NOW 8-K
ServiceNow, Inc. (NOW)
8-K
2022-01-26
For: 2022-01-25
View Original
Added on
April 12, 2026
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
_____________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of report (date of earliest event reported): January 25, 2022
___________
(Exact name of registrant as specified in its charter)
___________
(State or other jurisdiction of incorporation or organization) | (Commission File Number) | (I.R.S. Employer Identification Number) | ||||||||||||
(Address of Principal Executive Offices)
(408 ) 501-8550
(Registrant's telephone number, including area code)
Not Applicable | ||
(Former Name or Former Address, if Changed Since Last Report) | ||
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||||
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On January 26, 2022, ServiceNow, Inc. (“ServiceNow” or the “Company”) issued a press release announcing financial results for the three months and year ended December 31, 2021.
A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated by reference herein.
The information in this report, including the exhibit attached hereto, is furnished pursuant to Item 2.02 of Form 8-K and is not deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to liabilities of that section, nor shall it be deemed incorporated by reference in any filing of ServiceNow under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any filings.
ServiceNow makes reference to non-GAAP financial information in the press release. A reconciliation to the nearest comparable GAAP financial measures of the non-GAAP financial measures is included in the press release attached hereto as Exhibit 99.1. These non-GAAP financial measures are reported in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP.
ServiceNow 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.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
(b) and (c)
On January 25, 2022, the Board of Directors of ServiceNow promoted Chirantan “CJ” Desai, 51, to Chief Operating Officer, effective immediately, with overall responsibilities expanded to include product, design, and engineering, and industries and solution sales.
Mr. Desai’s biographical information and compensation information are included in the Company's proxy statement for its 2021 annual meeting of shareholders. There are no arrangements or understandings between Mr. Desai and any other person pursuant to which Mr. Desai was promoted as Chief Operating Officer. There are no family relationships between Mr. Desai and any of the Company's directors or other executive officers. Mr. Desai has not had an interest in any transaction since the beginning of the Company’s last fiscal year, or any currently proposed transaction, that requires disclosure pursuant to Item 404(a) of Regulation S-K.
Additionally, effective on January 25, 2022, Kevin Haverty was promoted and transitioned from the position of Chief Revenue Officer to the position of Senior Advisor to the Chief Executive Officer to work on expanding the Company’s footprint in the public sector and to mentor professionals across the Company.
Additionally, effective on January 25, 2022, Paul Smith was promoted to Chief Commercial Officer to oversee all regional sales teams, sales enablement and sales operations. Most recently, Mr. Smith served as the Company's President – EMEA since July 2020.
For additional information, see the press release attached as Exhibit 99.2 to this Current Report on Form 8-K. The information in the press release attached hereto shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing of ServiceNow under the Securities Act or the Exchange Act whether made before or after the date hereof and irrespective of any general incorporation language in any filings.
Item 9.01 Financial Statements and Exhibits.
| (d) | Exhibits. | |||||||
| 104 | Cover Page Interactive Data File – the cover page XBRL tags are embedded within the Inline XBRL document | |||||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
SERVICENOW, INC. | ||||||||||||||
| By: | /s/ Russell S. Elmer | |||||||||||||
| Russell S. Elmer General Counsel | ||||||||||||||
| Date: January 26, 2022 | ||||||||||||||
ServiceNow Reports Fourth Quarter and Full-Year 2021 Financial Results
•ServiceNow exceeds high end of guidance across all Q4 2021 metrics; expects strong 2022 subscription revenues growth with constant currency subscription revenues growth acceleration year-over-year in Q1 2022
•Subscription revenues of $1,523 million in Q4 2021, representing 29% year-over-year growth, 30% adjusted for constant currency
•Current remaining performance obligations of $5.7 billion as of Q4 2021, representing 29% year-over-year growth, 32% adjusted for constant currency
•135 transactions over $1 million in net new annual contract value in Q4 2021, representing 52% year-over-year growth
SANTA CLARA, Calif. - January 26, 2022 - ServiceNow (NYSE: NOW), the leading digital workflow company making the world work better for everyone, today announced financial results for its fourth quarter ended December 31, 2021, with subscription revenues of $1,523 million in Q4 2021, representing 29% year-over-year growth, 30% adjusted for constant currency.
As of December 31, 2021, current remaining performance obligations (“cRPO”), contract revenue that will be recognized as revenue in the next 12 months, was $5.7 billion, representing 29% year-over-year growth and 32% adjusted for constant currency. During the quarter, ServiceNow closed 135 transactions with more than $1 million in net new annual contract value, representing 52% year-over-year growth. The company now has 1,359 total customers with more than $1 million in annual contract value, representing 25% year-over-year growth in customers.
“We once again reported results that significantly beat the high end of expectations,” said ServiceNow President and CEO Bill McDermott. “Customer demand for ServiceNow’s innovative platform is stronger than ever. Our unique culture has made us one of the best places to work. We are growing like a fast-moving startup with the profitability of a global market leader.”
“Q4 was an outstanding quarter closing out an already phenomenal year of outperformance,” said ServiceNow CFO Gina Mastantuono. “The company is firing on all cylinders and we enter 2022 with tremendous momentum. We expect constant currency subscription revenue growth to accelerate year-over-year in Q1, setting us up for another strong year and putting us well on our way to becoming a $15 billion plus revenue company.”
During the quarter, ServiceNow continued to invest in the Now Platform with the acquisitions of ERP migration company Gekkobrain and software testing automation company DotWalk. ServiceNow deepened its strategic partnership with EY to further revolutionize finance and tax services on the Now Platform in support of EY’s goal of creating a $1 billion business with ServiceNow by 2025. ServiceNow expanded its alliance with KPMG firms to help customers accelerate ESG impact and modernize risk and resilience. ServiceNow was recently named the preferred workflow partner for DXC Platform X and further strengthened its partnership with the formation of a DXC ServiceNow Strategic Business Group. The company also released ServiceNow Impact, a new solution designed to help customers accelerate the return on their digital transformation investments.
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Fourth Quarter 2021 GAAP and Non-GAAP Results:
The following table summarizes our financial results for the fourth quarter 2021:
| Fourth Quarter 2021 GAAP Results | Fourth Quarter 2021 Non-GAAP Results(1) | ||||||||||||||||||||||
| Amount ($ millions) | Year/Year Growth (%) | Amount ($ millions)(2) | Year/Year Growth (%) | Adjusted Amount ($ millions)(2) | Adjusted Year/Year Growth (%) | ||||||||||||||||||
| Subscription revenues | $1,523 | 29 | % | $1,538 | 30 | % | |||||||||||||||||
| Professional services and other revenues | $91 | 38 | % | $91 | 38 | % | |||||||||||||||||
| Total revenues | $1,614 | 29 | % | $1,629 | 30 | % | |||||||||||||||||
| Subscription billings | $2,420 | 32 | % | $2,432 | 33 | % | |||||||||||||||||
| Professional services and other billings | $113 | 43 | % | $113 | 43 | % | |||||||||||||||||
| Total billings | $2,533 | 33 | % | $2,545 | 33 | % | |||||||||||||||||
| Amount ($ billions) | Year/Year Growth (%) | Amount ($ billions)(2) | Year/Year Growth (%) | ||||||||||||||||||||
| cRPO | $5.7 | 29 | % | $5.8 | 32 | % | |||||||||||||||||
| RPO | $11.5 | 29 | % | $11.8 | 32 | % | |||||||||||||||||
| Amount ($ millions) | Margin (%) | Amount ($ millions) | Margin (%) | ||||||||||||||||||||
| Subscription gross profit | $1,241 | 82 | % | $1,295 | 85 | % | |||||||||||||||||
| Professional services and other gross profit (loss) | ($2) | (2 | %) | $14 | 15 | % | |||||||||||||||||
| Total gross profit | $1,239 | 77 | % | $1,309 | 81 | % | |||||||||||||||||
| Income from operations | $35 | 2 | % | $367 | 23 | % | |||||||||||||||||
| Net cash provided by operating activities | $844 | 52 | % | ||||||||||||||||||||
| Free cash flow | $744 | 46 | % | ||||||||||||||||||||
| Amount ($ millions) | Earnings per Basic/Diluted Share ($) | Amount ($ millions) | Earnings per Basic/Diluted Share ($) | ||||||||||||||||||||
| Net income | $26 | $0.13/ $0.13 | $296 | $1.49/ $1.46 | |||||||||||||||||||
(1)We report non-GAAP financial measures in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. See the section entitled “Statement Regarding Use of Non-GAAP Financial Measures” for an explanation of non-GAAP measures, and the table entitled “GAAP to Non-GAAP Reconciliation” for a reconciliation of GAAP to non-GAAP measures.
(2)Non-GAAP subscription revenues, professional services and other revenues, total revenues, cRPO, RPO and adjusted professional services and other billings are adjusted for constant currency. Non-GAAP adjusted subscription billings and total billings are adjusted for constant currency and constant billings duration. See the section entitled “Statement Regarding Use of Non-GAAP Financial Measures” for an explanation of non-GAAP measures, and the table entitled “GAAP to Non-GAAP Reconciliation” for a reconciliation of GAAP to non-GAAP measures.
Note: Numbers rounded for presentation purposes.
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Full-Year 2021 GAAP and Non-GAAP Results:
The following table summarizes our financial results for the full-year 2021:
| Full Year 2021 GAAP Results | Full-Year 2021 Non-GAAP Results(1) | ||||||||||||||||||||||
| Amount ($ millions) | Year/Year Growth (%) | Amount ($ millions)(2) | Year/Year Growth (%) | Adjusted Amount ($ millions)(2) | Adjusted Year/Year Growth (%) | ||||||||||||||||||
| Subscription revenues | $5,573 | 30 | % | $5,496 | 28 | % | |||||||||||||||||
| Professional services and other revenues | $323 | 39 | % | $317 | 36 | % | |||||||||||||||||
| Total revenues | $5,896 | 30 | % | $5,813 | 29 | % | |||||||||||||||||
| Subscription billings | 6,494 | 30 | % | 6,388 | 28 | % | |||||||||||||||||
| Professional services and other billings | 356 | 45 | % | 350 | 42 | % | |||||||||||||||||
| Total billings | 6,850 | 31 | % | 6,738 | 29 | % | |||||||||||||||||
| Amount ($ billions) | Year/Year Growth (%) | Amount ($ billions)(2) | Year/Year Growth (%) | ||||||||||||||||||||
| cRPO | $5.7 | 29 | % | $5.8 | 32 | % | |||||||||||||||||
| RPO | $11.5 | 29 | % | $11.8 | 32 | % | |||||||||||||||||
| Amount ($ millions) | Margin (%) | Amount ($ millions) | Margin (%) | ||||||||||||||||||||
| Subscription gross profit | $4,551 | 82 | % | $4,743 | 85 | % | |||||||||||||||||
| Professional services and other gross profit (loss) | ($8) | (2 | %) | $51 | 16 | % | |||||||||||||||||
| Total gross profit | $4,543 | 77 | % | $4,794 | 81 | % | |||||||||||||||||
| Income from operations | $257 | 4 | % | $1,482 | 25 | % | |||||||||||||||||
| Net cash provided by operating activities | $2,191 | 37 | % | ||||||||||||||||||||
| Free cash flow | $1,867 | 32 | % | ||||||||||||||||||||
| Amount ($ millions) | Earnings per Basic/Diluted Share ($) | Amount ($ millions) | Earnings per Basic/Diluted Share ($) | ||||||||||||||||||||
| Net income | 230 | $1.16/ $1.13 | $1,201 | $6.07/ $5.92 | |||||||||||||||||||
(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 subscription revenues, professional services and other revenues, total revenues, cRPO, RPO and adjusted 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.
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Financial Outlook
Our guidance includes GAAP and non-GAAP financial measures. The non-GAAP growth rates for subscription revenues and cRPO are only adjusted for constant currency to provide better visibility into the underlying business trends. Since September 30, 2021, ServiceNow has seen an incremental strengthening of the U.S. dollar resulting in a foreign exchange (“FX”) headwind in 2022 (estimated to be approximately a $110 million currency headwind for 2022 subscription revenue and a $75 million currency headwind for Q1 2022 cRPO).
The following table summarizes our guidance for the first quarter 2022:
| First Quarter 2022 GAAP Guidance | First Quarter 2022 Non-GAAP Guidance(1) | ||||||||||||||||
Amount ($ millions)(2) | Year/Year Growth (%) | Constant Currency Year/ Year Growth (%) | |||||||||||||||
| Subscription revenues | $1,610 - $1,615 | 25 | % | 27.5 | % | ||||||||||||
cRPO | 28 | % | 29.5 | % | |||||||||||||
| Margin (%) | |||||||||||||||||
| Income from operations | 25 | % | |||||||||||||||
| Amount (millions) | |||||||||||||||||
| Weighted-average shares used to compute diluted net income per share | 203 | ||||||||||||||||
(1)We report non-GAAP financial measures in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. See the section entitled “Statement Regarding Use of Non-GAAP Financial Measures” for an explanation of non-GAAP measures, and the table entitled “Reconciliation of Non-GAAP Financial Guidance” for a reconciliation of GAAP to non-GAAP measures.
(2)Guidance for GAAP subscription revenues is based on the 31-day average of foreign exchange rates for December 2021 for entities reporting in currencies other than U.S. Dollars.
The following table summarizes our guidance for the full-year 2022:
| Full-Year 2022 GAAP Guidance | Full-Year 2022 Non-GAAP Guidance(1) | |||||||||||||
Amount ($ millions)(2) | Year/Year Growth (%) | Constant Currency Year/ Year Growth (%) | ||||||||||||
| Subscription revenues | $7,020 - $7,040 | 26 | % | 28 | % | |||||||||
| Margin (%) | ||||||||||||||
| Subscription gross profit | 86 | % | ||||||||||||
| Income from operations | 25 | % | ||||||||||||
| Free cash flow | 31 | % | ||||||||||||
| Amount (millions) | ||||||||||||||
| Weighted-average shares used to compute diluted net income per share | 204 | |||||||||||||
(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 for the future quarters included in our full-year 2022 guidance are based on the 31-day average of foreign exchange rates for December 2021 for entities reporting in currencies other than U.S. Dollars.
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Conference Call Details
The conference call will begin at 2 p.m. Pacific Time (22:00 GMT) on January 26, 2022. Interested parties may listen to the call by dialing (888) 330‑2022 (Passcode: 8135305), or if outside North America, by dialing (646) 960‑0690 (Passcode: 8135305). Individuals may access the live teleconference from this webcast.
https://events.q4inc.com/attendee/749924992.
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) 770‑2030 (Passcode: 8135305), or if outside North America, by dialing (647) 362‑9199 (Passcode: 8135305).
Investor Presentation Details
An investor presentation providing additional information, including forward-looking guidance, 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.
•Revenues. We adjust revenues and related growth rates 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 Q4 2020, the average exchange rates in effect for our major currencies were 1 USD to 0.84 Euros and 1 USD to 0.76 British Pound Sterling (“GBP”)), rather than the actual average exchange rates in effect during the current period (for Q4 2021, the average exchange rates in effect for our major currencies were 1 USD to 0.87 Euros and 1 USD to 0.74 GBP). We believe the presentation of revenues and related growth rates adjusted for constant currency facilitates the comparison of revenues year-over-year.
•Billings and Adjusted billings. 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 and related growth rates 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 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. While we believe billings is one indicator of the performance of our business, an increase or decrease in billings may not reflect the actual performance for that reporting period. As a result, our billings metric has become less indicative of the actual performance of our business over time and we do not plan to disclose this metric in the future.
•Remaining performance obligations and current remaining performance obligations. We adjust cRPO and remaining performance obligations (“RPO”) and related growth rates for constant currency to provide a framework for assessing how our business performed. To present this information, current period results for entities reporting in currencies other than USD are converted into USD at the exchange rates in effect at the end of the comparison period (for Q4 2020, the end of the period exchange rates in effect for our major currencies were 1 USD to 0.82 Euros and 1 USD to 0.73 GBP), rather than the actual end of the period exchange rates in effect during the current period (for Q4 2021, the end of the period exchange rates in effect for our major currencies were 1 USD to 0.88 Euros and 1 USD to 0.74 GBP). We believe the presentation of cRPO and RPO and related growth rates adjusted for constant currency facilitates the comparison of cRPO and RPO year-over-year, respectively.
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•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, repayments of convertible senior notes attributable to debt discount and business combination and other related costs including compensation expense, 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.
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: experiencing an actual or perceived cyber-security event; our ability to comply with evolving privacy laws, data transfer restrictions, and other foreign and domestic standards related to data and the Internet; errors, interruptions, delays, or security breaches in or of our service or data centers; our ability to maintain and attract key employees and manage workplace culture; alleged violations of laws and regulations, including those relating to anti-bribery and anti-corruption and those relating to public sector contracting requirements; our ability to compete successfully against existing and new competitors; our ability to predict, prepare for and respond promptly to rapidly evolving technological, market and customer developments; 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; our ability to develop and gain customer demand for and acceptance of new and improved products and services; material changes in the value of foreign currencies relative to the U.S. Dollar; the continued impact and duration of COVID-19 on our business, future financial performance and global economic conditions, including any subsequent waves of outbreak or new variant strains of the COVID-19 virus, the effectiveness, extent and duration of mitigation efforts such as “shelter in place” and other government responses, the availability of vaccinations; our ability to consummate and realize the benefits of any strategic transactions or acquisitions; and fluctuations and volatility in our stock price.
Further information on these and other factors that could affect our financial results are included in our Form 10-Q for the quarter ended September 30, 2021 and in other filings we make with the Securities and Exchange Commission from time to time, including our Form 10-K that will be filed for the year ended December 31, 2021.
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) makes the world work better for everyone. Our cloud-based platform and solutions help digitize and unify organizations so that they can find smarter, faster, better ways to make work flow. So employees and customers can be more connected, more innovative, and more agile. And we can all create the future we imagine. The world works with ServiceNowTM. For more information, visit: www.servicenow.com.
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© 2022 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.
Media Contact:
Sara Day
650.336.3123
Investor Contact:
Darren Yip
925.388.7205
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ServiceNow, Inc.
Condensed Consolidated Statements of Operations
(in millions, except per share data)
(unaudited)
| Three Months Ended | Twelve Months Ended | ||||||||||||||||||||||
| December 31, 2021 | December 31, 2020 | December 31, 2021 | December 31, 2020 | ||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||
| Subscription | $ | 1,523 | $ | 1,184 | $ | 5,573 | $ | 4,286 | |||||||||||||||
| Professional services and other | 91 | 66 | 323 | 233 | |||||||||||||||||||
| Total revenues | 1,614 | 1,250 | 5,896 | 4,519 | |||||||||||||||||||
Cost of revenues (1): | |||||||||||||||||||||||
| Subscription | 282 | 210 | 1,022 | 731 | |||||||||||||||||||
| Professional services and other | 93 | 69 | 331 | 256 | |||||||||||||||||||
| Total cost of revenues | 375 | 279 | 1,353 | 987 | |||||||||||||||||||
| Gross profit | 1,239 | 971 | 4,543 | 3,532 | |||||||||||||||||||
Operating expenses (1): | |||||||||||||||||||||||
| Sales and marketing | 632 | 534 | 2,292 | 1,855 | |||||||||||||||||||
| Research and development | 392 | 284 | 1,397 | 1,024 | |||||||||||||||||||
| General and administrative | 180 | 135 | 597 | 454 | |||||||||||||||||||
| Total operating expenses | 1,204 | 953 | 4,286 | 3,333 | |||||||||||||||||||
| Income from operations | 35 | 18 | 257 | 199 | |||||||||||||||||||
| Interest expense | (7) | (8) | (28) | (33) | |||||||||||||||||||
| Other income (expense), net | 4 | 4 | 20 | (16) | |||||||||||||||||||
| Income before income taxes | 32 | 14 | 249 | 150 | |||||||||||||||||||
| Provision for (benefit from) income taxes | 6 | (3) | 19 | 31 | |||||||||||||||||||
| Net income | $ | 26 | $ | 17 | $ | 230 | $ | 119 | |||||||||||||||
| Net income per share - basic | $ | 0.13 | $ | 0.09 | $ | 1.16 | $ | 0.61 | |||||||||||||||
| Net income per share - diluted | $ | 0.13 | $ | 0.08 | $ | 1.13 | $ | 0.59 | |||||||||||||||
| Weighted-average shares used to compute net income per share - basic | 199 | 195 | 198 | 193 | |||||||||||||||||||
| Weighted-average shares used to compute net income per share - diluted | 204 | 202 | 203 | 202 | |||||||||||||||||||
(1)Includes stock-based compensation as follows:
| Three Months Ended | Twelve Months Ended | ||||||||||||||||||||||
| December 31, 2021 | December 31, 2020 | December 31, 2021 | December 31, 2020 | ||||||||||||||||||||
| Cost of revenues: | |||||||||||||||||||||||
| Subscription | $ | 33 | $ | 26 | $ | 128 | $ | 98 | |||||||||||||||
| Professional services and other | 16 | 14 | 59 | 52 | |||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Sales and marketing | 96 | 92 | 389 | 320 | |||||||||||||||||||
| Research and development | 107 | 79 | 395 | 282 | |||||||||||||||||||
| General and administrative | 50 | 34 | 160 | 118 | |||||||||||||||||||
8
ServiceNow, Inc.
Condensed Consolidated Balance Sheets
(in millions)
(unaudited)
| December 31, 2021 | December 31, 2020 | ||||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 1,728 | $ | 1,677 | |||||||
| Short-term investments | 1,576 | 1,415 | |||||||||
| Accounts receivable, net | 1,390 | 1,009 | |||||||||
| Current portion of deferred commissions | 303 | 229 | |||||||||
| Prepaid expenses and other current assets | 223 | 192 | |||||||||
| Total current assets | 5,220 | 4,522 | |||||||||
| Deferred commissions, less current portion | 623 | 444 | |||||||||
| Long-term investments | 1,630 | 1,468 | |||||||||
| Property and equipment, net | 766 | 660 | |||||||||
| Operating lease right-of-use assets | 591 | 454 | |||||||||
| Intangible assets, net | 287 | 153 | |||||||||
| Goodwill | 777 | 241 | |||||||||
| Deferred tax assets | 692 | 673 | |||||||||
| Other assets | 212 | 100 | |||||||||
| Total assets | $ | 10,798 | $ | 8,715 | |||||||
| Liabilities and Stockholders’ Equity | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 89 | $ | 34 | |||||||
| Accrued expenses and other current liabilities | 850 | 668 | |||||||||
| Current portion of deferred revenue | 3,836 | 2,963 | |||||||||
| Current portion of operating lease liabilities | 82 | 72 | |||||||||
| Current debt, net | 92 | — | |||||||||
| Total current liabilities | 4,949 | 3,737 | |||||||||
| Deferred revenue, less current portion | 63 | 45 | |||||||||
| Operating lease liabilities, less current portion | 556 | 423 | |||||||||
| Long-term debt, net | 1,484 | 1,640 | |||||||||
| Other long-term liabilities | 51 | 36 | |||||||||
| Stockholders’ equity | 3,695 | 2,834 | |||||||||
| Total liabilities and stockholders’ equity | $ | 10,798 | $ | 8,715 | |||||||
9
ServiceNow, Inc.
Condensed Consolidated Statements of Cash Flows
(in millions)
(unaudited)
| Three Months Ended | Twelve Months Ended | ||||||||||||||||||||||
| December 31, 2021 | December 31, 2020 | December 31, 2021 | December 31, 2020 | ||||||||||||||||||||
| Cash flows from operating activities: | |||||||||||||||||||||||
| Net income | $ | 26 | $ | 17 | $ | 230 | $ | 119 | |||||||||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||||||||||
| Depreciation and amortization | 126 | 93 | 472 | 336 | |||||||||||||||||||
| Amortization of deferred commissions | 83 | 61 | 294 | 218 | |||||||||||||||||||
| Amortization of debt discount and issuance costs | 2 | 2 | 7 | 24 | |||||||||||||||||||
| Stock-based compensation | 302 | 245 | 1,131 | 870 | |||||||||||||||||||
| Deferred income taxes | (13) | (18) | (34) | (24) | |||||||||||||||||||
| Repayments of convertible senior notes attributable to debt discount | — | (13) | (15) | (82) | |||||||||||||||||||
| Loss on extinguishment of 2022 Notes | — | 5 | 3 | 47 | |||||||||||||||||||
| Other | 17 | (3) | 45 | (2) | |||||||||||||||||||
| Changes in operating assets and liabilities, net of effect of business combinations: | |||||||||||||||||||||||
| Accounts receivable | (620) | (362) | (401) | (152) | |||||||||||||||||||
| Deferred commissions | (221) | (144) | (565) | (365) | |||||||||||||||||||
| Prepaid expenses and other assets | (15) | (13) | (93) | (55) | |||||||||||||||||||
| Accounts payable | 16 | (36) | 55 | (34) | |||||||||||||||||||
| Deferred revenue | 913 | 645 | 960 | 711 | |||||||||||||||||||
| Accrued expenses and other liabilities | 228 | 206 | 102 | 175 | |||||||||||||||||||
| Net cash provided by operating activities | 844 | 685 | 2,191 | 1,786 | |||||||||||||||||||
| Cash flows from investing activities: | |||||||||||||||||||||||
| Purchases of property and equipment | (100) | (134) | (392) | (419) | |||||||||||||||||||
| Business combinations, net of cash acquired | (7) | 1 | (785) | (107) | |||||||||||||||||||
| Purchases of intangibles | (7) | (7) | (7) | (13) | |||||||||||||||||||
| Purchases of investments | (744) | (695) | (2,485) | (2,922) | |||||||||||||||||||
| Purchases of strategic investments | (43) | (10) | (71) | (12) | |||||||||||||||||||
| Sales and maturities of investments | 540 | 666 | 2,119 | 1,965 | |||||||||||||||||||
| Other | 2 | 2 | 14 | 1 | |||||||||||||||||||
| Net cash used in investing activities | (359) | (177) | (1,607) | (1,507) | |||||||||||||||||||
| Cash flows from financing activities: | |||||||||||||||||||||||
| Net proceeds from borrowings on 2030 Notes | — | — | — | 1,482 | |||||||||||||||||||
| Repayments of convertible senior notes attributable to principal | (2) | (59) | (61) | (1,628) | |||||||||||||||||||
| Net proceeds from unwind of 2022 Note Hedge | — | — | — | 1,106 | |||||||||||||||||||
| Proceeds from employee stock plans | 2 | 4 | 167 | 146 | |||||||||||||||||||
| Taxes paid related to net share settlement of equity awards | (155) | (148) | (612) | (509) | |||||||||||||||||||
| Net cash (used in) provided by financing activities | (155) | (203) | (506) | 597 | |||||||||||||||||||
| Foreign currency effect on cash, cash equivalents and restricted cash | (4) | 22 | (25) | 25 | |||||||||||||||||||
| Net change in cash, cash equivalents and restricted cash | 326 | 327 | 53 | 901 | |||||||||||||||||||
| Cash, cash equivalents and restricted cash at beginning of period | 1,406 | 1,352 | 1,679 | 778 | |||||||||||||||||||
| Cash, cash equivalents and restricted cash at end of period | $ | 1,732 | $ | 1,679 | $ | 1,732 | $ | 1,679 | |||||||||||||||
10
ServiceNow, Inc.
GAAP to Non-GAAP Reconciliation
(in millions, except cRPO, RPO and per share data)
(unaudited)
| Three Months Ended | Twelve Months Ended | ||||||||||||||||||||||||||||||||||
| December 31, 2021 | December 31, 2020 | Growth Rates | December 31, 2021 | December 31, 2020 | Growth Rates | ||||||||||||||||||||||||||||||
| Subscription revenues: | |||||||||||||||||||||||||||||||||||
| GAAP subscription revenues | $ | 1,523 | $ | 1,184 | 29% | $ | 5,573 | $ | 4,286 | 30% | |||||||||||||||||||||||||
| Effects of foreign currency rate fluctuations | 15 | (77) | |||||||||||||||||||||||||||||||||
Non-GAAP subscription revenues(1) | $ | 1,538 | 30% | $ | 5,496 | 28% | |||||||||||||||||||||||||||||
| Professional services and other revenues: | |||||||||||||||||||||||||||||||||||
| GAAP professional services and other revenues | $ | 91 | $ | 66 | 38% | $ | 323 | $ | 233 | 39% | |||||||||||||||||||||||||
| Effects of foreign currency rate fluctuations | — | (6) | |||||||||||||||||||||||||||||||||
Non-GAAP professional service and other revenues(1) | $ | 91 | 38% | $ | 317 | 36% | |||||||||||||||||||||||||||||
| Total revenues: | |||||||||||||||||||||||||||||||||||
| GAAP total revenues | $ | 1,614 | $ | 1,250 | 29% | $ | 5,896 | $ | 4,519 | 30% | |||||||||||||||||||||||||
| Effects of foreign currency rate fluctuations | 15 | (83) | |||||||||||||||||||||||||||||||||
Non-GAAP total revenues(1) | $ | 1,629 | 30% | $ | 5,813 | 29% | |||||||||||||||||||||||||||||
| cRPO (in billions): | |||||||||||||||||||||||||||||||||||
| GAAP cRPO | $ | 5.7 | $ | 4.4 | 29% | $ | 5.7 | $ | 4.4 | 29% | |||||||||||||||||||||||||
| Effects of foreign currency rate fluctuations | 0.1 | 0.1 | |||||||||||||||||||||||||||||||||
Non-GAAP cRPO(2) | $ | 5.8 | 32% | $ | 5.8 | 32% | |||||||||||||||||||||||||||||
| RPO (in billions): | |||||||||||||||||||||||||||||||||||
| GAAP RPO | $ | 11.5 | $ | 8.9 | 29% | $ | 11.5 | $ | 8.9 | 29% | |||||||||||||||||||||||||
| Effects of foreign currency rate fluctuations | 0.3 | 0.3 | |||||||||||||||||||||||||||||||||
Non-GAAP RPO(2) | $ | 11.8 | 32% | $ | 11.8 | 32% | |||||||||||||||||||||||||||||
| Subscription billings: | |||||||||||||||||||||||||||||||||||
| GAAP subscription revenues | $ | 1,523 | $ | 1,184 | 29% | $ | 5,573 | $ | 4,286 | 30% | |||||||||||||||||||||||||
| Change in subscription deferred revenue, unbilled receivables and customer deposits | 897 | 643 | 921 | 696 | |||||||||||||||||||||||||||||||
| Non-GAAP subscription billings | 2,420 | 1,827 | 32% | 6,494 | 4,982 | 30% | |||||||||||||||||||||||||||||
| Effects of foreign currency rate fluctuations | 25 | (68) | |||||||||||||||||||||||||||||||||
| Effects of fluctuations in billings duration | (13) | (38) | |||||||||||||||||||||||||||||||||
Non-GAAP adjusted subscription billings(3) | $ | 2,432 | 33% | $ | 6,388 | 28% | |||||||||||||||||||||||||||||
| Professional services and other billings: | |||||||||||||||||||||||||||||||||||
| GAAP professional services and other revenues | $ | 91 | $ | 66 | 37% | $ | 323 | $ | 233 | 39% | |||||||||||||||||||||||||
| Change in professional services and other deferred revenue | 22 | 13 | $ | 33 | $ | 13 | |||||||||||||||||||||||||||||
| Non-GAAP professional services and other billings | 113 | 79 | 43% | 356 | 246 | 45% | |||||||||||||||||||||||||||||
| Effects of foreign currency rate fluctuations | — | (6) | |||||||||||||||||||||||||||||||||
Non-GAAP adjusted professional services and other billings(3) | $ | 113 | 43% | $ | 350 | 42% | |||||||||||||||||||||||||||||
| Total billings: | |||||||||||||||||||||||||||||||||||
| GAAP total revenues | $ | 1,614 | $ | 1,250 | 29% | $ | 5,896 | $ | 4,519 | 30% | |||||||||||||||||||||||||
| Change in total deferred revenue, unbilled receivables and customer deposits | 919 | 657 | 954 | 710 | |||||||||||||||||||||||||||||||
| Non-GAAP total billings | 2,533 | 1,907 | 33% | 6,850 | 5,229 | 31% | |||||||||||||||||||||||||||||
| Effects of foreign currency rate fluctuations | 25 | (74) | |||||||||||||||||||||||||||||||||
| Effects of fluctuations in billings duration | (13) | (38) | |||||||||||||||||||||||||||||||||
Non-GAAP adjusted total billings(3) | $ | 2,545 | 33% | $ | 6,738 | 29% | |||||||||||||||||||||||||||||
| Cost of revenues: | |||||||||||||||||||||||||||||||||||
| GAAP subscription cost of revenues | $ | 282 | $ | 210 | $ | 1,022 | $ | 731 | |||||||||||||||||||||||||||
| Stock-based compensation | (33) | (26) | (128) | (98) | |||||||||||||||||||||||||||||||
| Amortization of purchased intangibles | (21) | (8) | (64) | (36) | |||||||||||||||||||||||||||||||
| Non-GAAP subscription cost of revenues | $ | 228 | $ | 176 | $ | 830 | $ | 597 | |||||||||||||||||||||||||||
| GAAP professional services and other cost of revenues | $ | 93 | $ | 69 | $ | 331 | $ | 256 | |||||||||||||||||||||||||||
| Stock-based compensation | (16) | (14) | (59) | (52) | |||||||||||||||||||||||||||||||
| Non-GAAP professional services and other cost of revenues | $ | 77 | $ | 55 | $ | 272 | $ | 204 | |||||||||||||||||||||||||||
| Gross profit: | |||||||||||||||||||||||||||||||||||
| GAAP subscription gross profit | $ | 1,241 | $ | 974 | $ | 4,551 | $ | 3,555 | |||||||||||||||||||||||||||
| Stock-based compensation | 33 | 26 | 128 | 98 | |||||||||||||||||||||||||||||||
| Amortization of purchased intangibles | 21 | 8 | 64 | 36 | |||||||||||||||||||||||||||||||
| Non-GAAP subscription gross profit | $ | 1,295 | $ | 1,008 | $ | 4,743 | $ | 3,689 | |||||||||||||||||||||||||||
| GAAP professional services and other gross loss | $ | (2) | $ | (3) | $ | (8) | $ | (23) | |||||||||||||||||||||||||||
| Stock-based compensation | 16 | 14 | 59 | 52 | |||||||||||||||||||||||||||||||
| Non-GAAP professional services and other gross profit | $ | 14 | $ | 11 | $ | 51 | $ | 29 | |||||||||||||||||||||||||||
| GAAP gross profit | $ | 1,239 | $ | 971 | $ | 4,543 | $ | 3,532 | |||||||||||||||||||||||||||
| Stock-based compensation | 49 | 40 | 187 | 150 | |||||||||||||||||||||||||||||||
| Amortization of purchased intangibles | 21 | 8 | 64 | 36 | |||||||||||||||||||||||||||||||
| Non-GAAP gross profit | $ | 1,309 | $ | 1,019 | $ | 4,794 | $ | 3,718 | |||||||||||||||||||||||||||
| Gross margin: | |||||||||||||||||||||||||||||||||||
| GAAP subscription gross margin | 82 | % | 82 | % | 82 | % | 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 | 85 | % | 85 | % | 85 | % | 86 | % | |||||||||||||||||||||||||||
| GAAP professional services and other gross margin | (2 | %) | (5 | %) | (2 | %) | (10 | %) | |||||||||||||||||||||||||||
| Stock-based compensation as % of professional services and other revenues | 17 | % | 21 | % | 18 | % | 22 | % | |||||||||||||||||||||||||||
| Non-GAAP professional services and other gross margin | 15 | % | 16 | % | 16 | % | 12 | % | |||||||||||||||||||||||||||
| GAAP gross margin | 77 | % | 78 | % | 77 | % | 78 | % | |||||||||||||||||||||||||||
| 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 | 81 | % | 82 | % | 81 | % | 82 | % | |||||||||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||||||||||||||
| GAAP sales and marketing expenses | $ | 632 | $ | 534 | $ | 2,292 | $ | 1,855 | |||||||||||||||||||||||||||
| Stock-based compensation | (96) | (92) | (389) | (320) | |||||||||||||||||||||||||||||||
| Amortization of purchased intangibles | — | (1) | (1) | (1) | |||||||||||||||||||||||||||||||
| Non-GAAP sales and marketing expenses | $ | 536 | $ | 441 | $ | 1,902 | $ | 1,534 | |||||||||||||||||||||||||||
| GAAP research and development expenses | $ | 392 | $ | 284 | $ | 1,397 | $ | 1,024 | |||||||||||||||||||||||||||
| Stock-based compensation | (107) | (79) | (395) | (282) | |||||||||||||||||||||||||||||||
| Amortization of purchased intangibles | (1) | — | (1) | (2) | |||||||||||||||||||||||||||||||
| Business combination and other related costs | $ | (5) | $ | — | $ | (10) | $ | — | |||||||||||||||||||||||||||
| Non-GAAP research and development expenses | $ | 279 | $ | 205 | $ | 991 | $ | 740 | |||||||||||||||||||||||||||
| GAAP general and administrative expenses | $ | 180 | $ | 135 | $ | 597 | $ | 454 | |||||||||||||||||||||||||||
| Stock-based compensation | (50) | (34) | (160) | (118) | |||||||||||||||||||||||||||||||
| Amortization of purchased intangibles | (2) | (2) | (10) | (7) | |||||||||||||||||||||||||||||||
| Business combination and other related costs | (1) | (2) | (8) | (6) | |||||||||||||||||||||||||||||||
| Non-GAAP general and administrative expenses | $ | 127 | $ | 97 | $ | 419 | $ | 323 | |||||||||||||||||||||||||||
| GAAP total operating expenses | $ | 1,204 | $ | 953 | $ | 4,286 | $ | 3,333 | |||||||||||||||||||||||||||
| Stock-based compensation | (253) | (205) | (944) | (720) | |||||||||||||||||||||||||||||||
| Amortization of purchased intangibles | (3) | (3) | (12) | (10) | |||||||||||||||||||||||||||||||
| Business combination and other related costs | (6) | (2) | (18) | (6) | |||||||||||||||||||||||||||||||
| Non-GAAP total operating expenses | $ | 942 | $ | 743 | $ | 3,312 | $ | 2,597 | |||||||||||||||||||||||||||
| Income from operations: | |||||||||||||||||||||||||||||||||||
| GAAP income from operations | $ | 35 | $ | 18 | $ | 257 | $ | 199 | |||||||||||||||||||||||||||
| Stock-based compensation | 302 | 245 | 1,131 | 870 | |||||||||||||||||||||||||||||||
| Amortization of purchased intangibles | 24 | 11 | 76 | 46 | |||||||||||||||||||||||||||||||
| Business combination and other related costs | 6 | 2 | 18 | 6 | |||||||||||||||||||||||||||||||
| Non-GAAP income from operations | $ | 367 | $ | 276 | $ | 1,482 | $ | 1,121 | |||||||||||||||||||||||||||
| Operating margin: | |||||||||||||||||||||||||||||||||||
| GAAP operating margin | 2 | % | 1 | % | 4 | % | 5 | % | |||||||||||||||||||||||||||
| Stock-based compensation as % of total revenues | 19 | % | 20 | % | 19 | % | 19 | % | |||||||||||||||||||||||||||
| Amortization of purchased intangibles as % of total revenues | 2 | % | 1 | % | 2 | % | 1 | % | |||||||||||||||||||||||||||
| Business combination and other related costs as % of total revenues | — | % | — | % | 0 | % | — | % | |||||||||||||||||||||||||||
| Non-GAAP operating margin | 23 | % | 22 | % | 25 | % | 25 | % | |||||||||||||||||||||||||||
| Net income: | |||||||||||||||||||||||||||||||||||
| GAAP net income | $ | 26 | $ | 17 | $ | 230 | $ | 119 | |||||||||||||||||||||||||||
| Stock-based compensation | 302 | 245 | 1,131 | 870 | |||||||||||||||||||||||||||||||
| Amortization of purchased intangibles | 24 | 11 | 76 | 46 | |||||||||||||||||||||||||||||||
| Business combination and other related costs | 6 | 2 | 18 | 6 | |||||||||||||||||||||||||||||||
| Amortization of debt discount and issuance costs | 2 | 2 | 7 | 24 | |||||||||||||||||||||||||||||||
| Other | — | 5 | 3 | 47 | |||||||||||||||||||||||||||||||
| Income tax expense effects related to the above adjustments | (64) | (47) | (264) | (186) | |||||||||||||||||||||||||||||||
| Non-GAAP net income | $ | 296 | $ | 235 | $ | 1,201 | $ | 926 | |||||||||||||||||||||||||||
| Net income per share - basic and diluted: | |||||||||||||||||||||||||||||||||||
| GAAP net income per share - basic | $ | 0.13 | $ | 0.09 | $ | 1.16 | $ | 0.61 | |||||||||||||||||||||||||||
| GAAP net income per share - diluted | $ | 0.13 | $ | 0.08 | $ | 1.13 | $ | 0.59 | |||||||||||||||||||||||||||
| Non-GAAP net income per share - basic | $ | 1.49 | $ | 1.20 | $ | 6.07 | $ | 4.79 | |||||||||||||||||||||||||||
| Non-GAAP net income per share - diluted | $ | 1.46 | $ | 1.17 | $ | 5.92 | $ | 4.63 | |||||||||||||||||||||||||||
| GAAP weighted-average shares used to compute net income per share - basic | 199 | 195 | 198 | 193 | |||||||||||||||||||||||||||||||
| GAAP weighted-average shares used to compute net income per share - diluted | 204 | 202 | 203 | 202 | |||||||||||||||||||||||||||||||
Effects of in-the-money portion of convertible senior notes(4) | (1) | (1) | — | (2) | |||||||||||||||||||||||||||||||
| Non-GAAP weighted-average shares used to compute net income per share - diluted | 203 | 201 | 203 | 200 | |||||||||||||||||||||||||||||||
| Free cash flow: | |||||||||||||||||||||||||||||||||||
| GAAP net cash provided by operating activities | $ | 844 | $ | 685 | $ | 2,191 | $ | 1,786 | |||||||||||||||||||||||||||
| Purchases of property and equipment | (100) | (134) | (392) | (419) | |||||||||||||||||||||||||||||||
| Repayments of convertible senior notes attributable to debt discount | — | 13 | 15 | 82 | |||||||||||||||||||||||||||||||
| Business combination and other related costs | — | — | 53 | — | |||||||||||||||||||||||||||||||
| Non-GAAP free cash flow | $ | 744 | $ | 564 | $ | 1,867 | $ | 1,449 | |||||||||||||||||||||||||||
| Free cash flow margin: | |||||||||||||||||||||||||||||||||||
| GAAP net cash provided by operating activities as % of total revenues | 52 | % | 55 | % | 37 | % | 39 | % | |||||||||||||||||||||||||||
| Purchases of property and equipment as % of total revenues | (6 | %) | (11 | %) | (7 | %) | (9 | %) | |||||||||||||||||||||||||||
| Repayments of convertible senior notes attributable to debt discount as % of total revenues | — | % | 1 | % | — | % | 2 | % | |||||||||||||||||||||||||||
| Business combination and other related costs as % of total revenues | 0 | % | — | % | 1 | % | — | % | |||||||||||||||||||||||||||
| Non-GAAP free cash flow margin | 46 | % | 45 | % | 32 | % | 32 | % | |||||||||||||||||||||||||||
(1)Non-GAAP 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)Non-GAAP cRPO, RPO and the corresponding growth rates are derived by applying the end of period exchange rates in effect during the comparison period rather than the actual end of period exchange rates in effect during the current period.
(3)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.
(4)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.
Note: Numbers are rounded for presentation purposes and may not foot.
11
ServiceNow, Inc.
Reconciliation of Non-GAAP Financial Guidance
| Three Months Ended | |||||||||||||||||
| March 31, 2022 | March 31, 2021 | Growth Rates | |||||||||||||||
| GAAP subscription revenues | $1,610 - $1,615 million | $1,293 million | 25% | ||||||||||||||
| Effects of foreign currency rate fluctuations | $35 million | 2.5% | |||||||||||||||
Non-GAAP subscription revenues(1) | $1,645 - $1,650 million | 27.5% | |||||||||||||||
| cRPO growth rate | 28% | ||||||||||||||||
| Effects of foreign currency rate fluctuations | 1.5% | ||||||||||||||||
Non-GAAP cRPO growth rate(2) | 29.5% | ||||||||||||||||
| GAAP operating margin | 4% | ||||||||||||||||
| Stock-based compensation expense as % of total revenues | 20% | ||||||||||||||||
| Amortization of purchased intangibles as % of total revenues | 1% | ||||||||||||||||
| Business combination and other related costs as % of total revenues | 0% | ||||||||||||||||
| Non-GAAP operating margin | 25% | ||||||||||||||||
| GAAP weighted-average shares used to compute net income per share - diluted | 204 million | ||||||||||||||||
Effects of in-the-money portion of convertible senior notes(3) | (1) million | ||||||||||||||||
| Non-GAAP weighted-average shares used to compute net income per share - diluted | 203 million | ||||||||||||||||
| Twelve Months Ended | |||||||||||||||||
| December 31, 2022 | December 31, 2021 | Growth Rates | |||||||||||||||
| GAAP subscription revenues | $7,020 - $7,040 million | $5,573 million | 26% | ||||||||||||||
| Effects of foreign currency rate fluctuations | $110 million | 2% | |||||||||||||||
Non-GAAP subscription revenues (1) | $7,130 - $7,150 million | 28% | |||||||||||||||
| 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% | ||||||||||||||||
| Business combination and other related costs as % of total revenues | 0% | ||||||||||||||||
| Non-GAAP operating margin | 25% | ||||||||||||||||
| GAAP net cash provided by operating activities as % of total revenues | 39% | ||||||||||||||||
| Purchases of property and equipment as % of total revenues | (8%) | ||||||||||||||||
| Repayments of convertible senior notes attributable to debt discount as % of total revenues | 0% | ||||||||||||||||
| Business combination and other related costs as % of total revenues | 0% | ||||||||||||||||
| Non-GAAP free cash flow margin | 31% | ||||||||||||||||
| GAAP weighted-average shares used to compute net income per share - diluted | 204 million | ||||||||||||||||
Effects of in-the-money portion of convertible senior notes(3) | 0 million | ||||||||||||||||
| Non-GAAP weighted-average shares used to compute net income per share - diluted | 204 million | ||||||||||||||||
(1)Non-GAAP 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)Non-GAAP cRPO growth rate is derived by applying the end of period exchange rates in effect during the comparison period rather than the actual end of period exchange rates in effect during the current period.
(3)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.
12
ServiceNow announces executive leadership promotions
As market opportunities expand, ServiceNow scales strong leadership team
Santa Clara, Calif. — Jan. 26, 2022 — ServiceNow (NYSE:NOW), the leading digital workflow company that makes the world work better for everyone, today announced leadership promotions taking effect in its global executive team. These expanded roles reflect the impressive global demand for ServiceNow as well as executive leaders’ ability to retain our inspired global workforce of 16,000-plus and to recruit the next generation of talent.
The executive leadership promotions include:
•Chief Product and Engineering Officer Chirantan “CJ” Desai has been promoted to chief operating officer (COO). As COO, Desai will now be responsible for industries and solution sales in addition to product, design, and engineering, and will help accelerate ServiceNow’s focus on industry solutions while driving continued platform leadership.
•Chief Revenue Officer Kevin Haverty has been promoted to a new strategic role as senior advisor to the CEO. Haverty will work to expand ServiceNow’s footprint in the public sector and mentor early-in-career professionals across the company, a key talent group for ServiceNow.
•President of EMEA Paul Smith has been promoted to chief commercial officer. Smith will oversee all regional sales teams, as well as sales enablement and sales operations. He will work closely with Haverty to ensure a smooth transition.
In addition, on Feb. 1, 2022, ServiceNow will welcome former Salesforce and Coca-Cola executive Ulrik Nehammer as our new president of EMEA (Europe, Middle East, Africa).
As the digital transformation opportunity continues to grow, these leaders’ tenure and experience will continue to position ServiceNow at the forefront for employees, customers, and partners.
“As our business continues to accelerate, we are strengthening our leadership team for scale,” said ServiceNow President and CEO Bill McDermott. “Customer demand for ServiceNow’s innovative platform has never been stronger. With leaders of this high caliber, we could not be more confident on our journey to $15B+ in revenue and beyond.”
Desai has led ServiceNow’s platform, product, and engineering teams for more than five years. During this time, his teams have innovated with speed and unmatched quality, establishing best-in-class standards for platform innovation, new products, product design, and successful deployments at scale. As investment in digital transformation has soared, ServiceNow’s platform and solutions portfolio continues to expand. As COO, Desai’s expanded responsibilities – including industries and solution sales – will help accelerate customer adoption of ServiceNow’s full suite of solutions.
“ServiceNow continues to lead and partner with our customers to accelerate their digital transformation journeys,” said Desai. “We have a tremendous opportunity to become the platform for every enterprise, government, and education institution. Bringing our product and industry sales teams into the same organization is consistent with our customer-first ethos and will enable us to further accelerate our innovation cycles.”
Haverty, a Veteran of the US Army National Guard, is a long-time sales leader at ServiceNow. During his 10-plus years, Haverty has successfully led and grown the sales organization on ServiceNow’s way to $5.896 billion in revenues at the end of 2021 and has built top-performing sales teams around the world.
“It’s been a huge honor for me to be part of ServiceNow’s growth for more than a decade,” said Haverty. “I’m excited to turn my attention to other critical areas of our business: serving our public sector customers, helping them create incredible citizen experiences, and helping incoming talent reach their full potential.”
Smith joined ServiceNow in July 2020 after senior roles at Salesforce and Microsoft and quickly established himself as a sales leader with broad geographic expertise and influence. He is also an ally in the technology industry for diversity, inclusion, and belonging.
“Every team across our global sales organization is best in class, and I can’t wait to work with them to ensure the best outcomes for our customers,” said Smith. “Every single person here is committed to taking care of our customers and one another. I’m humbled by the opportunity to build on the fantastic foundation and success that this organization has created.”
Hear more about the promotions during the ServiceNow Q4 and full-year 2021 earnings call on Wednesday, Jan. 26, 2022, from 2 to 3 pm PT. Register here.
About ServiceNow
ServiceNow (NYSE: NOW) makes the world work better for everyone. Our cloud-based platform and solutions deliver digital workflows that help organizations find smarter, faster, better ways to work. So employees and customers can be more connected, more innovative, and more agile. And we can all create the future we imagine. The world works with ServiceNow. For more information, visit: www.servicenow.com.
© 2022 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.
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