Servicenow, Inc. · NYSE:NOW

Servicenow — Q4 2021 Earnings Presentation

28 slides from Servicenow's earnings presentation, Jan 26, 2022

  1. Slide 1: Investor Presentation Fourth Quarter 2021

    ® Investor Presentation Fourth 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 adjust revenues, and related growth rates, and current remaining performance obligations

  4. Slide 4: We make the world work better for everyone

    We make the world work better for everyone™ Our 7,400+ global enterprise ServiceNow helps digitize and customers include approximately Our aspiration is to be the unify organizations so that they 80% of the Fortune 500. They all defining enterprise software can find smarter, faster, better rely on S

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

    Now Platform®: The platform of platforms for 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 your to

  6. Slide 6: Q4-21 Financial Highlights

    Q4-21 Financial Highlights Increase Currency & Duration Non-GAAP Increase Q4 2021 Results Quarterly Results (Decrease) Y/Y Impact Y/Y(1) (Decrease) Y/Y(2) ~100bps headwind from Subscription Revenues $1,523M 29% 30% Currency Non-GAAP Subscription Billings(3) 32% ~100bps headwind from 33%(4) $2,420M N

  7. Slide 7: FY21 Financial Highlights

    FY21 Financial Highlights Increase Currency & Duration Non-GAAP Increase FY 2021 Results Annual Results (Decrease) Y/Y Impact Y/Y(1) (Decrease) Y/Y(2) ~200bps tailwind from Subscription Revenues $5,573M 30% 28% Currency Non-GAAP Subscription Billings(3) 30% ~200bps tailwind from 28%(4) $6,494M Non-G

  8. Slide 8: Guidance Summary

    Guidance Summary Quarterly Increase Currency Impact Y/Y Non-GAAP Constant Q1 2022 Guidance (Decrease) Y/Y Included in Guidance(1) Currency Y/Y(2) Subscription Revenues $1,610M - $1,615M 25% ~250bps headwind 27.5% Non-GAAP Operating Margin(3) 25% (~250bps) NA NA Current RPO (cRPO) Growth 28% NA ~150b

  9. Slide 9: Comparison to Previously Issued Guidance

    Comparison to Previously Issued Guidance $1,518 ($15) $20 $1,523 ($M) Subscription Revenues Y/Y Growth 28% 29% 30% 30% $2,308 ($24) $117 $2,420 ($M) $20 Non-GAAP Subscription Billings(1) 26% 32% 28% 30% Y/Y Growth Q4-21A FY21A Prev. Guidance Midpoint(2) Currency Impact(3) Duration impact(4) Actual R

  10. Slide 10: Year-Over-Year Subscription Revenues and Subscription Billings Growth

    Year-Over-Year Subscription Revenues and Subscription Billings Growth 34% 32% 32% 30% 30% 30% 31% 31% 31% 30% 29% 30% 26% 27% 28% Subscription Revenues Q1-21A Q2-21A Q3-21A Q4-21A FY21A 41% 30% 29% 30% 32% 33% 32% 30% 28% Non-GAAP 25% 25% 25% 25% 28% 26% Subscription Billings(1) Q1-21A Q2-21A Q3-21A

  11. Slide 11: Comparison of Constant Currency Subscription Revenues Growth Guidance to Prior Year Results

    Comparison of Constant Currency Subscription Revenues Growth Guidance to Prior Year Results 27.5% 28% 28% 26% Non-GAAP Subscription Revenues Constant Currency Growth(1) Constant Currency Growth Guidance Midpoint(1) Q1-21A Q1-22E FY21A FY22E (1) Constant currency subscription revenues growth rates ar

  12. Slide 12: 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 $1,523 $1,538 $5,573 $1,330 $5,496 $1,293 $1,256 $1,285 ($11) $15 ($77) ($M) ($37) ($44) Subscription Revenues Y/Y Growth 30% 26% 31% 27% 31% 30% 29% 30% 30% 28% Q1-21A Q2-21A Q3-21A Q4-21A FY21A $6,494 $6,3

  13. Slide 13: Remaining Performance Obligations

    Remaining Performance Obligations Current RPO Noncurrent RPO Q4-21 $11.5 Y/Y Growth $9.5 $9.7 ($B) $8.9 $8.8 +29% / +32% cc(1) $5.8 Total RPO $4.8 $4.7 $4.5 $4.4 $4.7 $5.0 $5.7 $4.4 $4.4 Q4-20 Q1-21 Q2-21 Q3-21 Q4-21 cRPO Y/Y Growth 33% 33% 34% 32% 29% cRPO cc(1) Y/Y Growth 30% 29% 31% 32% 32% (1) T

  14. Slide 14: Customer Cohort Growth

    Customer Cohort Growth Annual Growth of Initial ACV 56% 78% 79% 73% 97% 102% 77% 91% 105% 154% 149% (1) (1) As an illustrative example, 2010 customer cohort started with a contract of initial ACV (annual contract value) of $100 and grew to ACV of $1,739 as of Q4-21, representing annual growth of ini

  15. Slide 15: Expansion of Customer Relationships

    Expansion of Customer Relationships $4.0 $3.8 $3.6 1500 $3.5 $3.5 $3.5 ($M) $3.5 $3.2 $3.2 $3.3 1,359 $3.1 1,260 1300 $3.0 1,199 1,139 1,085 1100 1,006 $2.5 960 923 882 900 $2.0 700 $1.5 500 $1.0 300 $0.5 100 $0.0 -100 Q4-19 Q1-20 Q2-20 Q3-20 Q4-20 Q1-21 Q2-21 Q3-21 Q4-21 Number of Customers with $1

  16. Slide 16: 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 15% 14% 17% 15% 20% 23% 25% 28% 25% 26% 62% 61% 57% 57% 55% Q4-20 Q1-21 Q2-21 Q3-21 Q4-21 (1) Historical presentations disclosed net new ACV contribution across products a

  17. Slide 17: Renewal Rate

    Renewal Rate 99% 99% 98% 97% 97% Q4-20 Q1-21 Q2-21 Q3-21 Q4-21 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

  18. Slide 18: GAAP Revenues by Geography

    GAAP Revenues by Geography North America EMEA APAC & Other 10% 10% 10% 10% 10% 26% 25% 27% 27% 27% 64% 65% 63% 63% 63% Q4-20 Q1-21 Q2-21 Q3-21 Q4-21 ® 18 2022 ServiceNow, Inc. All Rights Reserved. © 2021 Reserved

  19. Slide 19: Headcount by Department

    Headcount by Department PS & Other Cost of Sales Sub. Cost of Sales S&M R&D G&A 16,881 15,947 15,048 2,353 13,988 2,256 13,096 2,055 1,876 1,798 5,138 4,840 4,560 4,251 3,915 5,668 5,969 5,090 5,501 4,762 1,908 2,000 2,144 2,286 1,790 831 863 932 1,039 1,135 Q4-20 Q1-21 Q2-21 Q3-21 Q4-21 ® 19 2022 S

  20. Slide 20: Non-GAAP Gross Margins

    Non-GAAP Gross Margins Non-GAAP Subscription Gross Margin 86% 86% 85% 85% 85% 85% 85% Q4-20 Q1-21 Q2-21 Q3-21 Q4-21 FY20 FY21 Non-GAAP PS & Other Gross Margin 16% 17% 17% 15% 16% 14% 12% Q4-20 Q1-21 Q2-21 Q3-21 Q4-21 FY20 FY21 Non-GAAP Total Gross Margin 82% 82% 81% 81% 81% 82% 81% Q4-20 Q1-21 Q2-21

  21. Slide 21: Non-GAAP Operating and Free Cash Flow Margins

    Non-GAAP Operating and Free Cash Flow Margins Non-GAAP Operating Margin 27% 26% 25% 25% 25% 22% 23% Q4-20 Q1-21 Q2-21 Q3-21 Q4-21 FY20 FY21 Non-GAAP Free Cash Flow Margin 45% 46% 46% 32% 32% 19% 15% Q4-20 Q1-21 Q2-21 Q3-21 Q4-21 FY20 FY21 Note: All figures are calculated on a non-GAAP basis. See app

  22. Slide 22: Non-GAAP Net Income and Diluted EPS

    Non-GAAP Net Income and Diluted EPS Non-GAAP Net Income ($M) $1,201 $926 $306 $287 $314 $296 $235 Q4-20 Q1-21 Q2-21 Q3-21 Q4-21 FY20 FY21 $5.92 $4.63 Non-GAAP Diluted EPS $1.52 $1.42 $1.55 $1.46 $1.17 Q4-20 Q1-21 Q2-21 Q3-21 Q4-21 FY20 FY21 Note: All figures are calculated on a non-GAAP basis. See a

  23. Slide 23: GAAP to Non-GAAP Reconciliation

    GAAP to Non-GAAP Reconciliation ® 23 2022 ServiceNow, Inc. All Rights Reserved. © 2021 Reserved

  24. Slide 24: GAAP to Non-GAAP Reconciliation – Revenues and Billings

    GAAP to Non-GAAP Reconciliation – Revenues and Billings in millions (except %'s) Q1-20 Q2-20 Q3-20 Q4-20 2020 Q1-21 Q2-21 Q3-21 Q4-21 2021 Q1-22E Midpoint 2022E Midpoint GAAP Subscription Revenues $ 995 $ 1,015 $ 1,091 $ 1,184 $ 4,286 $ 1,293 $ 1,330 $ 1,427 $ 1,523 $ 5,573 $ 1,613 $ 7,030 (+) Effec

  25. Slide 25: 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 Q4-21 2021 Q1-22E GAAP Current Remaining Performance Obligations at Period End $ 3.3 $ 3.5 $ 3.8 $ 4.4 $ 4.4 $ 4.4 $ 4.7 $ 5.0 $ 5.7 $ 5.7 N/A (3) YoY Current R

  26. Slide 26: 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 Q4-21 2021 GAAP Subscription Revenues $ 1,184 $ 4,286 $ 1,293 $ 1,330 $ 1,427 $ 1,523 $ 5,573 (+/-) Change in Subscription Deferred Revenue, Unbilled Receivables, and 643 696 72 (2)

  27. Slide 27: GAAP to Non-GAAP Reconciliation – Other

    GAAP to Non-GAAP Reconciliation – Other in millions (except %'s and per share data) Q1-20 Margin Q2-20 Margin Q3-20 Margin Q4-20 Margin 2020 Margin Q1-21 Margin Q2-21 Margin Q3-21 Margin Q4-21 Margin 2021 Margin Q1'22E Margin 2022E Margin GAAP Subscription Gross Profit $ 835 84% $ 843 83% $ 902 83%

  28. Slide 28: GAAP to Non-GAAP Reconciliation – Other (cont.)

    GAAP to Non-GAAP Reconciliation – Other (cont.) in millions (except %'s and per share data) Q1-20 Margin Q2-20 Margin Q3-20 Margin Q4-20 Margin 2020 Margin Q1-21 Margin Q2-21 Margin Q3-21 Margin Q4-21 Margin 2021 Margin Q1'22E Margin 2022E Margin GAAP Weighted-Average Shares Used to Compute Net Inco

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