Servicenow, Inc. · NYSE:NOW

Servicenow — Q3 2021 Earnings Presentation

26 slides from Servicenow's earnings presentation, Oct 27, 2021

  1. Slide 1: Investor Presentation Third Quarter 2021

    ® Investor Presentation Third Quarter 2021

  2. Slide 2: Safe Harbor and Other Information

    Safe Harbor and Other Information This presentation contains “forward‐looking” statements that are based on our management’s beliefs and assumptions and on information currently available to management. Forward‐looking statements include information concerning our possible or assumed strategy, futur

  3. Slide 3: Statement Regarding Use of Non-GAAP Financial Measures

    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, revenue growth rates, and current remaining performance obligations an

  4. Slide 4: We make the world of work, work better for people

    We make the world of work, work better for people™ Our ~6,900 global enterprise ServiceNow delivers digital customers include approximately Our aspiration is to be the workflows that create great 80% of the Fortune 500. They all defining enterprise software experiences and unlock rely on ServiceNow

  5. Slide 5: Now Platform: The platform of platforms for the digital transformation

    Now Platform®: The platform of platforms for the digital transformation IT Employee Customer Creator Workflows Workflows Workflows Workflows Transform your Create connected Connect your Build connected business with and engaging customer operations cross-enterprise workflows that experiences for you

  6. Slide 6: Q3-21 Financial Highlights

    Q3-21 Financial Highlights Q3 2021 Results Quarterly Results Increase (Decrease) Y/Y FX & Duration Impact Y/Y(2) Subscription Revenues $1,427M 31% ~100bps tailwind from FX Non-GAAP Subscription Billings(1) $1,380M 28% ~150bps tailwind from FX and Duration Current RPO (cRPO) $5.0B 32% NM Remaining Pe

  7. Slide 7: Guidance Summary

    Guidance Summary Increase (Decrease) FX & Duration Impact Y/Y Q4 2021 Quarterly Guidance Y/Y Included in Guidance(3) Subscription Revenues $1,515M - $1,520M 28% NM Non-GAAP Subscription Billings(1) $2,305M - $2,310M 26% Non-GAAP Normalized Subscription Billings (~50bps) headwind from FX and Duration

  8. Slide 8: Comparison to Previously Issued Guidance

    Comparison to Previously Issued Guidance ($5) $5,535 ($11) $30 $14 $5,567 $1,403 $30 $1,427 ($M) Subscription Revenues Y/Y Growth 29% 31% 29% 30% ($14) $12 $50 $13 $6,381 $6,320 $1,323 ($4) $12 $50 $1,380 ($M) Non-GAAP Subscription Billings(3) Y/Y Growth 22% 28% 27% 28% Q3-21A FY21E Prev. Guidance M

  9. Slide 9: Year-Over-Year Subscription Revenues and Subscription Billings Growth

    Year-Over-Year Subscription Revenues and Subscription Billings Growth 35% 34% 34% 32% 32% 30% 30% 31% 31% 31% 30% 31% 29% 27% 26% Subscription Revenues Q4-20A Q1-21A Q2-21A Q3-21A FY20A 41% 36% 38% 30% 29% 30% 31% 32% 31% 25% 25% 25% 25% 28% 26% Non-GAAP Subscription Billings(1) Q4-20A Q1-21A Q2-21A

  10. Slide 10: Currency and Duration Impact to Year-Over-Year Sub. Revenues and Sub. Billings

    Currency and Duration Impact to Year-Over-Year Sub. Revenues and Sub. Billings $1,427 $1,416 $1,293 $1,330 $1,285 $4,286 $4,272 $1,256 ($11) $1,184 ($M) $1,161 ($37) ($44) ($14) ($23) Subscription Revenues Y/Y Growth 32% 29% 30% 26% 31% 27% 31% 30% 32% 31% Q4-20A Q1-21A Q2-21A Q3-21A FY20A $1,828 $4

  11. Slide 11: Remaining Performance Obligations

    Remaining Performance Obligations Current RPO Noncurrent RPO Q3-21 $9.5 $9.7 Y/Y Growth $8.9 $8.8 ($B) $7.3 $4.8 $4.7 +34% / +34% cc(1) $4.5 $4.4 $3.5 Total RPO $4.4 $4.4 $4.7 $5.0 $3.8 Q3-20 Q4-20 Q1-21 Q2-21 Q3-21 cRPO Y/Y Growth 33% 33% 33% 34% 32% cRPO cc(1) Y/Y Growth 30% 30% 29% 31% 32% (1) Re

  12. Slide 12: Customer Cohort Growth

    Customer Cohort Growth Annual Growth of Initial ACV 2021 48% 2020 69% 2019 74% 2018 71% 2017 85% 2016 2015 95% 2014 75% 2013 2012 84% 2011 97% 2010 130% 149% (1) 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 (1) As an illustrative example, 2010 customer cohort started with a contract o

  13. Slide 13: Expansion of Customer Relationships

    Expansion of Customer Relationships $4.0 $3.6 1500 $3.5 $3.4 $3.4 ($M) $3.5 $3.2 $3.3 $3.1 $3.1 1,266 1300 $3.0 1,202 $3.0 1,142 1,088 1100 1,009 $2.5 964 928 887 900 806 $2.0 700 $1.5 500 $1.0 300 $0.5 100 $0.0 -100 Q3-19 Q4-19 Q1-20 Q2-20 Q3-20 Q4-20 Q1-21 Q2-21 Q3-21 Number of Customers with $1M+

  14. Slide 14: Net New ACV Contribution Across Workflows and Products

    Net New ACV Contribution Across Workflows and Products (1) IT Workflows Customer & Employee Workflows Creator Workflows & Others 12% 15% 14% 17% 20% 26% 23% 25% 25% 26% 62% 62% 61% 57% 55% Q3-20 Q4-20 Q1-21 Q2-21 Q3-21 (1) Historical presentations disclosed net new ACV contribution across products a

  15. Slide 15: Renewal Rate

    Renewal Rate 99% 98% 98% 97% 97% Q3-20 Q4-20 Q1-21 Q2-21 Q3-21 Note: We adjust our Renewal Rate for acquisitions, consolidations and other customer events that cause the merging of two or more accounts occurring at the time of renewal. Additionally, starting in 2020, we simplified our methodology re

  16. Slide 16: GAAP Revenues by Geography

    GAAP Revenues by Geography North America EMEA APAC & Other 9% 10% 10% 10% 10% 25% 26% 25% 27% 27% 66% 64% 65% 63% 63% Q3-20 Q4-20 Q1-21 Q2-21 Q3-21 ® 16 © 2021 ServiceNow, Inc. All Rights Reserved.

  17. Slide 17: Headcount by Department

    Headcount by Department PS & Other Cost of Sales Sub. Cost of Sales S&M R&D G&A 15,947 15,048 13,988 2,256 13,096 2,055 12,643 1,876 1,761 1,798 4,840 4,560 4,251 3,769 3,915 5,501 5,668 4,762 5,090 4,599 1,715 1,790 1,908 2,000 2,144 799 831 863 932 1,039 Q3-20 Q4-20 Q1-21 Q2-21 Q3-21 ® 17 © 2021 S

  18. Slide 18: Non-GAAP Gross Margins

    Non-GAAP Gross Margins Non-GAAP Subscription Gross Margin 86% 86% 86% 86% 85% 85% 85% Q3-20 Q4-20 Q1-21 Q2-21 Q3-21 FY19 FY20 Non-GAAP PS & Other Gross Margin 19% 16% 14% 17% 17% 12% 1% Q3-20 Q4-20 Q1-21 Q2-21 Q3-21 FY19 FY20 Non-GAAP Total Gross Margin 82% 82% 82% 81% 81% 81% 82% Q3-20 Q4-20 Q1-21

  19. Slide 19: Non-GAAP Operating and Free Cash Flow Margins

    Non-GAAP Operating and Free Cash Flow Margins Non-GAAP Operating Margin 26% 27% 25% 26% 25% 22% 21% Q3-20 Q4-20 Q1-21 Q2-21 Q3-21 FY19 FY20 Non-GAAP Free Cash Flow Margin 45% 46% 32% 28% 19% 19% 15% Q3-20 Q4-20 Q1-21 Q2-21 Q3-21 FY19 FY20 Note: All figures are calculated on a non-GAAP basis. See app

  20. Slide 20: Non-GAAP Net Income and Diluted EPS

    Non-GAAP Net Income and Diluted EPS Non-GAAP Net Income ($M) $926 $646 $306 $287 $314 $241 $235 Q3-20 Q4-20 Q1-21 Q2-21 Q3-21 FY19 FY20 $4.63 Non-GAAP Diluted EPS $3.32 $1.52 $1.42 $1.55 $1.21 $1.17 Q3-20 Q4-20 Q1-21 Q2-21 Q3-21 FY19 FY20 Note: All figures are calculated on a non-GAAP basis. See app

  21. Slide 21: GAAP to Non-GAAP Reconciliation

    GAAP to Non-GAAP Reconciliation ® 21 © 2021 ServiceNow, Inc. All Rights Reserved.

  22. Slide 22: GAAP to Non-GAAP Reconciliation – Revenues and Billings

    GAAP to Non-GAAP Reconciliation – Revenues and Billings in millions (except %'s) 2019 Q1-20 Q2-20 Q3-20 Q4-20 2020 Q1-21 Q2-21 Q3-21 GAAP Subscription Revenues $ 3,255 $ 995 $ 1,015 $ 1,091 $ 1,184 $ 4,286 $ 1,293 $ 1,330 $ 1,427 (+) Effects of Foreign Currency Rate Fluctuations 58 12 12 (14) (23) (

  23. Slide 23: GAAP to Non-GAAP Reconciliation – Remaining Performance Obligations

    GAAP to Non-GAAP Reconciliation – Remaining Performance Obligations in billions (except %'s) Q1-20 Q2-20 Q3-20 Q4-20 2020 Q1-21 Q2-21 Q3-21 Q4-21E GAAP Current Remaining Performance Obligations at Period End $ 3.3 $ 3.5 $ 3.8 $ 4.4 $ 4.4 $ 4.4 $ 4.7 $ 5.0 N/A YoY Current Remaining Performance Obliga

  24. Slide 24: GAAP to Non-GAAP Reconciliation – Billings, Normalized Billings

    GAAP to Non-GAAP Reconciliation – Billings, Normalized Billings in millions (except %'s) Q4-20 2020 Q1-21 Q2-21 Q3-21 Q4-21E Midpoint 2021E Midpoint GAAP Subscription Revenues $ 1,184 $ 4,286 $ 1,293 $ 1,330 $ 1,427 $ 1,518 $ 5,567 (+/-) Change in Subscription Deferred Revenue, Unbilled Receivables,

  25. Slide 25: GAAP to Non-GAAP Reconciliation – Other

    GAAP to Non-GAAP Reconciliation – Other in millions (except %'s and per share data) 2019 Margin Q1-20 Margin Q2-20 Margin Q3-20 Margin Q4-20 Margin 2020 Margin Q1-21 Margin Q2-21 Margin Q3-21 Margin Q4'21E Margin 2021E Margin GAAP Subscription Gross Profit $ 2,705 83% $ 835 84% $ 843 83% $ 902 83% $

  26. Slide 26: GAAP to Non-GAAP Reconciliation – Other (cont.)

    GAAP to Non-GAAP Reconciliation – Other (cont.) in millions (except %'s and per share data) 2019 Margin Q1-20 Margin Q2-20 Margin Q3-20 Margin Q4-20 Margin 2020 Margin Q1-21 Margin Q2-21 Margin Q3-21 Margin Q4'21E Margin 2021E Margin GAAP Weighted-Average Shares Used to Compute Net Income (Loss) per

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