Amortization of purchased intangibles | (117 | ) | (56 | ) | (234 | ) | (74 | ) | |||||||||||||||||||
| Non-GAAP sales and marketing expenses | $ | 204,820 | $ | 153,589 | $ | 378,388 | $ | 281,183 | |||||||||||||||||||
| GAAP research and development expenses | $ | 90,005 | $ | 70,364 | $ | 174,494 | $ | 136,288 | |||||||||||||||||||
| Stock-based compensation | (22,731 | ) | (21,047 | ) | (44,532 | ) | (41,580 | ) | |||||||||||||||||||
| Amortization of purchased intangibles | (455 | ) | (303 | ) | (910 | ) | (303 | ) | |||||||||||||||||||
| Non-GAAP research and development expenses | $ | 66,819 | $ | 49,014 | $ | 129,052 | $ | 94,405 | |||||||||||||||||||
| GAAP general and administrative expenses | $ | 51,526 | $ | 36,071 | $ | 97,777 | $ | 77,308 | |||||||||||||||||||
| Stock-based compensation | (16,489 | ) | (11,070 | ) | (31,343 | ) | (21,481 | ) | |||||||||||||||||||
| Amortization of purchased intangibles | (528 | ) | (273 | ) | (1,053 | ) | (374 | ) | |||||||||||||||||||
| Business combination and other related costs | (1,131 | ) | (634 | ) | (1,350 | ) | (945 | ) | |||||||||||||||||||
| Non-GAAP general and administrative expenses | $ | 33,378 | $ | 24,094 | $ | 64,031 | $ | 54,508 | |||||||||||||||||||
| GAAP legal settlements | $ | - | $ | - | $ | - | $ | 270,000 | |||||||||||||||||||
| Legal settlements | - | - | - | (270,000 | ) | ||||||||||||||||||||||
| Non-GAAP legal settlements | $ | - | $ | - | $ | - | $ | - | |||||||||||||||||||
| Income (loss) from operations: | |||||||||||||||||||||||||||
| GAAP loss from operations | $ | (38,737 | ) | $ | (48,278 | ) | $ | (81,227 | ) | $ | (372,430 | ) | |||||||||||||||
| Stock-based compensation | 98,066 | 78,065 | 188,009 | 153,373 | |||||||||||||||||||||||
| Amortization of purchased intangibles | 4,796 | 3,738 | 9,465 | 6,625 | |||||||||||||||||||||||
| Business combination and other related costs | 1,131 | 634 | 1,350 | 945 | |||||||||||||||||||||||
| Legal settlements | - | - | - | 270,000 | |||||||||||||||||||||||
| Non-GAAP income from operations | $ | 65,256 | $ | 34,159 | $ | 117,597 | $ | 58,513 | |||||||||||||||||||
| Operating margin: | |||||||||||||||||||||||||||
| GAAP operating margin | (8 | %) | (14 | %) | (9 | %) | (58 | %) | |||||||||||||||||||
| Stock-based compensation as % of total revenues | 21 | % | 23 | % | 21 | % | 24 | % | |||||||||||||||||||
| Amortization of purchased intangibles as % of total revenues | 1 | % | 1 | % | 1 | % | 1 | % | |||||||||||||||||||
| Business combination and other related costs as % of total revenues | 0 | % | 0 | % | 0 | % | 0 | % | |||||||||||||||||||
| Legal settlements as % of total revenues | 0 | % | 0 | % | 0 | % | 42 | % | |||||||||||||||||||
| Non-GAAP operating margin | 14 | % | 10 | % | 13 | % | 9 | % | |||||||||||||||||||
| Net income (loss): | |||||||||||||||||||||||||||
| GAAP net loss | $ | (56,473 | ) | $ | (49,625 | ) | $ | (97,135 | ) | $ | (382,957 | ) | |||||||||||||||
| Stock-based compensation | 98,066 | 78,065 | 188,009 | 153,373 | |||||||||||||||||||||||
| Amortization of purchased intangibles | 4,796 | 3,738 | 9,465 | 6,625 | |||||||||||||||||||||||
| Business combination and other related costs | 1,131 | 634 | 1,350 | 945 | |||||||||||||||||||||||
| Legal settlements | - | - | - | 270,000 | |||||||||||||||||||||||
| Amortization of debt discount and issuance costs for the convertible senior notes | 11,337 | 8,248 | 20,015 | 16,357 | |||||||||||||||||||||||
| Income tax expense effects related to the above adjustments | (18,986 | ) | (15,482 | ) | (39,964 | ) | (24,285 | ) | |||||||||||||||||||
| Non-GAAP net income | $ | 39,871 | $ | 25,578 | $ | 81,740 | $ | 40,058 | |||||||||||||||||||
| Net income (loss) per share - basic and diluted: | |||||||||||||||||||||||||||
| GAAP net loss per share - basic and diluted | $ | (0.33 | ) | $ | (0.30 | ) | $ | (0.57 | ) | $ | (2.35 | ) | |||||||||||||||
| Non-GAAP net income per share - basic | $ | 0.23 | $ | 0.16 | $ | 0.48 | $ | 0.25 | |||||||||||||||||||
| Non-GAAP net income per share - diluted | $ |
0.22 |
|
$ | 0.15 |
|
$ | 0.46 | $ | 0.23 | |||||||||||||||||
| Weighted-average shares used to compute net income (loss) per share - basic | 170,419,083 | 163,838,755 | 169,585,356 | 162,952,721 | |||||||||||||||||||||||
| GAAP weighted-average shares used to compute net loss per share - diluted | 170,419,083 | 163,838,755 | 169,585,356 | 162,952,721 | |||||||||||||||||||||||
| Effect of dilutive securities (stock options and restricted stock units) | 8,279,274 | 8,772,013 | 8,470,084 | 8,864,056 | |||||||||||||||||||||||
| Non-GAAP weighted-average shares used to compute net income per share - diluted | 178,698,357 | 172,610,768 | 178,055,440 | 171,816,777 | |||||||||||||||||||||||
| Free cash flow: | |||||||||||||||||||||||||||
| GAAP net cash provided by (used in) operating activities | $ | 128,725 | $ | (148,171 | ) | $ | 316,149 | $ | (69,484 | ) | |||||||||||||||||
| Purchases of property and equipment | (35,917 | ) | (23,852 | ) | (69,103 | ) | (52,929 | ) | |||||||||||||||||||
| Cash paid for legal settlements | - | 250,000 | - | 267,500 | |||||||||||||||||||||||
| Non-GAAP free cash flow | $ | 92,808 | $ | 77,977 | $ | 247,046 | $ | 145,087 | |||||||||||||||||||
| Free cash flow margin: | |||||||||||||||||||||||||||
| GAAP net cash provided by operating activities as % of total revenues | 27 | % | (43 | %) | 36 | % | (11 | %) | |||||||||||||||||||
| Purchases of property and equipment as % of total revenues | (7 | %) | (7 | %) | (8 | %) | (8 | %) | |||||||||||||||||||
| Cash paid for legal settlements as % of total revenues | 0 | % | 73 | % | 0 | % | 41 | % | |||||||||||||||||||
| Non-GAAP free cash flow margin | 20 | % | 23 | % | 28 | % | 22 | % | |||||||||||||||||||
| (1) Adjusted revenues and the corresponding growth rates are derived by applying the exchange rates in effect during the comparison period rather than the actual exchange rates in effect during the current period. |
| (2) Adjusted billings and the corresponding growth rates are derived by applying the exchange rates in effect during the comparison period rather than the actual exchange rates in effect during the current period, and by replacing the portion of multi-year billings in excess of twelve months during the current period with the portion of multi-year billings in excess of twelve months during the comparison period. |
| (3) Effects of foreign currency rate fluctuations and fluctuations in billing durations are not applicable for the comparison period. |
| ServiceNow, Inc. | ||||||||||
| Reconciliation of Non-GAAP Financial Guidance | ||||||||||
|
The financial guidance provided below is an estimate based on information available as of June 30, 2017. The company’s future performance and financial results are subject to risks and uncertainties, and actual results could differ materially from the guidance set forth below. Some of the factors that could affect the company’s financial results are stated above in this press release. Further information on these and other factors that could affect our financial results are included in our Form 10-Q for the quarter ended March 31, 2017 and in other filings we make with the Securities and Exchange Commission from time to time, including our Form 10-Q that will be filed for the quarter ended June 30, 2017. The company assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates. |
||||||||||
| Three Months Ended | Three Months Ended | Growth rates | ||||||||
| September 30, 2017 | September, 2016 (3) | |||||||||
| GAAP subscription revenues | $442 - $446 million | $319 million | 39% - 40% | |||||||
| Effects of foreign currency rate fluctuations | (2) million | |||||||||
| Non-GAAP adjusted subscription revenues (1) | $440 - $444 million | 38% - 39% | ||||||||
| GAAP subscription revenues | $442 - $446 million | $319 million | 39% - 40% | |||||||
| Increase in subscription deferred revenue | 49 million | 44 million | ||||||||
| Non-GAAP subscription billings | $491 - $495 million | $363 million | 35% - 36% | |||||||
| Effects of foreign currency rate fluctuations | (2) million | |||||||||
| Effects of fluctuations in billings duration | 6 million | |||||||||
| Non-GAAP adjusted subscription billings (2) | $495 - $499 million | 36% - 38% | ||||||||
| GAAP professional services and other revenues | $46 - $47 million | $39 million | 19% - 21% | |||||||
| Effects of foreign currency rate fluctuations | (1) million | |||||||||
| Non-GAAP adjusted professional services and other revenues (1) | $45 - $46 million | 16% - 19% | ||||||||
| GAAP professional services and other revenues | $46 - $47 million | $39 million | 19% - 21% | |||||||
|
Increase in professional services and other deferred revenue |
3 million | 3 million | ||||||||
| Non-GAAP professional services and other billings | $49 - $50 million | $42 million | 18% - 20% | |||||||
| Effects of foreign currency rate fluctuations | (1) million | |||||||||
| Non-GAAP adjusted professional services and other billings (2) | $48 - $49 million | 16% - 18% | ||||||||
| GAAP total revenues | $488 - $493 million | $358 million | 36% - 38% | |||||||
| Effects of foreign currency rate fluctuations | (3) million | |||||||||
| Non-GAAP adjusted total revenues (1) | $485 - $490 million | 36% - 37% | ||||||||
| GAAP total revenues | $488 - $493 million | $358 million | 36% - 38% | |||||||
| Increase in total deferred revenue from condensed consolidated statements of cash flows | 52 million | 47 million | ||||||||
| Non-GAAP total billings | $540 - $545 million | $404 million | 34% - 35% | |||||||
| Effects of foreign currency rate fluctuations | (3) million | |||||||||
| Effects of fluctuations in billings duration | 6 million | |||||||||
| Non-GAAP adjusted total billings (2) | $543 - $548 million | 34% - 36% | ||||||||
| GAAP operating margin | (4%) | |||||||||
| Stock-based compensation expense as % of total revenues | 20% | |||||||||
| Amortization of purchased intangibles as % of total revenues | 1% | |||||||||
| Non-GAAP operating margin | 17% | |||||||||
| GAAP weighted-average shares used to compute net loss per share - diluted | 172 million | |||||||||
| Effect of dilutive securities (stock options, restricted stock units and warrants) | 9 million | |||||||||
| Non-GAAP weighted-average shares used to compute net income per share - diluted | 181 million | |||||||||
| Twelve Months Ended | Twelve Months Ended | Growth rates | ||||||||
| December 31, 2017 | December 31, 2016 (3) | |||||||||
| GAAP subscription revenues | $1,708 - $1,716 million | $1,222 million | 40% | |||||||
| Effects of foreign currency rate fluctuations | 2 million | |||||||||
| Non-GAAP adjusted subscription revenues (1) | $1,710 - $1,718 million | 40% - 41% | ||||||||
| GAAP subscription revenues | $1,708 - $1,716 million | $1,222 million | 40% | |||||||
| Increase in subscription deferred revenue | 358 million | 289 million | ||||||||
| Non-GAAP subscription billings | $2,066 - $2,074 million | $1,511 million | 37% | |||||||
| Effects of foreign currency rate fluctuations | 3 million | |||||||||
| Effects of fluctuations in billings duration | 5 million | |||||||||
| Non-GAAP adjusted subscription billings (2) | $2,074 - $2,082 million | 37% - 38% | ||||||||
| GAAP professional services and other revenues | $193 - $195 million | $169 million | 14% - 15% | |||||||
| Effects of foreign currency rate fluctuations | 0 million | |||||||||
| Non-GAAP adjusted professional services and other revenues (1) | $193 - $195 million | 14% - 15% | ||||||||
| GAAP professional services and other revenues | $193 - $195 million | $169 million | 14% - 15% | |||||||
| Increase in professional services and other deferred revenue | 12 million | 11 million | ||||||||
| Non-GAAP professional services and other billings | $205 - $207 million | $180 million | 14% - 15% | |||||||
| Effects of foreign currency rate fluctuations | 0 million | |||||||||
| Non-GAAP adjusted professional services and other billings (2) | $205 - $207 million | 14% - 15% | ||||||||
| GAAP total revenues | $1,901 - $1,911 million | $1,391 million | 37% | |||||||
| Effects of foreign currency rate fluctuations | 2 million | |||||||||
| Non-GAAP adjusted total revenues (1) | $1,903 - $1,913 million | 37% - 38% | ||||||||
| GAAP total revenues | $1,901 - $1,911 million | $1,391 million | 37% | |||||||
| Increase in total deferred revenue from condensed consolidated statements of cash flows | 370 million | 300 million | ||||||||
| Non-GAAP total billings | $2,271 - $2,281 million | $1,691 million | 34% - 35% | |||||||
| Effects of foreign currency rate fluctuations | 3 million | |||||||||
| Effects of fluctuations in billings duration | 5 million | |||||||||
| Non-GAAP adjusted total billings (2) | $2,279 - $2,289 million | 35% | ||||||||
| GAAP subscription gross margin | 81% | |||||||||
| Stock-based compensation expense as % of subscription revenues | 2% | |||||||||
| Amortization of purchased intangibles as % of subscription revenues | 1% | |||||||||
| Non-GAAP subscription gross margin | 84% | |||||||||
| GAAP professional services and other gross margin | 0% | |||||||||
| Stock-based compensation expense as % of professional services and other revenues | 15% | |||||||||
| Non-GAAP professional services and other gross margin | 15% | |||||||||
| GAAP total gross margin | 73% | |||||||||
| Stock-based compensation expense as % of total revenues | 3% | |||||||||
| Amortization of purchased intangibles as % of total revenues | 1% | |||||||||
| Non-GAAP total gross margin | 77% | |||||||||
| GAAP operating margin | (5%) | |||||||||
| Stock-based compensation expense as % of total revenues | 20% | |||||||||
| Amortization of purchased intangibles as % of total revenues | 1% | |||||||||
| Non-GAAP operating margin | 16% | |||||||||
| GAAP net cash provided by operating activities as % of total revenues | 32% | |||||||||
| Purchases of property and equipment as % of total revenues | (7%) | |||||||||
| Non-GAAP free cash flow margin | 25% | |||||||||
| GAAP weighted-average shares used to compute net loss per share - diluted | 171 million | |||||||||
| Effect of dilutive securities (stock options, restricted stock units and warrants) | 8 million | |||||||||
| Non-GAAP weighted-average shares used to compute net income per share - diluted | 179 million | |||||||||
| (1) | Adjusted revenues and the corresponding growth rates are derived by applying the exchange rates in effect during the comparison period rather than the forecasted exchange rates for the guidance period. | |
| (2) | Adjusted billings and the corresponding growth rates are derived by applying the exchange rates in effect during the comparison period rather than the forecasted exchange rates for the guidance period, and by replacing the forecasted portion of multi-year billings in excess of twelve months for the guidance period with the actual portion of multi-year billings in excess of twelve months during the comparison period. | |
| (3) | Effects of foreign currency rate fluctuations and fluctuations in billing durations are not applicable for the comparison period. | |
