ServiceNow Reports Third Quarter 2020 Financial Results

  • Subscription revenues of $1,091 million in Q3 2020, representing 31% year-over-year growth, 29% adjusted for constant currency
  • 41 transactions over $1 million in net new annual contract value in Q3 2020
  • 1,012 total customers with over $1 million in annual contract value
  • Company raises full-year guidance

SANTA CLARA, Calif.--()--ServiceNow (NYSE: NOW), the leading digital workflow company making work, work better for people, today announced financial results for its third quarter ended September 30, 2020, with subscription revenues of $1,091 million in Q3 2020, representing 31% year-over-year growth, 29% adjusted for constant currency.

During the quarter, ServiceNow closed 41 transactions with more than $1 million in net new annual contract value (ACV). The company now has 1,012 total customers with more than $1 million in ACV, representing 25% year-over-year growth in customers.

“Our outstanding Q3 performance beat expectations across the board and we are raising our full-year guidance,” said ServiceNow CEO Bill McDermott. “COVID is redefining the future of work, accelerating digital transformation and amplifying the need to unify systems, silos, and processes into holistic enterprise workflows. ServiceNow is the platform for digital business. Customers are leveraging the Now Platform to create the workflows that deliver great experiences for heroic veterans, students, knowledge workers, consumers, and so many others worldwide. We are hungry, humble, and passionately committed to making the world of work, work better for people. We have never been more confident.”

ServiceNow CFO Gina Mastantuono said, “In a challenging pandemic environment, Q3 was a fantastic quarter for ServiceNow. We exceeded the high end of our subscription revenues and subscription billings guidance, underscoring the power of our product portfolio and our ability to meet the evolving needs of our customers. Overall, we see strong momentum heading into the last quarter of the year and our robust pipeline gives me confidence in our ability to continue executing well into 2021. I’m very excited about the traction we are seeing in our journey towards becoming a $10 billion revenue company and the defining enterprise software company of the 21st century.”

During the quarter, ServiceNow delivered new workflows that enable speed, agility, resilience, and great experiences. Platform and product innovation included the release of the Now Platform Paris release, designed to help enterprises accelerate digital transformation by connecting teams, systems, and work. The company also introduced a number of new products, such as new Safe Workplace apps, Hardware Asset Management, Financial Services Operations, Telecom Service Management, Network Performance Management, Legal Service Delivery, Workplace Service Delivery, and Connected Operations. From a vertical perspective, the third quarter represented ServiceNow’s largest quarter ever in its federal business, including the company’s largest deal ever. ServiceNow also recently announced new and expanded partnerships with Accenture, Cisco, Deloitte, IBM, Microsoft Teams, Uber for Business, and Zoom, demonstrating the value of the Now Platform – the platform of platforms – to set a new standard for enterprise transformation.

Third Quarter 2020 GAAP and Non-GAAP Results:

The following table summarizes our financial results for the third quarter 2020:

 

Third Quarter 2020
GAAP Results

Third Quarter 2020 Non-GAAP Results(1)

 

Amount
($ millions)

 

Year/Year
Growth (%)

 

Amount
($ millions)

 

Year/Year
Growth (%)

 

Adjusted
Amount
($ millions)(2)

 

Adjusted
Year/Year
Growth (%)

Subscription revenues

$1,091

31%

 

 

$1,077

29%

Professional services and other revenues

$61

19%

 

 

$60

17%

Total revenues

$1,152

30%

 

 

$1,137

28%

 

 

 

 

 

 

 

Subscription billings

 

 

$1,081

25%

$1,069

24%

Professional services and other billings

 

 

$58

13%

$57

12%

Total billings

 

 

$1,139

25%

$1,126

23%

 

 

 

 

 

 

 

 

Amount
($ millions)

Margin (%)

Amount
($ millions)

Margin (%)

 

 

Subscription gross profit

$902

83%

$937

86%

 

 

Professional services and other gross profit (loss)

($2)

(3%)

$11

19%

 

 

Total gross profit

$900

78%

$948

82%

 

 

Income from operations

$69

6%

$299

26%

 

 

Net cash provided by operating activities

$241

21%

 

 

 

 

Free cash flow

 

 

$216

19%

 

 

 

 

 

 

 

 

 

 

Amount
($ millions)

Earnings per
Basic/Diluted
Share ($)

Amount
($ millions)

Earnings per
Basic/Diluted
Share ($)

 

 

Net income

$13

$0.07 / $0.06

$241

$1.24/ $1.21

 

 

(1)

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. See the section entitled “Statement Regarding Use of Non-GAAP Financial Measures” for an explanation of non-GAAP measures, and the table entitled “GAAP to Non-GAAP Reconciliation” for a reconciliation of GAAP to non-GAAP measures.

(2)

Non-GAAP adjusted subscription revenues, professional services and other revenues, total revenues and professional services and other billings are adjusted for constant currency. Non-GAAP adjusted subscription billings and total billings are adjusted for constant currency and constant billings duration. See the section entitled “Statement Regarding Use of Non-GAAP Financial Measures” for an explanation of non-GAAP measures, and the table entitled “GAAP to Non-GAAP Reconciliation” for a reconciliation of GAAP to non-GAAP measures.

 

Note: Numbers rounded for presentation purposes.

Financial Outlook

Our guidance includes GAAP and non-GAAP financial measures.

The following table summarizes our guidance for the fourth quarter 2020:

 

Fourth Quarter 2020
GAAP Guidance

 

Fourth Quarter 2020 Non-GAAP Guidance(1)

 

Amount
($ millions)(2)

 

Year/Year
Growth (%)

 

Amount
($ millions)(2)

 

Year/Year
Growth (%)

 

Adjusted
Amount
($ millions)(3)

 

Adjusted
Year/ Year
Growth (%)

Subscription revenues

$1,155 - $1,160

28% - 29%

 

 

 

$1,141 - $1,146

27%

Subscription billings

 

 

 

$1,625 - $1,645

25% - 27%

$1,612 - $1,632

24% - 26%

 

 

 

 

 

 

 

 

 

 

 

 

 

Margin (%)

 

 

Income from operations

 

 

 

 

21%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amount
(millions)

 

 

 

Weighted-average shares used to compute diluted net income per share

 

 

 

201

 

 

 

(1)

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. See the section entitled “Statement Regarding Use of Non-GAAP Financial Measures” for an explanation of non-GAAP measures, and the table entitled “Reconciliation of Non-GAAP Financial Guidance” for a reconciliation of GAAP to non-GAAP measures.

(2)

Guidance for GAAP subscription revenues and non-GAAP subscription billings is based on foreign exchange rates as of September 30, 2020 for entities reporting in currencies other than U.S. Dollars.

(3)

Non-GAAP adjusted subscription revenues are adjusted for constant currency. Non-GAAP adjusted subscription billings are adjusted for constant currency and constant billings duration. See the section entitled “Statement Regarding Use of Non-GAAP Financial Measures” for an explanation of non-GAAP measures, and the table entitled “Reconciliation of Non-GAAP Financial Guidance” for a reconciliation of GAAP to non-GAAP measures.

The following table summarizes our guidance for full-year 2020:

 

Full-Year 2020
GAAP Guidance

 

Full-Year 2020 Non-GAAP Guidance(1)

 

Amount
($ millions)(2)

 

Year/Year
Growth (%)

 

Amount
($ millions)(2)

 

Year/Year
Growth (%)

 

Adjusted
Amount
($ millions)(3)

 

Adjusted
Year/ Year
Growth (%)

Subscription revenues

$4,257 - $4,262

31%

 

 

 

$4,251 - $4,256

31%

Subscription billings

 

 

 

$4,780 - $4,800

26% - 27%

$4,779 - $4,799

26% - 27%

 

 

 

 

 

 

 

 

 

 

 

 

 

Margin (%)

 

 

Subscription gross profit

 

 

 

 

86%

 

 

Income from operations

 

 

 

 

24.5%

 

 

Free cash flow

 

 

 

 

31.5%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amount
(millions)

 

 

 

Weighted-average shares used to compute diluted net income per share

 

 

 

199

 

 

 

(1)

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. See the section entitled “Statement Regarding Use of Non-GAAP Financial Measures” for an explanation of non-GAAP measures, and the table entitled “Reconciliation of Non-GAAP Financial Guidance” for a reconciliation of GAAP to non-GAAP measures.

(2)

GAAP subscription revenues and non-GAAP subscription billings for the future quarters included in our full-year 2020 guidance are based on foreign exchange rates as of September 30, 2020 for entities reporting in currencies other than U.S. Dollars.

(3)

Non-GAAP adjusted subscription revenues are adjusted for constant currency. Non-GAAP adjusted subscription billings are adjusted for constant currency and constant billings duration. See the section entitled “Statement Regarding Use of Non-GAAP Financial Measures” for an explanation of non-GAAP measures, and the table entitled “Reconciliation of Non-GAAP Financial Guidance” for a reconciliation of GAAP to non-GAAP measures.

As with our previously issued full-year 2020 guidance dated July 29, 2020, our guidance factors in assumptions that are based on information available to us today regarding the expected impacts of COVID-19, and persistence of such impacts, on our business.

The following table compares our updated full-year 2020 guidance against our previously issued full-year 2020 guidance dated July 29, 2020:

 

Comparison of Updated Full-Year 2020 Guidance to Previously Issued Guidance(1)

($ millions)

 

Previous Guidance
Midpoint(2)

 

Currency Impact(3)

 

Duration Impact(4)

 

Guidance Change

 

Current Guidance
Midpoint(5)

GAAP subscription revenues

$4,193

$31

$0

$36

$4,260

 

 

 

 

 

 

Non-GAAP subscription billings(6)

$4,680

$35

$9

$66

$4,790

 

 

 

 

 

 

(1)

Numbers rounded for presentation purposes.

(2)

Refers to previously issued full-year 2020 guidance dated July 29, 2020.

(3)

GAAP subscription revenues and non-GAAP subscription billings for the future quarters included in our full-year 2020 guidance are based on foreign exchange rates in effect at the end of the current quarter for entities reporting in currencies other than U.S. Dollars. Currency impact represents the sum of (i) the impact of the difference between the actual average rates in the period used to calculate our Q3 2020 actual results and the rates as of June 30, 2020 assumed in our previously issued guidance dated July 29, 2020 plus (ii) the impact of the difference between the exchange rates in effect as of September 30, 2020 assumed in our updated full-year 2020 guidance, and the rates as of June 30, 2020 assumed in our previously issued guidance dated July 29, 2020.

(4)

Represents the impact of billings greater than 12 months in excess of guidance assumptions.

(5)

Represents the updated full-year 2020 guidance presented in the table above.

(6)

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. See the section entitled “Statement Regarding Use of Non-GAAP Financial Measures” for an explanation of non-GAAP measures, and the table entitled “Reconciliation of Non-GAAP Financial Guidance” for a reconciliation of GAAP to non-GAAP measures.

Conference Call Details

The conference call will begin at 2 p.m. Pacific Time (22:00 BST) on October 28, 2020. Interested parties may listen to the call by dialing (833) 513‑0567 (Passcode: 1688527), or if outside North America, by dialing (236) 714‑2186 (Passcode: 1688527). Individuals may access the live teleconference from this webcast link:

https://event.on24.com/wcc/r/2625181/2EDD61CDBF24CB6EFA12EEA3458C583D

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 (800) 585‑8367 (Passcode: 1688527), or if outside North America, by dialing (416) 621‑4642 (Passcode: 1688527).

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 the following non-GAAP financial measures in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP.

  • Adjusted revenues. We present revenues adjusted for constant currency 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 (USD) are converted into USD at the average exchange rates in effect during the comparison period (for Q3 2019, the average exchange rates in effect for our major currencies were 1 USD to 0.90 Euros and 1 USD to 0.812 British Pound Sterling (GBP)), rather than the actual average exchange rates in effect during the current period (for Q3 2020, the average exchange rates in effect for our major currencies were 1 USD to 0.856 Euros and 1 USD to 0.775 GBP). Similarly, in our guidance, we apply the average exchange rates in effect during the comparison period rather than the exchange rates for the guidance period. We believe the presentation of revenues adjusted for constant currency facilitates the comparison of revenues year-over-year.
  • Billings and Adjusted billings. We believe billings is a useful leading indicator regarding the performance of our business. We define subscription billings, professional services and other billings, and total billings as the applicable revenue plus the applicable change in deferred revenue, unbilled receivables and customer deposits as presented or derived from the statement of cash flows. We adjust billings for constant currency, as described above, and for constant duration by replacing the portion of multi-year billings in excess of twelve months during the current or guidance period with the portion of multi-year billings in excess of twelve months during the comparison period. We believe these adjustments facilitate greater comparability in our billings information year-over-year.
  • Gross profit, Income from operations, Net income and Net income per share - diluted. Our non-GAAP presentation of gross profit, income from operations, and net income measures exclude certain non-cash or non-recurring items, including stock-based compensation expense, amortization of debt discount and issuance costs related to our convertible senior notes, loss on early note conversions, amortization of purchased intangibles, legal settlements, business combination and other related costs, and the related income tax effect of these adjustments. The non-GAAP weighted-average shares used to compute our non-GAAP net income per share - diluted excludes the dilutive effect of the in-the-money portion of convertible senior notes as they are covered by our note hedges, and includes the dilutive effect of time-based stock awards, the dilutive effect of warrants and the potentially dilutive effect of our stock awards with performance conditions not yet satisfied at forecasted attainment levels to the extent we believe it is probable that the performance condition will be met. We believe these adjustments provide useful supplemental information to investors and facilitates the analysis of our operating results and comparison of operating results across reporting periods.
  • Free cash flow. Free cash flow is defined as net cash provided by (used in) operating activities plus cash paid for legal settlements and repayments of convertible senior notes attributable to debt discount, 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.

Our presentation of non-GAAP financial measures may not be comparable to similar measures used by other companies. We encourage investors to carefully consider our results under GAAP, as well as our supplemental non-GAAP information and the reconciliation between these presentations, to more fully understand our business. Please see the tables included at the end of this release for the reconciliation of GAAP and non-GAAP results and guidance.

Use of Forward-Looking Statements

This release contains “forward-looking statements” regarding our performance, including but not limited to statements in 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.

Factors that may cause actual results to differ materially from those in any forward-looking statements include: (i) the impact and duration of the health impact of COVID-19 and the economic impact of safety measures to mitigate its impact, including the effectiveness, extent and duration of efforts to limit the spread and impact of the disease, such as “shelter in place” and similar government directives; (ii) our ability to compete successfully against existing and new competitors, (iii) our ability to comply with evolving privacy laws, data transfer restrictions, and other foreign and domestic standards related to data and the Internet, (iv) our ability to predict, prepare for and respond promptly to rapidly evolving technological, market and customer developments, (v) errors, interruptions, delays, or security breaches in or of our service or data centers, (vi) our ability to grow our business, including converting remaining performance obligations into revenue, adding and retaining customers, selling additional subscriptions to existing customers, selling to larger enterprises, government and regulated organizations with complex sales cycles and certification processes, and entering new geographies and markets, (vii) our ability to develop and gain customer acceptance of new and improved products and services, including those acquired through strategic transactions, and (viii) material changes in the value of foreign currencies relative to the U.S. Dollar. Additionally, these forward-looking statements, particularly our guidance, involve risk, uncertainties and assumptions, including those related to the continued impacts of COVID-19 on our business and global economic conditions. Many of these assumptions relate to matters that are beyond our control and changing rapidly, including, but not limited to, the timeframes for and severity of social distancing and other mitigation requirements, the timing of headwinds from COVID-19, the continued impact of COVID-19 on new or existing customers’ purchasing decisions and the length of our sales cycles, renewal timing or billings terms, particularly for customers in certain industries highly affected by COVID-19. Significant variation from the assumptions underlying our forward-looking statements could cause our actual results to vary, and the impact could be significant.

Further information on these and other factors that could affect our financial results are included in our Form 10-Q that will be filed for the quarter ended September 30, 2020 and in other filings we make with the Securities and Exchange Commission from time to time, including our Form 10-K filed for the year ended December 31, 2019.

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

ServiceNow (NYSE: NOW) is making the world of work, work better for people. Our cloud-based platform and solutions deliver digital workflows that create great experiences and unlock productivity for employees and the enterprise. For more information, visit: www.servicenow.com.

© 2020 ServiceNow, Inc. All rights reserved. ServiceNow, the ServiceNow logo, Now, and other ServiceNow marks are trademarks and/or registered trademarks of ServiceNow, Inc. in the United States and/or other countries. Other company names, product names, and logos may be trademarks of the respective companies with which they are associated.

ServiceNow, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

(unaudited)

 

 

Three Months Ended

 

Nine Months Ended

 

September 30,
2020

 

September 30,
2019

 

September 30,
2020

 

September 30,
2019

Revenues:

 

 

 

 

 

 

 

Subscription

$

1,091,386

 

 

$

834,910

 

 

$

3,101,616

 

 

$

2,355,885

 

Professional services and other

60,586

 

 

50,923

 

 

167,538

 

 

152,778

 

Total revenues

1,151,972

 

 

885,833

 

 

3,269,154

 

 

2,508,663

 

Cost of revenues (1):

 

 

 

 

 

 

 

Subscription

189,280

 

 

139,330

 

 

520,935

 

 

401,398

 

Professional services and other

62,424

 

 

61,463

 

 

187,074

 

 

183,794

 

Total cost of revenues

251,704

 

 

200,793

 

 

708,009

 

 

585,192

 

Gross profit

900,268

 

 

685,040

 

 

2,561,145

 

 

1,923,471

 

Operating expenses (1):

 

 

 

 

 

 

 

Sales and marketing

453,410

 

 

362,975

 

 

1,321,163

 

 

1,118,279

 

Research and development

268,292

 

 

190,099

 

 

740,030

 

 

546,041

 

General and administrative

109,234

 

 

75,642

 

 

319,019

 

 

245,540

 

Total operating expenses

830,936

 

 

628,716

 

 

2,380,212

 

 

1,909,860

 

Income from operations

69,332

 

 

56,324

 

 

180,933

 

 

13,611

 

Interest expense

(7,980

)

 

(8,371

)

 

(25,038

)

 

(24,808

)

Interest income and other income (expense), net

(35,919

)

 

12,817

 

 

(20,070

)

 

44,196

 

Income before income taxes

25,433

 

 

60,770

 

 

135,825

 

 

32,999

 

Provision for income taxes

12,575

 

 

20,172

 

 

33,970

 

 

5,025

 

Net income

$

12,858

 

 

$

40,598

 

 

$

101,855

 

 

$

27,974

 

Net income per share - basic

$

0.07

 

 

$

0.22

 

 

$

0.53

 

 

$

0.15

 

Net income per share - diluted

$

0.06

 

 

$

0.21

 

 

$

0.50

 

 

$

0.14

 

Weighted-average shares used to compute net income per share - basic

193,237

 

 

188,074

 

 

193,203

 

 

185,676

 

Weighted-average shares used to compute net income per share - diluted

201,861

 

 

197,878

 

 

202,837

 

 

196,739

 

 

(1) Includes stock-based compensation as follows:

 

 

Three Months Ended

 

Nine Months Ended

 

September 30,
2020

 

September 30,
2019

 

September 30,
2020

 

September 30,
2019

Cost of revenues:

 

 

 

 

 

 

 

Subscription

$

25,602

 

 

$

18,880

 

 

$

72,086

 

 

$

54,019

 

Professional services and other

13,054

 

 

10,867

 

 

37,857

 

 

31,749

 

Operating expenses:

 

 

 

 

 

 

 

Sales and marketing

78,871

 

 

68,712

 

 

227,998

 

 

200,071

 

Research and development

74,213

 

 

50,636

 

 

203,279

 

 

144,259

 

General and administrative

28,189

 

 

13,839

 

 

83,834

 

 

62,046

 

ServiceNow, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

 

 

September 30, 2020

 

December 31, 2019

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

1,348,294

 

 

$

775,778

 

Short-term investments

1,603,317

 

 

915,317

 

Accounts receivable, net

631,055

 

 

835,279

 

Current portion of deferred commissions

202,741

 

 

175,039

 

Prepaid expenses and other current assets

181,474

 

 

125,488

 

Total current assets

3,966,881

 

 

2,826,901

 

Deferred commissions, less current portion

374,438

 

 

333,448

 

Long-term investments

1,259,951

 

 

1,013,332

 

Property and equipment, net

564,007

 

 

468,085

 

Operating lease right-of-use assets

457,726

 

 

402,428

 

Intangible assets, net

155,826

 

 

143,850

 

Goodwill

231,949

 

 

156,756

 

Deferred tax assets

620,890

 

 

599,633

 

Other assets

73,791

 

 

77,997

 

Total assets

$

7,705,459

 

 

$

6,022,430

 

Liabilities and Stockholders’ Equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

51,456

 

 

$

52,960

 

Accrued expenses and other current liabilities

442,288

 

 

461,403

 

Current portion of deferred revenue

2,274,269

 

 

2,185,754

 

Current portion of operating lease liabilities

67,934

 

 

52,668

 

Total current liabilities

2,835,947

 

 

2,752,785

 

Deferred revenue, less current portion

37,749

 

 

40,038

 

Operating lease liabilities, less current portion

429,661

 

 

383,221

 

Long-term debt

1,705,533

 

 

694,981

 

Other long-term liabilities

22,853

 

 

23,464

 

Stockholders’ equity

2,673,716

 

 

2,127,941

 

Total liabilities and stockholders’ equity

$

7,705,459

 

 

$

6,022,430

 

ServiceNow, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

 

Three Months Ended

 

Nine Months Ended

 

September 30,
2020

 

September 30,
2019

 

September 30,
2020

 

September 30,
2019

Cash flows from operating activities:

 

 

 

 

 

 

 

Net income

$

12,858

 

 

$

40,598

 

 

$

101,855

 

 

$

27,974

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

84,720

 

 

64,006

 

 

243,348

 

 

179,783

 

Amortization of deferred commissions

55,976

 

 

42,695

 

 

157,191

 

 

122,226

 

Amortization of debt discount and issuance costs

4,928

 

 

8,371

 

 

21,986

 

 

24,808

 

Stock-based compensation

219,929

 

 

162,934

 

 

625,054

 

 

492,144

 

Deferred income taxes

(3,263

)

 

231

 

 

(6,440

)

 

(2,842

)

Repayments of convertible senior notes attributable to debt discount

(66,534

)

 

 

 

(68,509

)

 

 

Loss on extinguishment of 2022 Notes

40,750

 

 

 

 

41,657

 

 

 

Other

2,190

 

 

(1,298

)

 

641

 

 

(4,621

)

Changes in operating assets and liabilities, net of effect of business combinations:

 

 

 

 

 

 

 

Accounts receivable

10,260

 

 

(43,023

)

 

210,275

 

 

28,331

 

Deferred commissions

(77,420

)

 

(61,115

)

 

(221,401

)

 

(158,309

)

Prepaid expenses and other assets

(9,267

)

 

2,914

 

 

(41,696

)

 

(25,569

)

Accounts payable

(35,532

)

 

4,995

 

 

1,792

 

 

30,088

 

Deferred revenue

(2,703

)

 

35,265

 

 

66,545

 

 

135,455

 

Accrued expenses and other liabilities

4,560

 

 

(46,395

)

 

(31,224

)

 

(34,707

)

Net cash provided by operating activities

241,452

 

 

210,178

 

 

1,101,074

 

 

814,761

 

Cash flows from investing activities:

 

 

 

 

 

 

 

Purchases of property and equipment

(91,656

)

 

(88,869

)

 

(285,327

)

 

(185,889

)

Business combinations, net of cash acquired

(24,699

)

 

 

 

(107,647

)

 

 

Purchases of intangibles

 

 

(1,200

)

 

(6,500

)

 

(37,360

)

Purchases of investments

(1,121,347

)

 

(455,050

)

 

(2,229,085

)

 

(1,255,691

)

Sales and maturities of investments

533,585

 

 

423,135

 

 

1,298,969

 

 

931,453

 

Realized gains (losses) on derivatives not designated as hedging instruments, net

1,873

 

 

(371

)

 

(763

)

 

21,742

 

Net cash used in investing activities

(702,244

)

 

(122,355

)

 

(1,330,353

)

 

(525,745

)

Cash flows from financing activities:

 

 

 

 

 

 

 

Net proceeds from borrowings on 2030 Notes

1,481,633

 

 

 

 

1,481,633

 

 

 

Repayments of convertible senior notes attributable to principal

(1,553,128

)

 

 

 

(1,568,866

)

 

 

Net proceeds from unwind of 2022 Note Hedge

1,105,542

 

 

 

 

1,105,542

 

 

 

Proceeds from employee stock plans

51,444

 

 

41,927

 

 

142,500

 

 

105,227

 

Taxes paid related to net share settlement of equity awards

(122,113

)

 

(83,183

)

 

(360,670

)

 

(330,802

)

Net cash provided by (used in) financing activities

963,378

 

 

(41,256

)

 

800,139

 

 

(225,575

)

Foreign currency effect on cash, cash equivalents and restricted cash

7,821

 

 

(7,725

)

 

2,959

 

 

(6,439

)

Net increase in cash, cash equivalents and restricted cash

510,407

 

 

38,842

 

 

573,819

 

 

57,002

 

Cash, cash equivalents and restricted cash at beginning of period

841,403

 

 

586,698

 

 

777,991

 

 

568,538

 

Cash, cash equivalents and restricted cash at end of period

$

1,351,810

 

 

$

625,540

 

 

$

1,351,810

 

 

$

625,540

 

ServiceNow, Inc.

GAAP to Non-GAAP Reconciliation

(in thousands, except per share data)

(unaudited)

 

 

Three Months Ended

 

 

 

Nine Months Ended

 

 

 

September 30,
2020

 

September 30,
2019

 

Growth
Rates

 

September 30,
2020

 

September 30,
2019

 

Growth
Rates

Subscription revenues:

 

 

 

 

 

 

 

 

 

 

 

GAAP subscription revenues

$

1,091,386

 

 

$

834,910

 

 

31%

 

$

3,101,616

 

 

$

2,355,885

 

 

32%

Effects of foreign currency rate fluctuations

(14,014

)

 

 

 

 

 

9,092

 

 

 

 

 

Non-GAAP adjusted subscription revenues(1)

$

1,077,372

 

 

 

 

29%

 

$

3,110,708

 

 

 

 

32%

 

 

 

 

 

 

 

 

 

 

 

 

Subscription billings:

 

 

 

 

 

 

 

 

 

 

 

GAAP subscription revenues

$

1,091,386

 

 

$

834,910

 

 

31%

 

$

3,101,616

 

 

$

2,355,885

 

 

32%

Change in subscription deferred revenue, unbilled receivables and customer deposits

(9,968

)

 

29,137

 

 

 

 

53,093

 

 

134,663

 

 

 

Non-GAAP subscription billings

1,081,418

 

 

864,047

 

 

25%

 

3,154,709

 

 

2,490,548

 

 

27%

Effects of foreign currency rate fluctuations

(12,430

)

 

 

 

 

 

11,474

 

 

 

 

 

Effects of fluctuations in billings duration

(362

)

 

 

 

 

 

537

 

 

 

 

 

Non-GAAP adjusted subscription billings(2)

$

1,068,626

 

 

 

 

24%

 

$

3,166,720

 

 

 

 

27%

 

 

 

 

 

 

 

 

 

 

 

 

Professional services and other revenues:

 

 

 

 

 

 

 

 

 

 

 

GAAP professional services and other revenues

$

60,586

 

 

$

50,923

 

 

19%

 

$

167,538

 

 

$

152,778

 

 

10%

Effects of foreign currency rate fluctuations

(808

)

 

 

 

 

 

831

 

 

 

 

 

Non-GAAP adjusted professional service and other revenues(1)

$

59,778

 

 

 

 

17%

 

$

168,369

 

 

 

 

10%

 

 

 

 

 

 

 

 

 

 

 

 

Professional services and other billings:

 

 

 

 

 

 

 

 

 

 

 

GAAP professional services and other revenues

$

60,586

 

 

$

50,923

 

 

19%

 

$

167,538

 

 

$

152,778

 

 

10%

Change in professional services and other deferred revenue

(2,512

)

 

245

 

 

 

 

(349

)

 

435

 

 

 

Non-GAAP professional services and other billings

58,074

 

 

51,168

 

 

13%

 

167,189

 

 

153,213

 

 

9%

Effects of foreign currency rate fluctuations

(808

)

 

 

 

 

 

831

 

 

 

 

 

Non-GAAP adjusted professional services and other billings(2)

$

57,266

 

 

 

 

12%

 

$

168,020

 

 

 

 

10%

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues:

 

 

 

 

 

 

 

 

 

 

 

GAAP total revenues

$

1,151,972

 

 

$

885,833

 

 

30%

 

$

3,269,154

 

 

$

2,508,663

 

 

30%

Effects of foreign currency rate fluctuations

(14,822

)

 

 

 

 

 

9,923

 

 

 

 

 

Non-GAAP adjusted total revenues(1)

$

1,137,150

 

 

 

 

28%

 

$

3,279,077

 

 

 

 

31%

 

 

 

 

 

 

 

 

 

 

 

 

Total billings:

 

 

 

 

 

 

 

 

 

 

 

GAAP total revenues

$

1,151,972

 

 

$

885,833

 

 

30%

 

$

3,269,154

 

 

$

2,508,663

 

 

30%

Change in total deferred revenue, unbilled receivables and customer deposits

(12,480

)

 

29,382

 

 

 

 

52,744

 

 

135,098

 

 

 

Non-GAAP total billings

1,139,492

 

 

915,215

 

 

25%

 

3,321,898

 

 

2,643,761

 

 

26%

Effects of foreign currency rate fluctuations

(13,238

)

 

 

 

 

 

12,305

 

 

 

 

 

Effects of fluctuations in billings duration

(362

)

 

 

 

 

 

537

 

 

 

 

 

Non-GAAP adjusted total billings(2)

$

1,125,892

 

 

 

 

23%

 

$

3,334,740

 

 

 

 

26%

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenues:

 

 

 

 

 

 

 

 

 

 

 

GAAP subscription cost of revenues

$

189,280

 

 

$

139,330

 

 

 

 

$

520,935

 

 

$

401,398

 

 

 

Stock-based compensation

(25,602

)

 

(18,880

)

 

 

 

(72,086

)

 

(54,019

)

 

 

Amortization of purchased intangibles

(8,827

)

 

(6,281

)

 

 

 

(27,681

)

 

(16,595

)

 

 

Non-GAAP subscription cost of revenues

$

154,851

 

 

$

114,169

 

 

 

 

$

421,168

 

 

$

330,784

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP professional services and other cost of revenues

$

62,424

 

 

$

61,463

 

 

 

 

$

187,074

 

 

$

183,794

 

 

 

Stock-based compensation

(13,054

)

 

(10,867

)

 

 

 

(37,857

)

 

(31,749

)

 

 

Non-GAAP professional services and other cost of revenues

$

49,370

 

 

$

50,596

 

 

 

 

$

149,217

 

 

$

152,045

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit:

 

 

 

 

 

 

 

 

 

 

 

GAAP subscription gross profit

$

902,106

 

 

$

695,580

 

 

 

 

$

2,580,681

 

 

$

1,954,487

 

 

 

Stock-based compensation

25,602

 

 

18,880

 

 

 

 

72,086

 

 

54,019

 

 

 

Amortization of purchased intangibles

8,827

 

 

6,281

 

 

 

 

27,681

 

 

16,595

 

 

 

Non-GAAP subscription gross profit

$

936,535

 

 

$

720,741

 

 

 

 

$

2,680,448

 

 

$

2,025,101

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP professional services and other gross loss

$

(1,838

)

 

$

(10,540

)

 

 

 

$

(19,536

)

 

$

(31,016

)

 

 

Stock-based compensation

13,054

 

 

10,867

 

 

 

 

37,857

 

 

31,749

 

 

 

Non-GAAP professional services and other gross profit

$

11,216

 

 

$

327

 

 

 

 

$

18,321

 

 

$

733

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP gross profit

$

900,268

 

 

$

685,040

 

 

 

 

$

2,561,145

 

 

$

1,923,471

 

 

 

Stock-based compensation

38,656

 

 

29,747

 

 

 

 

109,943

 

 

85,768

 

 

 

Amortization of purchased intangibles

8,827

 

 

6,281

 

 

 

 

27,681

 

 

16,595

 

 

 

Non-GAAP gross profit

$

947,751

 

 

$

721,068

 

 

 

 

$

2,698,769

 

 

$

2,025,834

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross margin:

 

 

 

 

 

 

 

 

 

 

 

GAAP subscription gross margin

83

%

 

83

%

 

 

 

83

%

 

83

%

 

 

Stock-based compensation as % of subscription revenues

2

%

 

2

%

 

 

 

2

%

 

2

%

 

 

Amortization of purchased intangibles as % of subscription revenues

1

%

 

1

%

 

 

 

1

%

 

1

%

 

 

Non-GAAP subscription gross margin

86

%

 

86

%

 

 

 

86

%

 

86

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP professional services and other gross margin

(3

%)

 

(21

%)

 

 

 

(12

%)

 

(20

%)

 

 

Stock-based compensation as % of professional services and other revenues

22

%

 

22

%

 

 

 

23

%

 

20

%

 

 

Non-GAAP professional services and other gross margin

19

%

 

1

%

 

 

 

11

%

 

0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP gross margin

78

%

 

77

%

 

 

 

78

%

 

77

%

 

 

Stock-based compensation as % of total revenues

3

%

 

3

%

 

 

 

3

%

 

3

%

 

 

Amortization of purchased intangibles as % of total revenues

1

%

 

1

%

 

 

 

1

%

 

1

%

 

 

Non-GAAP gross margin

82

%

 

81

%

 

 

 

82

%

 

81

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

GAAP sales and marketing expenses

$

453,410

 

 

$

362,975

 

 

 

 

$

1,321,163

 

 

$

1,118,279

 

 

 

Stock-based compensation

(78,871

)

 

(68,712

)

 

 

 

(227,998

)

 

(200,071

)

 

 

Amortization of purchased intangibles

(314

)

 

 

 

 

 

(936

)

 

 

 

 

Non-GAAP sales and marketing expenses

$

374,225

 

 

$

294,263

 

 

 

 

$

1,092,229

 

 

$

918,208

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP research and development expenses

$

268,292

 

 

$

190,099

 

 

 

 

$

740,030

 

 

$

546,041

 

 

 

Stock-based compensation

(74,213

)

 

(50,636

)

 

 

 

(203,279

)

 

(144,259

)

 

 

Amortization of purchased intangibles

(455

)

 

(455

)

 

 

 

(1,365

)

 

(1,365

)

 

 

Non-GAAP research and development expenses

$

193,624

 

 

$

139,008

 

 

 

 

$

535,386

 

 

$

400,417

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP general and administrative expenses

$

109,234

 

 

$

75,642

 

 

 

 

$

319,019

 

 

$

245,540

 

 

 

Stock-based compensation

(28,189

)

 

(13,839

)

 

 

 

(83,834

)

 

(62,046

)

 

 

Amortization of purchased intangibles

(33

)

 

(2,281

)

 

 

 

(4,665

)

 

(6,118

)

 

 

Business combination and other related costs

(34

)

 

26

 

 

 

 

(4,095

)

 

(120

)

 

 

Non-GAAP general and administrative expenses

$

80,978

 

 

$

59,548

 

 

 

 

$

226,425

 

 

$

177,256

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP total operating expenses

$

830,936

 

 

$

628,716

 

 

 

 

$

2,380,212

 

 

$

1,909,860

 

 

 

Stock-based compensation

(181,273

)

 

(133,187

)

 

 

 

(515,111

)

 

(406,376

)

 

 

Amortization of purchased intangibles

(803

)

 

(2,736

)

 

 

 

(6,967

)

 

(7,483

)

 

 

Business combination and other related costs

(34

)

 

26

 

 

 

 

(4,095

)

 

(120

)

 

 

Non-GAAP total operating expenses

$

648,826

 

 

$

492,819

 

 

 

 

$

1,854,039

 

 

$

1,495,881

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations:

 

 

 

 

 

 

 

 

 

 

 

GAAP income from operations

$

69,332

 

 

$

56,324

 

 

 

 

$

180,933

 

 

$

13,611

 

 

 

Stock-based compensation

219,929

 

 

162,934

 

 

 

 

625,054

 

 

492,144

 

 

 

Amortization of purchased intangibles

9,630

 

 

9,017

 

 

 

 

34,648

 

 

24,078

 

 

 

Business combination and other related costs

34

 

 

(26

)

 

 

 

4,095

 

 

120

 

 

 

Non-GAAP income from operations

$

298,925

 

 

$

228,249

 

 

 

 

$

844,730

 

 

$

529,953

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating margin:

 

 

 

 

 

 

 

 

 

 

 

GAAP operating margin

6

%

 

6

%

 

 

 

6

%

 

1

%

 

 

Stock-based compensation as % of total revenues

19

%

 

18

%

 

 

 

19

%

 

20

%

 

 

Amortization of purchased intangibles as % of total revenues

1

%

 

2

%

 

 

 

1

%

 

0

%

 

 

Business combination and other related costs as % of total revenues

0

%

 

0

%

 

 

 

0

%

 

0

%

 

 

Non-GAAP operating margin

26

%

 

26

%

 

 

 

26

%

 

21

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income:

 

 

 

 

 

 

 

 

 

 

 

GAAP net income

$

12,858

 

 

$

40,598

 

 

 

 

$

101,855

 

 

$

27,974

 

 

 

Stock-based compensation

219,929

 

 

162,934

 

 

 

 

625,054

 

 

492,144

 

 

 

Amortization of purchased intangibles

9,630

 

 

9,017

 

 

 

 

34,648

 

 

24,078

 

 

 

Business combination and other related costs

34

 

 

(26

)

 

 

 

4,095

 

 

120

 

 

 

Amortization of debt discount and issuance costs

4,928

 

 

8,371

 

 

 

 

21,986

 

 

24,808

 

 

 

Loss on extinguishment of 2022 Notes

40,750

 

 

 

 

 

 

41,657

 

 

 

 

 

Income tax expense effects related to the above adjustments

(47,566

)

 

(28,041

)

 

 

 

(138,683

)

 

(109,804

)

 

 

Non-GAAP net income

$

240,563

 

 

$

192,853

 

 

 

 

$

690,612

 

 

$

459,320

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share - basic and diluted:

 

 

 

 

 

 

 

 

 

 

 

GAAP net income per share - basic

$

0.07

 

 

$

0.22

 

 

 

 

$

0.53

 

 

$

0.15

 

 

 

GAAP net income per share - diluted

$

0.06

 

 

$

0.21

 

 

 

 

$

0.50

 

 

$

0.14

 

 

 

Non-GAAP net income per share - basic

$

1.24

 

 

$

1.03

 

 

 

 

$

3.57

 

 

$

2.47

 

 

 

Non-GAAP net income per share - diluted

$

1.21

 

 

$

0.99

 

 

 

 

$

3.46

 

 

$

2.37

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP weighted-average shares used to compute net income per share - basic

193,237

 

 

188,074

 

 

 

 

193,203

 

 

185,676

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP weighted-average shares used to compute net income per share - diluted

201,861

 

 

197,878

 

 

 

 

202,837

 

 

196,739

 

 

 

Effects of in-the-money portion of convertible senior notes(3)

(2,517

)

 

(2,929

)

 

 

 

(3,205

)

 

(2,701

)

 

 

Effects of stock awards with performance conditions not yet satisfied(3)

144

 

 

136

 

 

 

 

44

 

 

62

 

 

 

Non-GAAP weighted-average shares used to compute net income per share - diluted

199,488

 

 

195,085

 

 

 

 

199,676

 

 

194,100

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Free cash flow:

 

 

 

 

 

 

 

 

 

 

 

GAAP net cash provided by operating activities

$

241,452

 

 

$

210,178

 

 

 

 

$

1,101,074

 

 

$

814,761

 

 

 

Purchases of property and equipment

(91,656

)

 

(88,869

)

 

 

 

(285,327

)

 

(185,889

)

 

 

Repayments of convertible senior notes attributable to debt discount

66,534

 

 

 

 

 

 

68,509

 

 

 

 

 

Non-GAAP free cash flow

$

216,330

 

 

$

121,309

 

 

 

 

$

884,256

 

 

$

628,872

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Free cash flow margin:

 

 

 

 

 

 

 

 

 

 

 

GAAP net cash provided by operating activities as % of total revenues

21

%

 

24

%

 

 

 

34

%

 

32

%

 

 

Purchases of property and equipment as % of total revenues

(8

%)

 

(10

%)

 

 

 

(9

%)

 

(7

%)

 

 

Repayments of convertible senior notes attributable to debt discount as % of total revenues

6

%

 

%

 

 

 

2

%

 

%

 

 

Non-GAAP free cash flow margin

19

%

 

14

%

 

 

 

27

%

 

25

%

 

 

(1)

Adjusted revenues and the corresponding growth rates are derived by applying the average exchange rates in effect during the comparison period rather than the actual average exchange rates in effect during the current period.

(2)

Adjusted billings and the corresponding growth rates are derived by applying the average exchange rates in effect during the comparison period rather than the actual average 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 dilutive time-based stock awards, in-the-money portion of convertible senior notes and warrants are included in the GAAP weighted-average diluted shares in periods where we have GAAP net income. We exclude the in-the-money portion of convertible senior notes for non-GAAP weighted-average diluted shares as they are covered by our note hedges. We include stock awards with performance conditions not yet satisfied for non-GAAP weighted average diluted shares at forecasted attainment levels to the extent we believe it is probable that the performance condition will be met.

ServiceNow, Inc.
Reconciliation of Non-GAAP Financial Guidance

The financial guidance provided below is an estimate based on information available as of September 30, 2020. 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-K for the year ended December 31, 2019 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 three months ended September 30, 2020. The company assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates.

 

Three Months Ended

 

 

 

December 31, 2020

 

December 31, 2019(3)

 

Growth Rates

 

 

 

 

 

 

GAAP subscription revenues

$1,155 - $1,160 million

 

$899 million

 

28% - 29%

 

 

 

 

 

 

Effects of foreign currency rate fluctuations

(15) million

 

 

 

 

 

 

 

 

 

 

Non-GAAP adjusted subscription revenues(1)

$1,141 - $1,146 million

 

 

 

27%

 

 

 

 

 

 

GAAP subscription revenues

$1,155 - $1,160 million

 

$899 million

 

28% - 29%

 

 

 

 

 

 

Change in subscription deferred revenue, unbilled receivables and customer deposits

470 - 485 million

 

$399 million

 

 

 

 

 

 

 

 

Non-GAAP subscription billings

$1,625 - $1,645 million

 

$1,298 million

 

25% - 27%

 

 

 

 

 

 

Effects of foreign currency rate fluctuations

(18) million

 

 

 

 

 

 

 

 

 

 

Effects of fluctuations in billings duration

5 million

 

 

 

 

 

 

 

 

 

 

Non-GAAP adjusted subscription billings(2)

$1,612 - $1,632 million

 

 

 

24% - 26%

 

 

 

 

 

 

GAAP operating margin

2%

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense as % of total revenues

18%

 

 

 

 

 

 

 

 

 

 

Amortization of purchased intangibles as % of total revenues

1%

 

 

 

 

 

 

 

 

 

 

Non-GAAP operating margin

21%

 

 

 

 

 

 

 

 

 

 

GAAP weighted-average shares used to compute net income per share - diluted

202 million

 

 

 

 

 

 

 

 

 

 

Effects of in-the-money portion of convertible senior notes(4)

(1) million

 

 

 

 

 

 

 

 

 

 

Non-GAAP weighted-average shares used to compute net income per share - diluted

201 million

 

 

 

 

 

 

 

 

 

 

 

Twelve Months Ended

 

 

 

December 31, 2020

 

December 31, 2019(3)

 

Growth Rates

 

 

 

 

 

 

GAAP subscription revenues

$4,257 - $4,262 million

 

$3,255 million

 

31%

 

 

 

 

 

 

Effects of foreign currency rate fluctuations

(6) million

 

 

 

 

 

 

 

 

 

 

Non-GAAP adjusted subscription revenues(1)

$4,251 - $4,256 million

 

 

 

31%

 

 

 

 

 

 

GAAP subscription revenues

$4,257 - $4,262 million

 

$3,255 million

 

31%

 

 

 

 

 

 

Change in subscription deferred revenue, unbilled receivables and customer deposits

523 - 538 million

 

533 million

 

 

 

 

 

 

 

 

Non-GAAP subscription billings

$4,780 - $4,800 million

 

$3,788 million

 

26% - 27%

 

 

 

 

 

 

Effects of foreign currency rate fluctuations

(7) million

 

 

 

 

 

 

 

 

 

 

Effects of fluctuations in billings duration

5 million

 

 

 

 

 

 

 

 

 

 

Non-GAAP adjusted subscription billings(2)

$4,779 - $4,799 million

 

 

 

26% - 27%

 

 

 

 

 

 

GAAP subscription gross margin

83%

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense as % of subscription revenues

2%

 

 

 

 

 

 

 

 

 

 

Amortization of purchased intangibles as % of subscription revenues

1%

 

 

 

 

 

 

 

 

 

 

Non-GAAP subscription margin

86%

 

 

 

 

 

 

 

 

 

 

GAAP operating margin

5%

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense as % of total revenues

19%

 

 

 

 

 

 

 

 

 

 

Amortization of purchased intangibles as % of total revenues

1%

 

 

 

 

 

 

 

 

 

 

Non-GAAP operating margin

24.5%

 

 

 

 

 

 

 

 

 

 

GAAP net cash provided by operating activities as % of total revenues

40%

 

 

 

 

 

 

 

 

 

 

Purchases of property and equipment as % of total revenues

(8%)

 

 

 

 

 

 

 

 

 

 

Non-GAAP free cash flow margin

31.5%

 

 

 

 

 

 

 

 

 

 

GAAP weighted-average shares used to compute net income per share - diluted

200 million

 

 

 

 

 

 

 

 

 

 

Effects of in-the-money portion of convertible senior notes(4)

(1) million

 

 

 

 

 

 

 

 

 

 

Non-GAAP weighted-average shares used to compute net income per share - diluted

199 million

 

 

 

 

(1)

Adjusted revenues and the corresponding growth rates are derived by applying the average exchange rates in effect during the comparison period rather than the exchange rates for the guidance period.

(2)

Adjusted billings and the corresponding growth rates are derived by applying the average exchange rates in effect during the comparison period rather than the exchange rates for the guidance period, and by replacing the 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.

(4)

We exclude the in-the-money portion of convertible senior notes for non-GAAP weighted-average diluted shares as they are covered by our note hedges.

Note: Numbers rounded for presentation purposes and may not foot.

 

Contacts

Media Contact:
Sara Day
650.336.3123
press@servicenow.com

Investor Contact:
Darren Yip
925.388.7205
ir@servicenow.com

Release Summary

ServiceNow Reports Third Quarter 2020 Financial Results

Contacts

Media Contact:
Sara Day
650.336.3123
press@servicenow.com

Investor Contact:
Darren Yip
925.388.7205
ir@servicenow.com