Servicenow, Inc. · NYSE:NOW

Servicenow — Q3 2022 Earnings Presentation

25 slides from Servicenow's earnings presentation, Oct 26, 2022

  1. Slide 1: Investor Presentation Third Quarter 2022

    Investor Presentation Third 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 Fortune 500. They all rely defining enterprise software can find smarter, faster, better o

  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: Q3-22 Financial Highlights

    Q3-22 Financial Highlights Increase Non-GAAP Constant Q3 2022 Results Quarterly Results Currency Impact(1) (Decrease) Y/Y Currency Y/Y(2) Subscription Revenues $1,742M 22% ~650bps headwind 28.5% Current RPO (cRPO) $5.87B 18% ~700bps headwind 25% Remaining Performance Obligations (RPO) $11.4B 17% ~75

  7. Slide 7: Guidance Summary

    Guidance Summary Currency Impact Quarterly Increase Non-GAAP Constant Q4 2022 Included in Guidance (Decrease) Y/Y Currency Y/Y(2) Guidance(1) Subscription Revenues $1,834M - $1,839M 20% - 21% ~600bps headwind 26% - 27% Non-GAAP Operating Margin(3) 26% ~350bps NA NA Current RPO (cRPO) Growth 20% NA ~

  8. Slide 8: Comparison to Previously Issued Guidance

    Comparison to Previously Issued Guidance ($M) Subscription Revenues Y/Y Growth 23% 22% 24% 23% Q3-22A FY22E Prev. Guidance Midpoint(1) Currency Impact(2) Q3 Performance Actual Results Guidance Change Current Guidance Midpoint (1) Refers to previously issued financial guidance dated 7/27/22 (2) GAAP

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

    Year-Over-Year Subscription Revenues Growth 31% 31% 30% 32% 31% 31% 32% 29% 30% 30% 29% 30% 29% 30% 28% 26% 25% 22% Subscription Revenues Q3-21A Q4-21A Q1-22A Q2-22A Q3-22A 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 $5,573 $5,496 $1,658 $1,724 $1,834 $1,631 $1,666 $1,742 $1,523 $1,538 ($77) $66 $92 $35 $15 ($M) Subscription Revenues Q4-21A Q1-22A Q2-22A Q3-22A FY21A Y/Y Growth 29% 30% 26% 29% 25% 30% 22% 29% 30% 28% Actuals Currency Impact Non-GAAP Constant Curren

  11. Slide 11: Remaining Performance Obligations

    Remaining Performance Obligations ($B) Current RPO Noncurrent RPO Q3-22 $11.5 $11.5 $11.5 $11.4 Y/Y Growth $9.7 +17% / +24.5% cc(1) $5.8 $5.8 $5.8 $5.5 Total RPO $4.7 $4.96 $5.68 $5.69 $5.75 $5.87 Q3-21 Q4-21 Q1-22 Q2-22 Q3-22 cRPO Y/Y Growth 32% 29% 29% 21% 18% cRPO cc(1) Y/Y Growth 32% 32% 30.5% 2

  12. Slide 12: Customer Cohort Growth

    Customer Cohort Growth Annual Growth of Initial ACV 54% 61% 2022 76% 2021 76% 2020 2019 73% 2018 2017 98% 2016 2015 108% 2014 2013 88% 2012 2011 110% 2010 112% 167% 189% (1) (1) As an illustrative example, 2010 customer cohort started with a contract of initial ACV (annual contract value) of $100 an

  13. Slide 13: Expansion of Customer Relationships

    Expansion of Customer Relationships $3.9 $3.9 $4.0 $3.8 $3.7 $3.6 1,530 $3.5 $3.5 $3.4 1,459 ($M) 1,398 1,344 1,252 1,192 1,133 1,080 1,007 Q3-20 Q4-20 Q1-21 Q2-21 Q3-21 Q4-21 Q1-22 Q2-22 Q3-22 Number of Customers with $1M+ ACV Avg ACV of Customers with $1M+ ACV Note: Previously disclosed number of

  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 17% 15% 14% 16% 17% 26% 28% 27% 22% 24% 57% 57% 59% 62% 59% Q3-21 Q4-21 Q1-22 Q2-22 Q3-22 (1) Historical presentations disclosed net new ACV contribution across pr

  15. Slide 15: Renewal Rate

    Renewal Rate 99% 99% 98% 98% 98% Q3-21 Q4-21 Q1-22 Q2-22 Q3-22 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% 25% 25% 24% 63% 63% 65% 65% 66% Q3-21 Q4-21 Q1-22 Q2-22 Q3-22 © 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 20,072 19,046 17,884 2,632 16,881 2,532 15,947 2,459 2,353 2,256 6,086 5,768 5,422 5,138 4,840 6,918 7,368 5,969 6,362 5,668 2,144 2,286 2,407 2,508 2,669 1,039 1,135 1,234 1,320 1,317 Q3-21 Q4-21 Q1-22 Q2-22 Q3-22 © 202

  18. Slide 18: Non-GAAP Gross Margins

    Non-GAAP Gross Margins Non-GAAP Subscription Gross Margin 86% 86% 86% 86% 85% 85% 85% Q3-21 Q4-21 Q1-22 Q2-22 Q3-22 FY20 FY21 Non-GAAP PS & Other Gross Margin 17% 15% 15% 10% 16% 8% 12% Q3-21 Q4-21 Q1-22 Q2-22 Q3-22 FY20 FY21 Non-GAAP Total Gross Margin 81% 81% 83% 82% 82% 82% 81% Q3-21 Q4-21 Q1-22

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

    Non-GAAP Operating and Free Cash Flow Margins Non-GAAP Operating Margin 26% 25% 25% 25% 23% 23% 26% Q3-21 Q4-21 Q1-22 Q2-22 Q3-22 FY20 FY21 Non-GAAP Free Cash Flow Margin 46% 45% 32% 32% 15% 16% 6% Q3-21 Q4-21 Q1-22 Q2-22 Q3-22 FY20 FY21 Note: All figures are calculated on a non-GAAP basis. See appe

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

    Non-GAAP Net Income and Diluted EPS $1,201 Non-GAAP Net Income ($M) $926 $352 $329 $398 $314 $296 Q3-21 Q4-21 Q1-22 Q2-22 Q3-22 FY20 FY21 $5.92 $4.63 Non-GAAP Diluted EPS $1.73 $1.96 $1.55 $1.46 $1.62 Q3-21 Q4-21 Q1-22 Q2-22 Q3-22 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 Note: Numbers rounded for presentation purposes and may not foot. © 2022 ServiceNow, Inc. All Rights Reserved. Confidential. 22 ®

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

    GAAP to Non-GAAP Reconciliation – Remaining Performance Obligations and Normalized Remaining Performance Obligations ininbillions billions(except (except%'s) %'s) Q1-21Q1-21 Q2-21Q2-21 Q3-21 Q3-21 Q4-21 Q4-21 2021 2021 Q1-22 Q1-22 Q2-22 Q2-22Q3-22 Q3-22 Q4-22E Q4-22E2022E Midpoint M GAAPCurrent GAAP

  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 Q3'22 Margin Q4'22E Margin 2022E Margin GAAP Subscription Gross Profit $ 1,065 82% $ 1,082 81% $ 1,163 81% $ 1,241 82% $ 4,551

  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 Q3'22 Margin Q4'22E Margin 2022E Margin GAAP Weighted-Average Shares Used to Compute Net Income (Loss) per 202 N/A 202

ServiceNow — Q3 2022 Earnings Presentation on 6ix