Servicenow, Inc. · NYSE:NOW

Servicenow — Q2 2022 Earnings Presentation

25 slides from Servicenow's earnings presentation, Jul 27, 2022

  1. Slide 1: Investor Presentation Second Quarter 2022

    Investor Presentation Second Quarter 2022

  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(1) include approximately Our aspiration is to be the unify organizations so that they 80% of the 500 largest U.S. defining enterprise software can find smarter, faster, better companies.

  5. Slide 5: Now Platform: Optimize processes, connect silos, and create new value

    Now Platform®: Optimize processes, connect silos, and create new value on a single, unifying platform to digitize your entire business. Technology Employee Customer Creator Workflows Workflows Workflows Workflows Accelerate digital Deliver a unified Deliver frictionless Build connected transformatio

  6. Slide 6: Q2-22 Financial Highlights

    Q2-22 Financial Highlights Increase Non-GAAP Constant Q2 2022 Results Quarterly Results Currency Impact Y/Y(1) (Decrease) Y/Y Currency Y/Y(2) Subscription Revenues $1,658M 25% ~500bps headwind 29.5% Current RPO (cRPO) $5.75B 21% ~600bps headwind 27% Remaining Performance Obligations (RPO) $11.5B 21%

  7. Slide 7: Guidance Summary

    Guidance Summary Currency Impact Quarterly Increase Non-GAAP Constant Q3 2022 Y/Y Included in Guidance (Decrease) Y/Y Currency Y/Y(2) Guidance(1) Subscription Revenues $1,750M - $1,755M 23% ~450bps headwind 27.5% Non-GAAP Operating Margin(3) 25% ~(100)bps NA NA Current RPO (cRPO) Growth(4) 20% NA ~3

  8. Slide 8: Comparison to Previously Issued Guidance

    Comparison to Previously Issued Guidance ($M) Subscription Revenues Y/Y Growth 26% 25% 26% 24% Q2-22A FY22E Prev. Guidance Midpoint(1) Currency Impact(2) Q2 Performance Actual Results Guidance Change Current Guidance Midpoint (1) Refers to previously issued financial guidance dated 4/27/22 (2) GAAP

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

    Year-Over-Year Subscription Revenues Growth 31% 31% 30% 32% 32% 30% 31% 29% 30% 30% 29% 31% 30% 30% 27% 28% 26% 25% Subscription Revenues Q2-21A Q3-21A Q4-21A Q1-22A Q2-22A FY21A Previous Year Growth Actual Growth Non-GAAP Constant Currency Sub Revenue Growth (1) (1) Non-GAAP constant currency subsc

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

    Currency Impact to Year-Over-Year Sub. Revenues $1,666 $1,724 $5,573 $5,496 $1,427 $1,416 $1,523 $1,538 $1,631 $1,658 ($11) $15 $35 $66 ($77) ($M) Subscription Revenues Q3-21A Q4-21A Q1-22A Q2-22A FY21A Y/Y Growth 31% 30% 29% 30% 26% 29% 25% 30% 30% 28% Actuals Currency Impact Non-GAAP Constant Curr

  11. Slide 11: Remaining Performance Obligations

    Remaining Performance Obligations ($B) Current RPO Noncurrent RPO Q2-22 $11.5 $11.5 $11.5 Y/Y Growth $9.5 $9.7 +21% / +27% cc(1) $5.8 $5.8 $5.8 Total RPO $4.8 $4.7 $4.75 $4.96 $5.68 $5.69 $5.75 Q2-21 Q3-21 Q4-21 Q1-22 Q2-22 cRPO Y/Y Growth 34% 32% 29% 29% 21% cRPO cc(1) Y/Y Growth 31% 32% 32% 30.5%

  12. Slide 12: Customer Cohort Growth

    Customer Cohort Growth Annual Growth of Initial ACV 55% 62% 78% 76% 72% 98% 105% 86% 104% 110% 155% 183% (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 $2,296 as of Q2-22, and represents annual growth

  13. Slide 13: Expansion of Customer Relationships

    Expansion of Customer Relationships $3.9 $3.9 $3.8 $3.6 $3.6 $3.5 $3.5 1,463 $3.4 1,402 ($M) $3.3 1,347 1,255 1,196 1,135 1,081 1,006 963 Q2-20 Q3-20 Q4-20 Q1-21 Q2-21 Q3-21 Q4-21 Q1-22 Q2-22 Number of Customers with $1M+ ACV Avg ACV of Customers with $1M+ ACV Note: Previously disclosed number of cu

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

    Net New ACV Contribution Across Workflows and Products (1) Technology Workflows Customer & Employee Workflows Creator Workflows & Others 14% 17% 15% 14% 16% 25% 28% 27% 22% 26% 61% 57% 57% 59% 62% Q2-21 Q3-21 Q4-21 Q1-22 Q2-22 (1) Historical presentations disclosed net new ACV contribution across pr

  15. Slide 15: Renewal Rate

    Renewal Rate 99% 99% 98% 98% 97% Q2-21 Q3-21 Q4-21 Q1-22 Q2-22 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. © 2022 ServiceNow, Inc. All Rights Reserved © 2022 ServiceNow, I

  16. Slide 16: GAAP Revenues by Geography

    GAAP Revenues by Geography North America EMEA APAC & Other 10% 10% 10% 10% 10% 27% 27% 27% 25% 25% 63% 63% 63% 65% 65% Q2-21 Q3-21 Q4-21 Q1-22 Q2-22 © 2022 ServiceNow, Inc. All Rights Reserved © 2022 ServiceNow, Inc. All Rights Reserved. Confidential. 16 ®

  17. Slide 17: Headcount by Department

    Headcount by Department PS & Other Cost of Sales Sub. Cost of Sales S&M R&D G&A 19,046 17,884 16,881 2,532 15,947 2,459 15,048 2,353 2,256 2,055 5,768 5,422 5,138 4,840 4,560 6,362 6,918 5,668 5,969 5,501 2,144 2,286 2,407 2,508 2,000 932 1,039 1,135 1,234 1,320 Q2-21 Q3-21 Q4-21 Q1-22 Q2-22 © 2022

  18. Slide 18: Non-GAAP Gross Margins

    Non-GAAP Gross Margins Non-GAAP Subscription Gross Margin 86% 86% 86% 85% 85% 85% 85% Q2-21 Q3-21 Q4-21 Q1-22 Q2-22 FY20 FY21 Non-GAAP PS & Other Gross Margin 17% 17% 15% 15% 16% 10% 12% Q2-21 Q3-21 Q4-21 Q1-22 Q2-22 FY20 FY21 Non-GAAP Total Gross Margin 81% 81% 81% 83% 82% 82% 81% Q2-21 Q3-21 Q4-21

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

    Non-GAAP Operating and Free Cash Flow Margins Non-GAAP Operating Margin 25% 26% 25% 25% 25% 23% 23% Q2-21 Q3-21 Q4-21 Q1-22 Q2-22 FY20 FY21 Non-GAAP Free Cash Flow Margin 46% 45% 32% 32% 19% 15% 16% Q2-21 Q3-21 Q4-21 Q1-22 Q2-22 FY20 FY21 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) $1,201 $926 $352 $329 $287 $314 $296 Q2-21 Q3-21 Q4-21 Q1-22 Q2-22 FY20 FY21 $5.92 $4.63 Non-GAAP Diluted EPS $1.42 $1.55 $1.46 $1.73 $1.62 Q2-21 Q3-21 Q4-21 Q1-22 Q2-22 FY20 FY21 Note: All figures are calculated on a non-GAAP basis. See a

  21. Slide 21: GAAP to Non-GAAP Reconciliation

    GAAP to Non-GAAP Reconciliation © 2022 ServiceNow, Inc. All Rights Reserved. Confidential. 21 ®

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

    GAAP to Non-GAAP Reconciliation – Revenues in millions (except %'s) Q1-20 Q2-20 Q3-20 Q4-20 2020 Q1-21 Q2-21 Q3-21 Q4-21 2021 Q1-22 Q2-22 Q3-22E 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 $ 1,631 $ 1,658 $ 1,753 $

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

    GAAP to Non-GAAP Reconciliation – Remaining Performance Obligations and Normalized Remaining Performance Obligations 2022E in billions (except %'s) Q1-21 Q2-21 Q3-21 Q4-21 2021 Q1-22 Q2-22 Q3-22E Midpoint GAAP Current Remaining Performance Obligations at Period End $ 4.42 $ 4.75 $ 4.96 $ 5.68 $ 5.68

  24. Slide 24: GAAP to Non-GAAP Reconciliation – Other

    GAAP to Non-GAAP Reconciliation – Other in millions (except %'s and per share data) Q1-21 Margin Q2-21 Margin Q3-21 Margin Q4-21 Margin 2021 Margin Q1'22 Margin Q2'22 Margin Q3'22E Margin 2022E Margin GAAP Subscription Gross Profit $ 1,065 82% $ 1,082 81% $ 1,163 81% $ 1,241 82% $ 4,551 82% $ 1,356

  25. Slide 25: GAAP to Non-GAAP Reconciliation – Other (cont.)

    GAAP to Non-GAAP Reconciliation – Other (cont.) in millions (except %'s and per share data) Q1-21 Margin Q2-21 Margin Q3-21 Margin Q4-21 Margin 2021 Margin Q1'22 Margin Q2'22 Margin Q3'22E Margin 2022E Margin GAAP Weighted-Average Shares Used to Compute Net Income (Loss) per 202 N/A 202 N/A 203 N/A

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