ServiceNow® (NYSE: NOW) today announced the financial results
for its first quarter 2017.
First Quarter 2017 GAAP Results:
- Subscription revenues of $376.1
million, representing 41% year-over-year growth.
- Professional services and other
revenues of $40.6 million, representing 6% year-over-year
growth.
- Total revenues of $416.8 million,
representing 36% year-over-year growth.
- Subscription gross profit of $305.8
million, representing 81% of subscription revenues.
- Professional services and other gross
loss of $5.4 million, representing negative 13% of professional
services and other revenues.
- Total gross profit of $300.3 million,
representing 72% of total revenues.
- Loss from operations of $42.5 million,
representing negative 10% of total revenues.
- Net loss of $40.7 million, or loss of
$0.24 per basic and diluted share.
- Net cash provided by operating
activities of $187.4 million, representing 45% of total
revenues.
First Quarter 2017 Non-GAAP Results:
We report non-GAAP financial measures in addition to, and not as
a substitute for, or superior to, financial measures calculated in
accordance with GAAP. For the following non-GAAP results, see the
section entitled “Statement Regarding Use of Non-GAAP Financial
Measures” for an explanation of non-GAAP measures and the
corresponding growth rates, and the table entitled "GAAP to
Non-GAAP Reconciliation” for a reconciliation of non-GAAP to GAAP
measures and corresponding growth rates.
- Subscription revenues of $382.7
million, representing 43% year-over-year growth adjusted for
constant currency.
- Professional services and other
revenues of $41.3 million, representing 8% year-over-year growth
adjusted for constant currency.
- Total revenues of $424.0 million,
representing 39% year-over-year growth adjusted for constant
currency.
- Subscription billings of $478.7
million, representing 44% year-over-year growth (or $466.2 million,
representing 41% year-over-year growth adjusted for constant
currency and constant billings duration).
- Professional services and other
billings of $50.5 million, representing 11% year-over-year growth
(or $51.2 million, representing 13% year-over-year growth adjusted
for constant currency).
- Total billings of $529.2 million,
representing 40% year-over-year growth (or $517.5 million,
representing 37% year-over-year growth adjusted for constant
currency and constant billings duration).
- Subscription gross profit of $317.3
million, representing 84% of subscription revenues.
- Professional services and other gross
profit of $1.5 million, representing 4% of professional services
and other revenues.
- Total gross profit of $318.8 million,
representing 76% of total revenues.
- Income from operations of $52.3
million, representing 13% of total revenues.
- Net income of $41.9 million, or
earnings of $0.25 per basic share and $0.24 per diluted share.
- Free cash flow of $154.2 million,
representing 37% of total revenues.
“We’re off to a strong start in Q1, continuing to diversify our
business mix,” said John Donahoe, president and chief
executive officer, ServiceNow. “Now 73 percent of all our customers
license more than one product up from 50 percent two years ago. As
Frank passes the torch, the company is well positioned to deliver
on its goals with loyal customers and a growing partner
ecosystem.”
“We continue to see success with our land and expand strategy,
adding 26 new Global 2000 customers in Q1, compared to 21 in the
same period last year,” said Michael Scarpelli, chief financial
officer, ServiceNow. “We now have 370 customers each paying us more
than $1 million in annualized contract value, an increase of 51
percent year-over-year.”
Financial Outlook
Our guidance is based on foreign exchange rates as of March 31,
2017. See the section entitled “Statement Regarding Use of Non-GAAP
Financial Measures” for an explanation of non-GAAP measures and the
corresponding growth rates, and the table entitled “Reconciliation
of Non-GAAP Financial Guidance” for a reconciliation of non-GAAP to
GAAP metrics and corresponding growth rates.
For the second quarter of 2017, we expect:
- GAAP subscription revenues between $400
and $404 million, representing 38% to 39% year-over-year growth (or
non-GAAP subscription revenues between $409 and $413 million,
representing 41% to 42% year-over-year growth adjusted for constant
currency).
- GAAP professional services and other
revenues between $58 and $59 million, representing 15% to 17%
year-over-year growth (or non-GAAP professional services and other
revenues between $60 and $61 million, representing 18% to 20%
year-over-year growth adjusted for constant currency).
- GAAP total revenues between $458 and
$463 million, representing 34% to 36% year-over-year growth (or
non-GAAP total revenues between $469 and $474 million, representing
37% to 39% year-over-year growth adjusted for constant
currency).
- Non-GAAP subscription billings between
$444 and $448 million, representing 33% to 35% year-over-year
growth (or between $460 and $464 million, representing 38% to 39%
year-over-year growth adjusted for constant currency and constant
billings duration).
- Non-GAAP professional services and
other billings between $47 and $48 million, representing 12% to 14%
year-over-year growth (or between $49 and $50 million, representing
16% to 19% year-over-year growth adjusted for constant
currency).
- Non-GAAP total billings between $491
and $496 million, representing 31% to 32% year-over-year growth (or
between $509 and $514 million, representing 36% to 37%
year-over-year growth adjusted for constant currency and constant
billings duration).
- Non-GAAP operating margin of 11%.
- Non-GAAP weighted average shares used
to compute diluted net income per share of approximately 179
million shares.
For the full year 2017, we expect:
- GAAP subscription revenues between
$1,670 and $1,685 million, representing 37% to 38% year-over-year
growth (or non-GAAP subscription revenues between $1,693 and $1,708
million, representing 39% to 40% year-over-year growth adjusted for
constant currency).
- GAAP professional services and other
revenues between $190 and $195 million, representing 13% to 15%
year-over-year growth (or non-GAAP professional services and other
revenues between $193 and $198 million, representing 14% to 17%
year-over-year growth adjusted for constant currency).
- GAAP total revenues between $1,860 and
$1,880 million, representing 34% to 35% year-over-year growth (or
non-GAAP total revenues between $1,886 and $1,906 million,
representing 36% to 37% year-over-year growth adjusted for constant
currency).
- Non-GAAP subscription billings between
$2,030 and $2,045 million, representing 34% to 35% year-over-year
growth (or between $2,064 and $2,079 million, representing 37% to
38% year-over-year growth adjusted for constant currency and
constant billings duration).
- Non-GAAP professional services and
other billings between $205 and $210 million, representing 14% to
17% year-over-year growth (or between $208 and $213 million,
representing 16% to 18% year-over-year growth adjusted for constant
currency).
- Non-GAAP total billings between $2,235
and $2,255 million, representing 32% to 33% year-over-year growth
(or between $2,272 and $2,292 million, representing 34% to 36%
year-over-year growth adjusted for constant currency and constant
billings duration).
- Non-GAAP subscription gross margin of
84%.
- Non-GAAP professional services and
other gross margin of 15%.
- Non-GAAP total gross margin of
77%.
- Non-GAAP operating margin of 16%.
- Non-GAAP free cash flow margin of
25%.
- Non-GAAP weighted average shares used
to compute diluted net income per share of approximately 179
million shares.
Conference Call Details
The conference call will begin at 2 p.m. Pacific Time (21:00
GMT) on Wednesday, April 26, 2017. Interested parties may listen to
the call by dialing 844.464.3153 (passcode: 95378330), or if
outside North America, by dialing +1.508.637.5575 (passcode:
95378330). Individuals may access the live teleconference from
the investor relations section of the ServiceNow website at
http://investors.servicenow.com.
An audio replay of the conference call and webcast will be
available two hours after its completion and will be accessible for
30 days. To hear the replay, interested parties may go to the
investor relations section of the ServiceNow website or dial
855.859.2056 (passcode: 95378330), or if outside North America, by
dialing +1.404.537.3406 (passcode: 95378330).
Investor Presentation Details
An investor presentation providing additional information and
analysis can be found at http://investors.servicenow.com.
Statement Regarding Use of Non-GAAP Financial
Measures
We report non-GAAP financial measures in addition to, and not as
a substitute for, or superior to, financial measures calculated in
accordance with GAAP.
We present revenues adjusted for constant currency and
corresponding growth rates to provide a framework for assessing how
our business performed excluding the effect of foreign currency
rate fluctuations. To present this information, current period
results for entities reporting in currencies other than U.S.
Dollars are converted into U.S. Dollars at the exchange rates in
effect during the prior period presented, rather than the actual
exchange rates in effect during the current period. We believe the
presentation of revenues adjusted for constant currency facilitates
the comparison of revenues year-over-year.
We believe billings is a useful leading indicator regarding the
performance of our business. We present subscription billings,
professional services and other billings, and total billings, and
corresponding growth rates, as the applicable revenue plus the
applicable change in deferred revenue as presented or derived from
the statement of cash flows. While we typically bill customers
annually for our subscription services, customers sometimes
request, and we accommodate, multi-year billings, which are
billings with durations in excess of the typical 12 month term.
Accordingly, to facilitate greater comparability in our billings
information, we further present billings adjusted for constant
billings duration, in addition to adjusting for constant currency.
To present this information, we adjust subscription billings and
total billings for constant currency as described above, and adjust
for constant duration by replacing the portion of multi-year
billings in excess of twelve months during the current period with
the portion of multi-year billings in excess of twelve months
during the prior period presented. We also present professional
services and other billings and corresponding growth rates adjusted
for constant currency as described above.
Our non-GAAP presentation of gross profit, income from
operations and net income measures exclude stock-based compensation
expense, amortization of debt discount and issuance costs related
to the convertible senior notes, amortization of purchased
intangibles, legal settlements, business combination and other
related costs, and the related income tax effect of these
adjustments. We believe the presentation of operating results that
exclude these non-cash or non-recurring items provides useful
supplemental information to investors and facilitates the analysis
of our operating results and comparison of operating results across
reporting periods.
Free cash flow, which is a non-GAAP financial measure, is
calculated as net cash provided by operating activities plus cash
paid for legal settlements, reduced by purchases of property and
equipment. Free cash flow margin is calculated as free cash flow as
a percentage of total revenues. We believe information regarding
free cash flow and free cash flow margin provides useful
information to investors because it is an indicator of the strength
and performance of our business operations. However, our
calculation of free cash flow and free cash flow margin may not be
comparable to similar measures used by other companies.
The company encourages investors to carefully consider its
results under GAAP, as well as its supplemental non-GAAP
information and the reconciliation between these presentations, to
more fully understand its business. Please see the tables included
at the end of this release for the reconciliation of GAAP and
non-GAAP results.
Use of Forward-Looking Statements
This release contains “forward-looking statements” regarding our
performance, including but not limited to the section entitled
“Financial Outlook.” Forward-looking statements are subject to
known and unknown risks and uncertainties and are based on
potentially inaccurate assumptions that could cause actual results
to differ materially from those expected or implied by the
forward-looking statements. If any such risks or uncertainties
materialize or if any of the assumptions prove incorrect, our
results could differ materially from the results expressed or
implied by the forward-looking statements we make.
Among the important factors that could cause actual results to
differ materially from those in any forward-looking statements
include: (i) errors, interruptions, delays, or security
breaches in or of our service or web hosting, (ii) our ability
to grow at our expected rate of growth, including our ability to
convert deferred revenue and backlog into revenue, add and retain
customers, sell additional subscriptions to existing customers and
enter new geographies and markets, (iii) our ability to
continue to release, and gain customer acceptance of, improved
versions of our services, (iv) our ability to develop and gain
customer acceptance of new products and services, including our
platform, and (v) our ability to compete successfully against
existing and new competitors.
Further information on these and other factors that could affect
our financial results are included in our Form 10-K for the year
ended December 31, 2016 and in other filings we make with the
Securities and Exchange Commission from time to time, including our
Form 10-Q that will be filed for the quarter ended March 31,
2017.
We undertake no obligation, and do not intend, to update these
forward-looking statements, to review or confirm analysts’
expectations, or to provide interim reports or updates on the
progress of the current financial quarter.
About ServiceNow
Your enterprise needs to move faster, but lack of process and
legacy tools hold you back. Every day, thousands of customer
requests, IT incidents, and HR cases follow their own paths—moving
back and forth between people, machines and departments.
Unstructured. Undocumented. Unimproved for years. With the
ServiceNow® System of Action™ you can replace these unstructured
work patterns of the past with intelligent workflows of the future.
Now every employee, customer and machine can make requests on a
single cloud platform. Every department working on these requests
can assign and prioritize, collaborate, get down to root cause
issues, gain real-time insights and drive to action. Your employees
are energized. Your service levels improve. And you realize
game-changing economics. Work at Lightspeed™. To find out how,
visit www.servicenow.com.
© 2017 ServiceNow, Inc. All rights reserved. ServiceNow, the
ServiceNow logo, and other ServiceNow marks are trademarks and/or
registered trademarks of ServiceNow, Inc., in the United States
and/or other countries. Other company and product names may be
trademarks of the respective companies with which they are
associated.
ServiceNow, Inc. Condensed Consolidated
Statements of Operations (in thousands, except share and per
share data) (unaudited)
Three Months Ended March 31, 2017 March 31,
2016 Revenues: Subscription $ 376,135 $ 267,422
Professional services and other 40,648 38,457
Total revenues 416,783 305,879
Cost of revenues (1): Subscription 70,375 52,781 Professional
services and other 46,072 41,479 Total
cost of revenues 116,447 94,260 Gross
profit 300,336 211,619 Operating
expenses (1): Sales and marketing 212,086 158,610 Research and
development 84,489 65,924 General and administrative 46,251 41,237
Legal settlement — 270,000 Total
operating expenses 342,826 535,771 Loss
from operations (42,490 ) (324,152 ) Interest expense (8,678 )
(8,109 ) Interest income and other income (expense), net
7,716 702 Loss before income taxes (43,452 )
(331,559 ) Provision for (benefit from) income taxes (2,790
) 1,773 Net loss $ (40,662 ) $ (333,332 ) Net loss
per share - basic and diluted $ (0.24 ) $ (2.06 ) Weighted-average
shares used to compute net loss per share - basic and diluted
168,742,366 162,067,108
(1)
Includes total stock-based compensation expense for stock-based
awards as follows:
Three Months Ended March 31, 2017
March 31, 2016 Cost of revenues: Subscription $ 7,938 $
6,607 Professional services and other 6,949 6,759 Sales and
marketing 38,401 30,998 Research and development 21,801 20,533
General and administrative 14,854 10,411
ServiceNow, Inc.
Condensed Consolidated Balance
Sheets
(in thousands)
(unaudited)
March 31, 2017 December 31, 2016 ASSETS
Current assets: Cash and cash equivalents $ 439,915 $ 401,238
Short-term investments 535,399 498,124 Accounts receivable, net
278,107 322,757 Current portion of deferred commissions 78,786
76,780 Prepaid expenses and other current assets 64,048
43,636 Total current assets 1,396,255 1,342,535 Deferred
commissions, less current portion 61,648 61,990 Long-term
investments 326,261 262,658 Property and equipment, net 189,659
181,620 Intangible assets, net 67,755 65,854 Goodwill 96,914 82,534
Other assets 31,771 36,576 Total assets $ 2,170,263 $
2,033,767
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities: Accounts payable $ 33,658 $ 38,080 Accrued
expenses and other current liabilities 144,594 171,636 Current
portion of deferred revenue 961,553 861,782 Total
current liabilities 1,139,805 1,071,498 Deferred revenue, less
current portion 50,440 33,319 Convertible senior notes, net 516,490
507,812 Other long-term liabilities 36,189 34,177 Stockholders’
equity 427,339 386,961
Total liabilities and stockholders’
equity
$ 2,170,263 $ 2,033,767
ServiceNow,
Inc. Condensed Consolidated Statements of Cash Flows
(in thousands) (unaudited)
Three Months Ended March 31, 2017
March 31, 2016 Cash flows from operating
activities: Net loss $ (40,662 ) $ (333,332 ) Adjustments to
reconcile net loss to net cash provided by operating activities:
Depreciation and amortization 25,226 17,452 Amortization of
premiums on investments 945 1,490 Amortization of deferred
commissions 26,180 18,033 Amortization of debt discount and
issuance costs 8,678 8,109 Stock-based compensation 89,943 75,308
Deferred income tax (3,291 ) — Other (2,218 ) (330 ) Changes in
operating assets and liabilities, net of effect of business
combinations: Accounts receivable 47,021 15,811 Deferred
commissions (27,195 ) (23,971 ) Prepaid expenses and other assets
(22,772 ) (19,808 ) Accounts payable 675 3,387 Deferred revenue
112,447 70,803 Accrued expenses and other liabilities
(27,553 ) 245,735 Net cash provided by operating
activities 187,424 78,687
Cash flows
from investing activities: Purchases of property and equipment
(33,186 ) (29,077 ) Business combinations, net of cash acquired
(15,035 ) (500 ) Purchase of other intangibles — (5,750 ) Purchases
of investments (222,596 ) (180,365 ) Purchase of strategic
investments (1,000 ) — Sales of investments 21,789 92,885
Maturities of investments 122,263 91,858 Restricted cash
(689 ) (457 ) Net cash used in investing activities
(128,454 ) (31,406 )
Cash flows from financing
activities: Proceeds from employee stock plans 34,807 19,873
Taxes paid related to net share settlement of equity awards (53,023
) (28,453 ) Payments on financing obligations (1,415 )
(110 ) Net cash used in financing activities (19,631
) (8,690 ) Foreign currency effect on cash and cash
equivalents (662 ) 2,554 Net increase in cash
and cash equivalents 38,677 41,145 Cash and cash equivalents at
beginning of period 401,238 412,305
Cash and cash equivalents at end of period $ 439,915 $
453,450
ServiceNow, Inc.
GAAP to Non-GAAP Reconciliation (in thousands, except
share and per share data) (unaudited)
Three Months Ended March 31, 2017 March 31,
2016 (3) Growth Rates Subscription
revenues: GAAP subscription revenues $ 376,135 $ 267,422 41%
Effects of foreign currency rate fluctuations 6,521 Non-GAAP
adjusted subscription revenues (1) $ 382,656 43%
Subscription billings: GAAP subscription revenues $ 376,135
$ 267,422 41% Increase in subscription deferred revenue
102,558 63,873 Non-GAAP subscription billings $ 478,693 $
331,295 44% Effects of foreign currency rate fluctuations 8,831
Effects of fluctuations in billings duration (21,302)
Non-GAAP adjusted subscription billings (2) $ 466,222 41%
Professional services and other revenues: GAAP professional
services and other revenues $ 40,648 $ 38,457 6% Effects of foreign
currency rate fluctuations 694 Non-GAAP adjusted
professional services and other revenues (1) $ 41,342 8%
Professional services and other billings: GAAP professional
services and other revenues $ 40,648 $ 38,457 6% Increase in
professional services and other deferred revenue 9,889
6,930 Non-GAAP professional services and other billings
50,537 45,387 11% Effects of foreign currency rate fluctuations
694 Non-GAAP adjusted professional services and other
billings (2) $ 51,231 13%
Total revenues: GAAP total
revenues $ 416,783 $ 305,879 36% Effects of foreign currency rate
fluctuations 7,215 Non-GAAP adjusted total revenues (1) $
423,998 39%
Total billings: GAAP total revenues $
416,783 $ 305,879 36% Increase in total deferred revenue from
condensed consolidated statements of cash flows 112,447
70,803 Non-GAAP total billings 529,230 376,682 40% Effects
of foreign currency rate fluctuations 9,525 Effects of fluctuations
in billings duration (21,302) Non-GAAP adjusted total
billings (2) $ 517,453 37%
Cost of revenues: GAAP
subscription cost of revenues $ 70,375 $ 52,781 Stock-based
compensation (7,938) (6,607) Amortization of purchased intangibles
(3,572) (2,768) Non-GAAP subscription cost of
revenues $ 58,865 $ 43,406 GAAP professional services and
other cost of revenues $ 46,072 $ 41,479 Stock-based compensation
(6,949) (6,759) Non-GAAP professional services and
other cost of revenues $ 39,123 $ 34,720
Gross profit
(loss):
GAAP subscription gross profit
$ 305,760 $ 214,641 Stock-based compensation 7,938 6,607
Amortization of purchased intangibles 3,572 2,768
Non-GAAP subscription gross profit $ 317,270 $ 224,016 GAAP
professional services and other gross loss $ (5,424) $ (3,022)
Stock-based compensation 6,949 6,759 Non-GAAP
professional services and other gross profit $ 1,525 $ 3,737
GAAP gross profit $ 300,336 $ 211,619 Stock-based compensation
14,887 13,366 Amortization of purchased intangibles 3,572
2,768 Non-GAAP gross profit $ 318,795 $ 227,753
Gross margin: GAAP subscription gross margin 81% 80%
Stock-based compensation as % of subscription revenues 2% 3%
Amortization of purchased intangibles as % of subscription revenues
1% 1% Non-GAAP subscription gross margin 84%
84% GAAP professional services and other gross margin
-13% -8% Stock-based compensation as % of professional services and
other revenues 17% 18% Non-GAAP professional services
and other gross margin 4% 10% GAAP gross
margin 72% 69% Stock-based compensation as % of total revenues 3%
4% Amortization of purchased intangibles as % of total revenues
1% 1% Non-GAAP gross margin 76% 74%
Operating expenses: GAAP sales and marketing expenses
$ 212,086 $ 158,610 Stock-based compensation (38,401) (30,998)
Amortization of purchased intangibles (117) (18)
Non-GAAP sales and marketing expenses $ 173,568 $ 127,594
GAAP research and development expenses $ 84,489 $ 65,924
Stock-based compensation (21,801) (20,533) Amortization of
purchased intangibles (455) - Non-GAAP research and
development expenses $ 62,233 $ 45,391 GAAP general and
administrative expenses $ 46,251 $ 41,237 Stock-based compensation
(14,854) (10,411) Amortization of purchased intangibles (525) (101)
Business combination and other related costs (219)
(311) Non-GAAP general and administrative expenses $ 30,653 $
30,414 GAAP legal settlements $ - $ 270,000 Legal
settlements - (270,000) Non-GAAP legal settlements $
- $ -
Income (loss) from operations: GAAP loss from
operations $ (42,490) $ (324,152) Stock-based compensation 89,943
75,308 Amortization of purchased intangibles 4,669 2,887 Business
combination and other related costs 219 311 Legal settlements
- 270,000 Non-GAAP income from operations $ 52,341 $
24,354
Operating margin: GAAP operating margin -10%
-106% Stock-based compensation as % of total revenues 22% 25%
Amortization of purchased intangibles as % of total revenues 1% 1%
Business combination and other related costs as % of total revenues
0% 0% Legal settlements as % of total revenues 0% 88%
Non-GAAP operating margin 13% 8%
Net income
(loss): GAAP net loss $ (40,662) $ (333,332) Stock-based
compensation 89,943 75,308 Amortization of purchased intangibles
4,669 2,887 Business combination and other related costs 219 311
Legal settlements - 270,000 Amortization of debt discount and
issuance costs for the convertible senior notes 8,678 8,109 Income
tax expense effects related to the above adjustments
(20,978) (8,803) Non-GAAP net income $ 41,869 $ 14,480
Net income (loss) per share - basic and diluted:
GAAP net loss per share - basic and
diluted
$ (0.24) $ (2.06)
Non-GAAP net income per share - basic
$ 0.25 $ 0.09 Non-GAAP net income per share - diluted $ 0.24 $ 0.09
Weighted-average shares used to compute net income (loss)
per share - basic 168,742,366 162,067,108 GAAP
weighted-average shares used to compute net loss per share -
diluted 168,742,366 162,067,108 Effect of dilutive securities
(stock options and restricted stock units) 8,389,294
8,265,897 Non-GAAP weighted-average shares used to compute net
income per share - diluted 177,131,660 170,333,005
Free cash flow: GAAP net cash provided by operating
activities $ 187,424 $ 78,687 Purchases of property and equipment
(33,186) (29,077) Cash paid for legal settlements -
17,500 Non-GAAP free cash flow $ 154,238 $ 67,110
Free
cash flow margin: GAAP net cash provided by operating
activities as % of total revenues 45% 26% Purchases of property and
equipment as % of total revenues -8% -10% Cash paid for legal
settlements as % of total revenues 0% 6% Non-GAAP
free cash flow margin 37% 22%
(1) Adjusted
revenues and the corresponding growth rates are derived by applying
the exchange rates in effect during the comparison period rather
than the actual exchange rates in effect during the current period.
(2) Adjusted billings and the corresponding growth rates are
derived by applying the exchange rates in effect during the
comparison period rather than the actual exchange rates in effect
during the current period, and by replacing the portion of
multi-year billings in excess of twelve months during the current
period with the portion of multi-year billings in excess of twelve
months during the comparison period. (3) Effects of foreign
currency rate fluctuations and fluctuations in billing durations
are not applicable for the comparison period.
ServiceNow, Inc.
Reconciliation of Non-GAAP Financial Guidance
The financial guidance provided
below is an estimate based on information available as of March 31,
2017. The company’s future performance and financial results are
subject to risks and uncertainties, and actual results could differ
materially from the guidance set forth below. Some of the factors
that could affect the company’s financial results are stated above
in this press release. More information on potential factors that
could affect the company’s financial results is included from time
to time in the company’s public reports filed with the SEC,
including the company's Annual Report on Form 10-K filed on
February 28, 2017, the company's Form 10-Q for the quarter ended
March 31, 2017 to be filed with SEC. The company assumes no
obligation to update any forward-looking statements or information,
which speak as of their respective dates.
Three Months
Ended Three Months Ended Growth rates June 30,
2017 June 30, 2016 (3) GAAP subscription
revenues $400 - $404 million $291 million 38% - 39% Effects
of foreign currency rate fluctuations 9 million Non-GAAP
adjusted subscription revenues (1) $409 - $413 million 41% - 42%
GAAP subscription revenues $400 - $404 million $291 million
38% - 39% Increase in subscription deferred revenue 44
million 42 million Non-GAAP subscription billings
$444 - $448 million $333 million 33% - 35% Effects of
foreign currency rate fluctuations 11 million Effects of
fluctuations in billings duration 5 million Non-GAAP
adjusted subscription billings (2) $460 - $464 million 38% - 39%
GAAP professional services and other revenues $58 - $59
million $51 million 15% - 17% Effects of foreign currency
rate fluctuations 2 million Non-GAAP adjusted professional
services and other revenues (1) $60 - $61 million 18% - 20%
GAAP professional services and other revenues $58 - $59 million $51
million 15% - 17% Decrease in professional services and
other deferred revenue (11) million (9) million
Non-GAAP professional services and other billings $47 - $48 million
$42 million 12% - 14% Effects of foreign currency rate
fluctuations 2 million Non-GAAP adjusted professional
services and other billings (2) $49 - $50 million 16% - 19%
GAAP total revenues $458 - $463 million $341 million 34% - 36%
Effects of foreign currency rate fluctuations 11 million
Non-GAAP adjusted total revenues (1) $469 - $474 million 37%
- 39% GAAP total revenues $458 - $463 million $341 million
34% - 36% Increase in total deferred revenue from condensed
consolidated statements of cash flows 33 million 34 million
Non-GAAP total billings $491 - $496 million $375 million 31%
- 32% Effects of foreign currency rate fluctuations 13
million Effects of fluctuations in billings duration 5
million Non-GAAP adjusted total billings (2) $509 - $514
million 36% - 37% GAAP operating margin (11%)
Stock-based compensation expense as % of total revenues 21%
Amortization of purchased intangibles as % of total revenues 1%
Non-GAAP operating margin 11% GAAP weighted-average
shares used to compute net loss per share - diluted 170 million
Effect of dilutive securities (stock options and restricted
stock units) 9 million Non-GAAP weighted-average shares used
to compute net income per share - diluted 179 million
Twelve Months Ended Twelve Months Ended Growth
rates December 31, 2017 December 31, 2016
(3) GAAP subscription revenues
$1,670 - $1,685 million
$1,222 million 37% - 38% Effects of foreign currency rate
fluctuations 23 million Non-GAAP adjusted subscription
revenues (1) $1,693 - $1,708 million 39% - 40% GAAP
subscription revenues $1,670 - $1,685 million $1,222 million 37% -
38% Increase in subscription deferred revenue 360 million
289 million Non-GAAP subscription billings $2,030 -
$2,045 million $1,511 million 34% - 35% Effects of foreign
currency rate fluctuations 28 million Effects of
fluctuations in billings duration 6 million Non-GAAP
adjusted subscription billings (2) $2,064 - $2,079 million 37% -
38% GAAP professional services and other revenues $190 -
$195 million $169 million 13% - 15% Effects of foreign
currency rate fluctuations 3 million Non-GAAP adjusted
professional services and other revenues (1) $193 - $198 million
14% - 17% GAAP professional services and other revenues $190
- $195 million $169 million 13% - 15% Increase in
professional services and other deferred revenue 15 million 11
million Non-GAAP professional services and other
billings $205 - $210 million $180 million 14% - 17% Effects
of foreign currency rate fluctuations 3 million Non-GAAP
adjusted professional services and other billings (2) $208 - $213
million 16% - 18% GAAP total revenues $1,860 - $1,880
million $1,391 million 34% - 35% Effects of foreign currency
rate fluctuations 26 million Non-GAAP adjusted total
revenues (1) $1,886 - $1,906 million 36% - 37% GAAP total
revenues $1,860 - $1,880 million $1,391 million 34% - 35%
Increase in total deferred revenue from condensed consolidated
statements of cash flows 375 million 300 million
Non-GAAP total billings $2,235 - $2,255 million $1,691 million 32%
- 33% Effects of foreign currency rate fluctuations 31
million Effects of fluctuations in billings duration 6
million Non-GAAP adjusted total billings (2) $2,272 - $2,292
million 34% - 36% GAAP subscription gross margin 81%
Stock-based compensation expense as % of subscription revenues 2%
Amortization of purchased intangibles as % of subscription
revenues 1% Non-GAAP subscription gross margin 84%
GAAP professional services and other gross margin 0%
Stock-based compensation expense as % of professional services and
other revenues 15% Non-GAAP professional services and other
gross margin 15% GAAP total gross margin 73%
Stock-based compensation expense as % of total revenues 3%
Amortization of purchased intangibles as % of total revenues 1%
Non-GAAP total gross margin 77% GAAP operating margin
(5%) Stock-based compensation expense as % of total revenues
20% Amortization of purchased intangibles as % of total
revenues 1% Non-GAAP operating margin 16% GAAP net
cash provided by operating activities as % of total revenues 32%
Purchases of property and equipment as % of total revenues
(7%) Non-GAAP free cash flow margin 25% GAAP
weighted-average shares used to compute net loss per share -
diluted 170 million Effect of dilutive securities (stock
options and restricted stock units) 9 million Non-GAAP
weighted-average shares used to compute net income per share -
diluted 179 million (1) Adjusted
revenues and the corresponding growth rates are derived by applying
the exchange rates in effect during the comparison period rather
than the forecasted exchange rates for the guidance period. (2)
Adjusted billings and the corresponding growth rates are derived by
applying the exchange rates in effect during the comparison period
rather than the forecasted exchange rates for the guidance period,
and by replacing the forecasted portion of multi-year billings in
excess of twelve months for the guidance period with the actual
portion of multi-year billings in excess of twelve months during
the comparison period. (3) Effects of foreign currency rate
fluctuations and fluctuations in billing durations are not
applicable for the comparison period.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170426006420/en/
ServiceNowMedia Contact:Joanne Blum,
310-489-7278press@servicenow.comorInvestor
Contact:ir@servicenow.com
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