Le Lézard
Classified in: Science and technology, Business, Covid-19 virus
Subjects: EARNINGS, Conference Call, Webcast

ServiceNow Reports Third Quarter 2022 Financial Results


ServiceNow (NYSE: NOW), the leading digital workflow company making the world work better for everyone, today announced financial results for its third quarter ended September 30, 2022, with subscription revenues of $1,742 million in Q3 2022, representing 22% year-over-year growth, 28.5% adjusted for constant currency.

"Once again, ServiceNow beat both our top and bottom-line goals," said ServiceNow Chairman and CEO Bill McDermott. "Businesses are leaning into the generational shift from architectures built in the last century to platforms engineered for this one. Through dramatically improved experiences for customers, employees, and creators, ServiceNow is becoming the strategic center of gravity for digital transformation. Our focus on value creation is unmatched."

As of September 30, 2022, current remaining performance obligations ("cRPO"), contract revenue that will be recognized as revenue in the next 12 months, was $5.87 billion, representing 18% year-over-year growth and 25% adjusted for constant currency. The company now has 1,530 total customers with more than $1 million in annual contract value, representing 22% year-over-year growth in customers. The number of customers paying over $10 million in annual contract value in Q3 2022 grew 60% year-over-year.

"Q3's outperformance is a testament to the mission critical nature of our platform and the strong execution of the ServiceNow team," said ServiceNow CFO Gina Mastantuono. "We continue to see a robust pipeline and are maintaining our investments in growth hires as the opportunity in front of us remains enormous. Our business is resilient, our teams are delivering, and we are as confident as ever about becoming the defining enterprise software company of the 21st century."

ServiceNow also announced today that McDermott was named Chairman of ServiceNow's Board of Directors. Founder Fred Luddy, who has served as Chairman for the past four-plus years, will remain a member of the Board.

"From the start, Fred's vision for a platform that would make the world work better for everyone has inspired millions," said McDermott. "He is not only one of the great innovators of all time, he is a leader of unparalleled character and class. I'm especially grateful for his ongoing, long-term commitment to this Board. Fred's love for our company and customers knows no bounds."

Recent Business Highlights

Third Quarter 2022 GAAP and Non-GAAP Results:

The following table summarizes our financial results for the third quarter 2022:

 

 

 

 

 

 

 

Third Quarter 2022 GAAP Results

 

Third Quarter 2022 Non-GAAP Results(1)

 

Amount

($ millions)

Year/Year

Growth (%)

 

Amount

($ millions)(2)

Year/Year

Growth (%)

Subscription revenues

$1,742

22%

 

$1,834

28.5 %

Professional services and other revenues

$89

5%

 

$95

12%

Total revenues

$1,831

21%

 

$1,929

27.5%

 

 

 

 

 

 

 

Amount

($ billions)

Year/Year

Growth (%)

 

Amount
($ billions)(2)

Year/Year

Growth (%)

cRPO

$5.87

18%

 

$6.22

25%

RPO

$11.4

17%

 

$12.1

24.5%

 

 

 

 

 

 

 

Amount

($ millions)

Margin (%)

 

Amount

($ millions)

Margin (%)

Subscription gross profit

$1,441

83%

 

$1,502

86%

Professional services and other gross profit (loss)

($10)

(11%)

 

$7

8%

Total gross profit

$1,431

78%

 

$1,509

82%

Income from operations

$91

5%

 

$480

26%

Net cash provided by operating activities

$265

15%

 

 

 

Free cash flow

 

 

 

$103

6%

 

 

 

 

 

 

 

Amount

($ millions)

Earnings per

Basic/Diluted
Share ($)

 

Amount

($ millions)

Earnings per
Basic/Diluted
Share ($)

Net income

$80

$0.39/ $0.39

 

$398

$1.97/ $1.96

(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 and RPO are adjusted for constant currency. 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 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 December 31, 2021, ServiceNow has seen an incremental strengthening of the U.S. dollar resulting in foreign exchange ("FX") headwinds. Total FX impact estimated to be approximately a $290 million (~5.5%) headwind for 2022 subscription revenues and a $330 million (~6%) headwind for Q4 2022 cRPO. FX is also expected to be approximately a 1 point headwind to both FY 2022 operating margin and free cash flow margin.

The following table summarizes our guidance for the fourth quarter 2022:

 

Fourth Quarter 2022

GAAP Guidance

 

Fourth Quarter 2022

Non-GAAP Guidance(1)

 

Amount
($ millions)(2)

Year/Year

Growth (%)(2)

 

Constant Currency

Year/ Year Growth (%)

Subscription revenues

$1,834 - $1,839

20 % - 21 %

 

26 % - 27 %

 

 

 

 

 

cRPO

 

20 %

 

26 %

 

 

 

 

 

 

 

 

 

Margin (%)

Income from operations

 

 

 

26 %

 

 

 

 

 

 

 

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)

Guidance for GAAP subscription revenues and GAAP subscription revenue and cRPO growth rate is based on the 30-day average of foreign exchange rates for September 2022 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 (%)(2)

 

Constant Currency

Year/ Year Growth (%)

Subscription revenues

$6,865 - $6,870

23 %

 

28.5 %

 

 

 

 

 

 

 

 

 

Margin (%)

Subscription gross profit

 

 

 

86 %

Income from operations

 

 

 

25 %

Free cash flow

 

 

 

29 %

 

 

 

 

 

 

 

 

 

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)

GAAP subscription revenues and related growth rate for the future quarters included in our full-year 2022 guidance are based on the 30-day average of foreign exchange rates for September 2022 for entities reporting in currencies other than U.S. Dollars.

Conference Call Details

The conference call will begin at 2 p.m. Pacific Time (21:00 GMT) on October 26, 2022. Interested parties may listen to the call by dialing (888) 330-2455 (Passcode: 8135305), or if outside North America, by dialing (240) 789-2717 (Passcode: 8135305). Individuals may access the live teleconference from this webcast.

https://events.q4inc.com/attendee/133177732

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 https://www.servicenow.com/company/investor-relations.html

Statement Regarding Use of Non-GAAP Financial Measures

We use 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.

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, among others, 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; fluctuations in the value of foreign currencies relative to the U.S. Dollar; fluctuations in interest rates; 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, and the availability of vaccinations; our ability to consummate and realize the benefits of any strategic transactions or acquisitions; the impact of the Russian invasion of Ukraine on macroeconomic conditions; inflation; 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-K filed for the year ended December 31, 2021, our Form 10-Q that will be filed for the quarter ended September 30, 2022 and in other filings we make with the Securities and Exchange Commission from time to time.

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.

© 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.

ServiceNow, Inc.

Condensed Consolidated Statements of Operations

(in millions, except per share data)

(unaudited)

 

 

Three Months Ended

 

Nine Months Ended

 

September 30,
2022

 

September 30,
2021

 

September 30,
2022

 

September 30,
2021

Revenues:

 

 

 

 

 

 

 

Subscription

$

1,742

 

 

$

1,427

 

 

$

5,031

 

 

$

4,050

 

Professional services and other

 

89

 

 

 

85

 

 

 

274

 

 

 

232

 

Total revenues

 

1,831

 

 

 

1,512

 

 

 

5,305

 

 

 

4,282

 

Cost of revenues (1):

 

 

 

 

 

 

 

Subscription

 

301

 

 

 

264

 

 

 

863

 

 

 

740

 

Professional services and other

 

99

 

 

 

86

 

 

 

295

 

 

 

239

 

Total cost of revenues

 

400

 

 

 

350

 

 

 

1,158

 

 

 

979

 

Gross profit

 

1,431

 

 

 

1,162

 

 

 

4,147

 

 

 

3,303

 

Operating expenses (1):

 

 

 

 

 

 

 

Sales and marketing

 

697

 

 

 

579

 

 

 

2,092

 

 

 

1,660

 

Research and development

 

456

 

 

 

358

 

 

 

1,314

 

 

 

1,005

 

General and administrative

 

187

 

 

 

151

 

 

 

541

 

 

 

416

 

Total operating expenses

 

1,340

 

 

 

1,088

 

 

 

3,947

 

 

 

3,081

 

Income from operations

 

91

 

 

 

74

 

 

 

200

 

 

 

222

 

Interest expense

 

(8

)

 

 

(7

)

 

 

(20

)

 

 

(21

)

Other income, net

 

19

 

 

 

1

 

 

 

36

 

 

 

16

 

Income before income taxes

 

102

 

 

 

68

 

 

 

216

 

 

 

217

 

Provision for income taxes

 

22

 

 

 

5

 

 

 

41

 

 

 

13

 

Net income

$

80

 

 

$

63

 

 

$

175

 

 

$

204

 

Net income per share - basic

$

0.39

 

 

$

0.32

 

 

$

0.87

 

 

$

1.03

 

Net income per share - diluted

$

0.39

 

 

$

0.31

 

 

$

0.86

 

 

$

1.00

 

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

 

202

 

 

 

199

 

 

 

201

 

 

 

198

 

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

 

203

 

 

 

203

 

 

 

203

 

 

 

203

 

(1) Includes stock-based compensation as follows:

 

Three Months Ended

 

Nine Months Ended

 

September 30,
2022

 

September 30,
2021

 

September 30,
2022

 

September 30,
2021

Cost of revenues:

 

 

 

 

 

 

 

Subscription

$

41

 

$

33

 

$

116

 

$

95

Professional services and other

 

17

 

 

 

15

 

 

 

51

 

 

 

43

 

Operating expenses:

 

 

 

 

 

 

 

Sales and marketing

 

119

 

 

 

101

 

 

 

337

 

 

 

293

 

Research and development

 

127

 

 

 

102

 

 

 

368

 

 

 

288

 

General and administrative

 

57

 

 

 

40

 

 

 

166

 

 

 

110

 

ServiceNow, Inc.

Condensed Consolidated Balance Sheets

(in millions)

 

 

September 30, 2022

 

December 31, 2021

 

(unaudited)

 

 

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

1,248

 

$

1,728

Short-term investments

 

2,708

 

 

1,576

Accounts receivable, net

 

898

 

 

1,390

Current portion of deferred commissions

 

330

 

 

303

Prepaid expenses and other current assets

 

292

 

 

223

Total current assets

 

5,476

 

 

5,220

Deferred commissions, less current portion

 

650

 

 

623

Long-term investments

 

1,517

 

 

1,630

Property and equipment, net

 

914

 

 

766

Operating lease right-of-use assets

 

581

 

 

591

Intangible assets, net

 

234

 

 

287

Goodwill

 

794

 

 

777

Deferred tax assets

 

604

 

 

692

Other assets

 

336

 

 

212

Total assets

$

11,106

 

$

10,798

Liabilities and Stockholders' Equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

195

 

$

89

Accrued expenses and other current liabilities

 

657

 

 

850

Current portion of deferred revenue

 

3,491

 

 

3,836

Current portion of operating lease liabilities

 

89

 

 

82

Current debt, net

 

?

 

 

92

Total current liabilities

 

4,432

 

 

4,949

Deferred revenue, less current portion

 

63

 

 

63

Operating lease liabilities, less current portion

 

551

 

 

556

Long-term debt, net

 

1,485

 

 

1,484

Other long-term liabilities

 

52

 

 

51

Stockholders' equity

 

4,523

 

 

3,695

Total liabilities and stockholders' equity

$

11,106

 

$

10,798

ServiceNow, Inc.

Condensed Consolidated Statements of Cash Flows

(in millions)

(unaudited)

 

 

Three Months Ended

 

Nine Months Ended

 

September 30,
2022

 

September 30,
2021

 

September 30,
2022

 

September 30,
2021

Cash flows from operating activities:

 

 

 

 

 

 

 

Net income

$

80

 

 

$

63

 

 

$

175

 

 

$

204

 

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

 

 

 

 

 

 

 

Depreciation and amortization

 

109

 

 

 

125

 

 

 

315

 

 

 

346

 

Amortization of deferred commissions

 

92

 

 

 

75

 

 

 

261

 

 

 

211

 

Stock-based compensation

 

361

 

 

 

291

 

 

 

1,038

 

 

 

828

 

Deferred income taxes

 

?

 

 

 

(5

)

 

 

(3

)

 

 

(21

)

Repayments of convertible senior notes attributable to debt discount

 

?

 

 

 

(2

)

 

 

?

 

 

 

(15

)

Other

 

(10

)

 

 

15

 

 

 

9

 

 

 

37

 

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

 

 

 

 

 

 

 

Accounts receivable

 

(66

)

 

 

(5

)

 

 

445

 

 

 

219

 

Deferred commissions

 

(132

)

 

 

(127

)

 

 

(369

)

 

 

(344

)

Prepaid expenses and other assets

 

(1

)

 

 

(21

)

 

 

(73

)

 

 

(78

)

Accounts payable

 

(24

)

 

 

(36

)

 

 

116

 

 

 

39

 

Deferred revenue

 

(112

)

 

 

(38

)

 

 

(156

)

 

 

47

 

Accrued expenses and other liabilities

 

(32

)

 

 

(15

)

 

 

(197

)

 

 

(126

)

Net cash provided by operating activities

 

265

 

 

 

320

 

 

 

1,561

 

 

 

1,347

 

Cash flows from investing activities:

 

 

 

 

 

 

 

Purchases of property and equipment

 

(162

)

 

 

(94

)

 

 

(406

)

 

 

(292

)

Business combinations, net of cash acquired

 

?

 

 

 

(40

)

 

 

(57

)

 

 

(778

)

Purchases of investments

 

(1,037

)

 

 

(609

)

 

 

(2,811

)

 

 

(1,741

)

Purchases of non-marketable investments

 

(2

)

 

 

(21

)

 

 

(138

)

 

 

(28

)

Sales and maturities of investments

 

569

 

 

 

556

 

 

 

1,700

 

 

 

1,579

 

Other

 

3

 

 

 

11

 

 

 

3

 

 

 

12

 

Net cash used in investing activities

 

(629

)

 

 

(197

)

 

 

(1,709

)

 

 

(1,248

)

Cash flows from financing activities:

 

 

 

 

 

 

 

Repayments of convertible senior notes attributable to principal

 

?

 

 

 

(6

)

 

 

(94

)

 

 

(59

)

Proceeds from employee stock plans

 

71

 

 

 

70

 

 

 

177

 

 

 

165

 

Taxes paid related to net share settlement of equity awards

 

(111

)

 

 

(142

)

 

 

(352

)

 

 

(457

)

Net cash used in financing activities

 

(40

)

 

 

(78

)

 

 

(269

)

 

 

(351

)

Foreign currency effect on cash, cash equivalents and restricted cash

 

(12

)

 

 

(10

)

 

 

(61

)

 

 

(21

)

Net change in cash, cash equivalents and restricted cash

 

(416

)

 

 

35

 

 

 

(478

)

 

 

(273

)

Cash, cash equivalents and restricted cash at beginning of period

 

1,670

 

 

 

1,371

 

 

 

1,732

 

 

 

1,679

 

Cash, cash equivalents and restricted cash at end of period

$

1,254

 

 

$

1,406

 

 

$

1,254

 

 

$

1,406

 

ServiceNow, Inc.

GAAP to Non-GAAP Reconciliation

(in millions, except cRPO, RPO and per share data)

(unaudited)

 

 

 

Three Months Ended

 

 

 

Nine Months Ended

 

 

 

September 30,
2022

 

September 30,
2021

 

Growth Rates

 

September 30,
2022

 

September 30,
2021

 

Growth Rates

Subscription revenues:

 

 

 

 

 

 

 

 

 

 

 

GAAP subscription revenues

$

1,742

 

 

$

1,427

 

 

22%

 

$

5,031

 

 

$

4,050

 

 

24%

Effects of foreign currency rate fluctuations

 

92

 

 

 

 

 

 

 

193

 

 

 

 

 

Non-GAAP subscription revenues(1)

$

1,834

 

 

 

 

28.5%

 

$

5,224

 

 

 

 

29%

 

 

 

 

 

 

 

 

 

 

 

 

Professional services and other revenues:

 

 

 

 

 

 

 

 

 

 

 

GAAP professional services and other revenues

$

89

 

 

$

85

 

 

5%

 

$

274

 

 

$

232

 

 

18%

Effects of foreign currency rate fluctuations

 

6

 

 

 

 

 

 

 

14

 

 

 

 

 

Non-GAAP professional service and other revenues(1)

$

95

 

 

 

 

12%

 

$

288

 

 

 

 

24%

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues:

 

 

 

 

 

 

 

 

 

 

 

GAAP total revenues

$

1,831

 

 

$

1,512

 

 

21%

 

$

5,305

 

 

$

4,282

 

 

24%

Effects of foreign currency rate fluctuations

 

98

 

 

 

 

 

 

 

207

 

 

 

 

 

Non-GAAP total revenues(1)

$

1,929

 

 

 

 

27.5%

 

$

5,512

 

 

 

 

28.5%

 

 

 

 

 

 

 

 

 

 

 

 

cRPO (in billions):

 

 

 

 

 

 

 

 

 

 

 

GAAP cRPO

$

5.87

 

 

$

4.97

 

 

18%

 

$

5.87

 

 

$

4.97

 

 

18%

Effects of foreign currency rate fluctuations

 

0.35

 

 

 

 

 

 

 

0.35

 

 

 

 

 

Non-GAAP cRPO(2)

$

6.22

 

 

 

 

25%

 

$

6.22

 

 

 

 

25%

 

 

 

 

 

 

 

 

 

 

 

 

RPO (in billions):

 

 

 

 

 

 

 

 

 

 

 

GAAP RPO

$

11.4

 

 

$

9.7

 

 

17%

 

$

11.4

 

 

$

9.7

 

 

17%

Effects of foreign currency rate fluctuations

 

0.7

 

 

 

 

 

 

 

0.7

 

 

 

 

 

Non-GAAP RPO(2)

$

12.1

 

 

 

 

24.5%

 

$

12.1

 

 

 

 

24.5%

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenues:

 

 

 

 

 

 

 

 

 

 

 

GAAP subscription cost of revenues

$

301

 

 

$

264

 

 

 

 

$

863

 

 

$

740

 

 

 

Stock-based compensation

 

(41

)

 

 

(33

)

 

 

 

 

(116

)

 

 

(95

)

 

 

Amortization of purchased intangibles

 

(18

)

 

 

(17

)

 

 

 

 

(54

)

 

 

(43

)

 

 

Business combination and other related costs

 

(2

)

 

 

?

 

 

 

 

 

(2

)

 

 

?

 

 

 

Non-GAAP subscription cost of revenues

$

240

 

 

$

214

 

 

 

 

$

691

 

 

$

602

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP professional services and other cost of revenues

$

99

 

 

$

86

 

 

 

 

$

295

 

 

$

239

 

 

 

Stock-based compensation

 

(17

)

 

 

(15

)

 

 

 

 

(51

)

 

 

(43

)

 

 

Non-GAAP professional services and other cost of revenues

$

82

 

 

$

71

 

 

 

 

$

244

 

 

$

196

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit:

 

 

 

 

 

 

 

 

 

 

 

GAAP subscription gross profit

$

1,441

 

 

$

1,163

 

 

 

 

$

4,168

 

 

$

3,310

 

 

 

Stock-based compensation

 

41

 

 

 

33

 

 

 

 

 

116

 

 

 

95

 

 

 

Amortization of purchased intangibles

 

18

 

 

 

17

 

 

 

 

 

54

 

 

 

43

 

 

 

Business combination and other related costs

 

2

 

 

 

?

 

 

 

 

 

2

 

 

 

?

 

 

 

Non-GAAP subscription gross profit

$

1,502

 

 

$

1,213

 

 

 

 

$

4,340

 

 

$

3,448

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP professional services and other gross loss

$

(10

)

 

$

(1

)

 

 

 

$

(21

)

 

$

(7

)

 

 

Stock-based compensation

 

17

 

 

 

15

 

 

 

 

 

51

 

 

 

43

 

 

 

Non-GAAP professional services and other gross profit

$

7

 

 

$

14

 

 

 

 

$

30

 

 

$

36

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP gross profit

$

1,431

 

 

$

1,162

 

 

 

 

$

4,147

 

 

$

3,303

 

 

 

Stock-based compensation

 

58

 

 

 

48

 

 

 

 

 

166

 

 

 

138

 

 

 

Amortization of purchased intangibles

 

18

 

 

 

17

 

 

 

 

 

54

 

 

 

43

 

 

 

Business combination and other related costs

 

2

 

 

 

?

 

 

 

 

 

2

 

 

 

?

 

 

 

Non-GAAP gross profit

$

1,509

 

 

$

1,227

 

 

 

 

$

4,369

 

 

$

3,484

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross margin:

 

 

 

 

 

 

 

 

 

 

 

GAAP subscription gross margin

 

83

%

 

 

81

%

 

 

 

 

83

%

 

 

82

%

 

 

Stock-based compensation as % of subscription revenues

 

2

%

 

 

2

%

 

 

 

 

2

%

 

 

2

%

 

 

Amortization of purchased intangibles as % of subscription revenues

 

1

%

 

 

1

%

 

 

 

 

1

%

 

 

1

%

 

 

Business combination and other related costs as % of subscription revenues

 

?

%

 

 

?

%

 

 

 

 

?

%

 

 

?

%

 

 

Non-GAAP subscription gross margin

 

86

%

 

 

85

%

 

 

 

 

86

%

 

 

85

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP professional services and other gross margin

 

(11

%)

 

 

(1

%)

 

 

 

 

(8

%)

 

 

(3

%)

 

 

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

 

19

%

 

 

18

%

 

 

 

 

19

%

 

 

19

%

 

 

Non-GAAP professional services and other gross margin

 

8

%

 

 

17

%

 

 

 

 

11

%

 

 

16

%

 

 

 

 

 

 

 

 

 

 

 

 

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

%

 

 

Business combination and other related costs as % of total revenues

 

?

%

 

 

?

%

 

 

 

 

?

%

 

 

?

%

 

 

Non-GAAP gross margin

 

82

%

 

 

81

%

 

 

 

 

82

%

 

 

81

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

GAAP sales and marketing expenses

$

697

 

 

$

579

 

 

 

 

$

2,092

 

 

$

1,660

 

 

 

Stock-based compensation

 

(119

)

 

 

(101

)

 

 

 

 

(337

)

 

 

(293

)

 

 

Amortization of purchased intangibles

 

?

 

 

 

?

 

 

 

 

 

?

 

 

 

(1

)

 

 

Non-GAAP sales and marketing expenses

$

578

 

 

$

478

 

 

 

 

$

1,755

 

 

$

1,366

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP research and development expenses

$

456

 

 

$

358

 

 

 

 

$

1,314

 

 

$

1,005

 

 

 

Stock-based compensation

 

(127

)

 

 

(102

)

 

 

 

 

(368

)

 

 

(288

)

 

 

Business combination and other related costs

 

(6

)

 

 

(4

)

 

 

 

$

(16

)

 

$

(5

)

 

 

Non-GAAP research and development expenses

$

323

 

 

$

252

 

 

 

 

$

930

 

 

$

712

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP general and administrative expenses

$

187

 

 

$

151

 

 

 

 

$

541

 

 

$

416

 

 

 

Stock-based compensation

 

(57

)

 

 

(40

)

 

 

 

 

(166

)

 

 

(110

)

 

 

Amortization of purchased intangibles

 

(2

)

 

 

(2

)

 

 

 

 

(6

)

 

 

(8

)

 

 

Business combination and other related costs

 

?

 

 

 

(2

)

 

 

 

 

?

 

 

 

(7

)

 

 

Non-GAAP general and administrative expenses

$

128

 

 

$

107

 

 

 

 

$

369

 

 

$

291

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP total operating expenses

$

1,340

 

 

$

1,088

 

 

 

 

$

3,947

 

 

$

3,081

 

 

 

Stock-based compensation

 

(303

)

 

 

(243

)

 

 

 

 

(871

)

 

 

(691

)

 

 

Amortization of purchased intangibles

 

(2

)

 

 

(2

)

 

 

 

 

(6

)

 

 

(9

)

 

 

Business combination and other related costs

 

(6

)

 

 

(7

)

 

 

 

 

(16

)

 

 

(13

)

 

 

Non-GAAP total operating expenses

$

1,029

 

 

$

836

 

 

 

 

$

3,054

 

 

$

2,368

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations:

 

 

 

 

 

 

 

 

 

 

 

GAAP income from operations

$

91

 

 

$

74

 

 

 

 

$

200

 

 

$

222

 

 

 

Stock-based compensation

 

361

 

 

 

291

 

 

 

 

 

1,038

 

 

 

829

 

 

 

Amortization of purchased intangibles

 

20

 

 

 

19

 

 

 

 

 

60

 

 

 

52

 

 

 

Business combination and other related costs

 

8

 

 

 

7

 

 

 

 

 

18

 

 

 

13

 

 

 

Non-GAAP income from operations

$

480

 

 

$

391

 

 

 

 

$

1,316

 

 

$

1,116

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating margin:

 

 

 

 

 

 

 

 

 

 

 

GAAP operating margin

 

5

%

 

 

5

%

 

 

 

 

4

%

 

 

5

%

 

 

Stock-based compensation as % of total revenues

 

20

%

 

 

19

%

 

 

 

 

20

%

 

 

19

%

 

 

Amortization of purchased intangibles as % of total revenues

 

1

%

 

 

1

%

 

 

 

 

1

%

 

 

1

%

 

 

Business combination and other related costs as % of total revenues

 

?

%

 

 

1

%

 

 

 

 

?

%

 

 

1

%

 

 

Non-GAAP operating margin

 

26

%

 

 

26

%

 

 

 

 

25

%

 

 

26

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income:

 

 

 

 

 

 

 

 

 

 

 

GAAP net income

$

80

 

 

$

63

 

 

 

 

$

175

 

 

$

204

 

 

 

Stock-based compensation

 

361

 

 

 

291

 

 

 

 

 

1,038

 

 

 

829

 

 

 

Amortization of purchased intangibles

 

20

 

 

 

19

 

 

 

 

 

60

 

 

 

52

 

 

 

Business combination and other related costs

 

8

 

 

 

7

 

 

 

 

 

18

 

 

 

13

 

 

 

Amortization of debt discount and issuance costs

 

?

 

 

 

2

 

 

 

 

 

?

 

 

 

6

 

 

 

Other

 

?

 

 

 

?

 

 

 

 

 

?

 

 

 

3

 

 

 

Income tax expense effects related to the above adjustments

 

(71

)

 

 

(68

)

 

 

 

 

(212

)

 

 

(200

)

 

 

Non-GAAP net income

$

398

 

 

$

314

 

 

 

 

$

1,079

 

 

$

907

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share - basic and diluted:

 

 

 

 

 

 

 

 

 

 

 

GAAP net income per share - basic

$

0.39

 

 

$

0.32

 

 

 

 

$

0.87

 

 

$

1.03

 

 

 

GAAP net income per share - diluted

$

0.39

 

 

$

0.31

 

 

 

 

$

0.86

 

 

$

1.00

 

 

 

Non-GAAP net income per share - basic

$

1.97

 

 

$

1.58

 

 

 

 

$

5.37

 

 

$

4.58

 

 

 

Non-GAAP net income per share - diluted

$

1.96

 

 

$

1.55

 

 

 

 

$

5.31

 

 

$

4.49

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

202

 

 

 

199

 

 

 

 

 

201

 

 

 

198

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

203

 

 

 

203

 

 

 

 

 

203

 

 

 

203

 

 

 

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

 

?

 

 

 

?

 

 

 

 

 

?

 

 

 

(1

)

 

 

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

 

203

 

 

 

203

 

 

 

 

 

203

 

 

 

202

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Free cash flow:

 

 

 

 

 

 

 

 

 

 

 

GAAP net cash provided by operating activities

$

265

 

 

$

320

 

 

 

 

$

1,561

 

 

$

1,347

 

 

 

Purchases of property and equipment

 

(162

)

 

 

(94

)

 

 

 

 

(406

)

 

 

(292

)

 

 

Repayments of convertible senior notes attributable to debt discount

 

?

 

 

 

2

 

 

 

 

 

?

 

 

 

15

 

 

 

Business combination and other related costs

 

?

 

 

 

?

 

 

 

 

 

5

 

 

 

53

 

 

 

Non-GAAP free cash flow

$

103

 

 

$

228

 

 

 

 

$

1,160

 

 

$

1,123

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Free cash flow margin:

 

 

 

 

 

 

 

 

 

 

 

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

 

15

%

 

 

21

%

 

 

 

 

29

%

 

 

31

%

 

 

Purchases of property and equipment as % of total revenues

 

(9

%)

 

 

(6

%)

 

 

 

 

(8

%)

 

 

(7

%)

 

 

Business combination and other related costs as % of total revenues

 

?

%

 

 

?

%

 

 

 

 

?

%

 

 

1

%

 

 

Non-GAAP free cash flow margin

 

6

%

 

 

15

%

 

 

 

 

22

%

 

 

26

%

 

 

(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)

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.

ServiceNow, Inc.

Reconciliation of Non-GAAP Financial Guidance

 

 

Three Months Ending

 

December 31, 2022

 

 

GAAP subscription revenues growth rate

20 % - 21 %

 

 

Effects of foreign currency rate fluctuations

6%

 

 

Non-GAAP subscription revenues growth rate (1)

26 % - 27 %

 

 

cRPO growth rate

20%

 

 

Effects of foreign currency rate fluctuations

6%

 

 

Non-GAAP cRPO growth rate(2)

26%

 

 

GAAP operating margin

6%

 

 

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

?%

 

 

Non-GAAP operating margin

26%

 

Twelve Months Ending

 

December 31, 2022

 

 

GAAP subscription revenues growth rate

23%

 

 

Effects of foreign currency rate fluctuations

5.5%

 

 

Non-GAAP subscription revenues growth rate (1)

28.5%

 

 

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

?%

 

 

Non-GAAP operating margin

25%

 

 

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

36%

 

 

Purchases of property and equipment as % of total revenues

(7)%

 

 

Business combination and other related costs as % of total revenues

?%

 

 

Non-GAAP free cash flow margin

29%

 

 

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

203 million

 

 

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

?

 

 

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

203 million

(1)

Non-GAAP subscription revenue 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 exchange rates in effect during the guidance 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.

 

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

 


These press releases may also interest you

at 20:00
"We are even more clear that we must focus on building sustainable, predictable, and enterprise with stable growth. " Speaking at the 2023 annual results conference on March 28th, Fosun International Chairman Guo Guangchang said, "We are even more...

at 20:00
The "Finland Social Commerce Market Intelligence and Future Growth Dynamics Databook - 50+ KPIs on Social Commerce Trends by End-Use Sectors, Operational KPIs, Retail Product Dynamics, and Consumer Demographics - Q1 2024 Update" report has been added...

at 19:53
The Greater Toronto Airports Authority ("GTAA") today reported its financial and operating results for 2023.  Passenger activity significantly increased by 9.2 million, or 25.8 per cent, from 35.6 million to 44.8 million in 2023, when compared to...

at 19:45
North Coast Brewing Company (NCBC) announces an exceptional new barrel-aged beer. Born from a special collaboration between North Coast Brewing Company and Westward Whiskey, this limited offering of Barrel Aged Old Rasputin has matured for over a...

at 19:30
Robex Resources Inc. ("Robex" or the "Company") announces today that its Board of Directors has approved the implementation of the consolidation of the issued and outstanding common shares of the Company approved by its shareholders on June 29,...

at 19:30
ApartmentLove Inc. ("ApartmentLove" or the "Company"), a leading provider of online home, apartment, and vacation rental marketing services to property managers, owners, renters, and vacationers from around the world today announces a non-brokered...



News published on and distributed by: