Servicenow, Inc. · NYSE:NOW

Servicenow — Q1 2019 Earnings Presentation

22 slides from Servicenow's earnings presentation, 2019

  1. Slide 1: Investor Presentation First Quarter 2019

    Investor Presentation First Quarter 2019

  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. We intend for such forward‐looking statements to be covered by the safe harbor provisions for for

  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 adjusted for constant currency and corresponding growth rates to provid

  4. Slide 4: Comparison to Previously Issued Guidance

    Comparison to Previously Issued Guidance ($M) Prev. Guidance Currency Impact(2) Duration Impact(3) Q1-19 Outperformance Actual Results Guidance Change Current Guidance Midpoint(1) Midpoint(4) $718 $21 $740 $23 $3,243 $1 $3,225 ($5) Subscription Revenues Y/Y Growth 32% 36% 33% 34% $17 $810 $3,715 $24

  5. Slide 5: Year-Over-Year Subscription Revenues and Billings Growth

    Year-Over-Year Subscription Revenues and Billings Growth Previous Year Growth Actual Growth Guidance Midpoint Growth Non-GAAP Adjusted Growth(3) Sub Rev: Constant Currency(1) Sub Billings : Constant Currency + Constant Duration(1)(2) 45% 45% 42% 41% 39% 39% 40% 40% 40% 38% 39% 36% 36% 34% 36% 33% 35

  6. Slide 6: Currency and Duration Impact to Year-Over-Year Sub. Revenues and Billings

    Currency and Duration Impact to Year-Over-Year Sub. Revenues and Billings ($M) Actuals Guidance Midpoint Currency Impact(1) Duration Impact(2) Non-GAAP Adjusted Sub. Revenues and Sub. Billings(3) $666 $7 $674 $740 $20 $760 $781 $15 $796 $2,421 $2,394 $3,243 $45 $3,288 $627 $3 $629 Subscription $585

  7. Slide 7: Consistent Customer Growth Across All Cohorts

    Consistent Customer Growth Across All Cohorts Illustrative Example Initial ACV Annual Growth Periods ACV Today of Initial ACV Annual Growth 2018 $100 + (100 x 66%) x 1 $166 of Initial ACV (100 x 54%) x 2 2017 $100 + $208 66% (100 x 77%) x 3 2016 $100 + $331 54% (100 x 80%) x 4 77% 2015 $100 + $420 (

  8. Slide 8: Expansion of Customer Relationships

    Expansion of Customer Relationships Cust >$1M Y/Y Growth 49% 47% 43% 43% 43% 40% 37% 34% 33% 717 675 610 575 541 505 446 411 379 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Note: Previously disclosed number of customers with ACV greater than $1 million is restated to allow for comparabilit

  9. Slide 9: Net New ACV Contribution Across Products

    Net New ACV Contribution Across Products IT Emerging Products Platform Add-ons & Other 11% 12% 13% 13% 17% 30% 27% 26% 31% 28% 59% 61% 61% 56% 55% Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Note: IT = IT Service Mgmt, IT Operations Mgmt*, IT Asset Mgmt, IT Business Mgmt Emerging Products = CSM, HR, Security, Int

  10. Slide 10: 17 of Top 20 New Deals in Q1 Included 3+ Products

    17 of Top 20 New Deals in Q1 Included 3+ Products 5+ Products 3-4 Products 1-2 Products Platform Add- IT Emerging Products ons & Other Customer Security Intelligent Platform Add- ITSM ITOM ITAM ITBM HR Service Operations Apps ons & Other Customer 1 X X X X X X X X Customer 2 X X X X X X X X Customer

  11. Slide 11: Headcount by Department

    Headcount by Department PS & Other Cost of Sales Sub. Cost of Sales S&M R&D G&A 8,666 8,154 7,661 1,257 7,150 1,178 6,675 1,149 1,045 979 2,214 2,080 1,860 1,675 1,509 3,296 2,890 3,061 2,616 2,763 1,065 1,121 1,171 1,218 1,003 568 602 641 664 681 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 11 © 2019 ServiceNow,

  12. Slide 12: Consistently High Renewal Rate

    Consistently High Renewal Rate 99% 98% 98% 98% 97% Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Note: We adjust our Renewal Rate for acquisitions, consolidations and other customer events that cause the merging of two or more accounts 12 occurring at the time of renewal. Previously disclosed Renewal Rates may be r

  13. Slide 13: Top Line Mix Shifting to Subscription

    Top Line Mix Shifting to Subscription GAAP Revenues Subscription PS & Other 8% 7% 7% 7% 6% 9% 7% 92% 93% 93% 93% 94% 91% 93% Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 FY17 FY18 Non-GAAP Billings Subscription PS & Other 7% 7% 6% 6% 6% 8% 7% 93% 93% 94% 94% 94% 92% 93% Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 FY17 FY18 Note

  14. Slide 14: GAAP Revenues by Geography

    GAAP Revenues by Geography North America EMEA APAC & Other 8% 9% 9% 9% 9% 26% 25% 24% 25% 25% 66% 66% 67% 66% 66% Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 14 © 2019 ServiceNow, Inc. All Rights Reserved.

  15. Slide 15: Average Contract Terms

    Average Contract Terms New Customer Upsell Renewal 37.3 35.3 35.7 31.9 32.5 28.8 27.2 26.9 25.6 25.7 26.1 25.4 26.0 26.2 23.8 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Note: All figures represent number of months. Revised mapping of customers in the cu

  16. Slide 16: Non-GAAP Gross Margins

    Non-GAAP Gross Margins Non-GAAP Subscription Gross Margin 86% 86% 86% 86% 86% 85% 85% Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 FY17 FY18 Non-GAAP PS & Other Gross Margin 12% 12% 8% 6% 8% 6% -2% Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 FY17 FY18 Non-GAAP Total Gross Margin 80% 80% 80% 80% 80% 80% 78% Q1-18 Q2-18 Q3-18 Q4-

  17. Slide 17: Demonstrated Operating Leverage Expansion

    Demonstrated Operating Leverage Expansion Non-GAAP Operating Margin 24% 21% 20% 18% 19% 18% 17% Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 FY17 FY18 Non-GAAP Free Cash Flow Margin 38% 40% 34% 28% 26% 24% 17% Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 FY17 FY18 Note: All figures are calculated on a non-GAAP basis. See appendi

  18. Slide 18: Non-GAAP Net Income and Diluted EPS

    Non-GAAP Net Income and Diluted EPS Non-GAAP Net Income ($M) $470 $242 $129 $146 $129 $105 $91 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 FY17 FY18 Non-GAAP Diluted EPS $2.49 $1.35 $0.68 $0.77 $0.67 $0.56 $0.49 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 FY17 FY18 Note: All figures are calculated on a non-GAAP basis. See appe

  19. Slide 19: GAAP to Non-GAAP Reconciliation

    GAAP to Non-GAAP Reconciliation 19 © 2019 ServiceNow, Inc. All Rights Reserved.

  20. Slide 20: GAAP to Non-GAAP Reconciliation – Revenues and Billings

    GAAP to Non-GAAP Reconciliation – Revenues and Billings in millions (except %'s) 2017 Q1-18 Q2-18 Q3-18 Q4-18 2018 Q1-19 Q2-19E Midpoint 2019E Midpoint GAAP Subscription Revenues $ 1,740 $ 543 $ 585 $ 627 $ 666 $ 2,421 $ 740 $ 781 $ 3,243 (+) Effects of Foreign Currency Rate Fluctuations (5) (23) (1

  21. Slide 21: GAAP to Non-GAAP Reconciliation – Other

    GAAP to Non-GAAP Reconciliation – Other in millions (except %'s and per share data) 2017 Margin Q1-18 Margin Q2-18 Margin Q3-18 Margin Q4-18 Margin 2018 Margin Q1-19 Margin Q2-19E 2019E GAAP Subscription Gross Profit $ 1,424 82% $ 448 82% $ 484 83% $ 520 83% $ 553 83% $ 2,004 83% $ 613 83% N/A 83% (

  22. Slide 22: GAAP to Non-GAAP Reconciliation – Other (cont.)

    GAAP to Non-GAAP Reconciliation – Other (cont.) in millions (except %'s and per share data) 2017 Margin Q1-18 Margin Q2-18 Margin Q3-18 Margin Q4-18 Margin 2018 Margin Q1-19 Margin Q2-19E 2019E GAAP Weighted-Average Shares Used to Compute Net Income (Loss) per 171 N/A 190 N/A 177 N/A 192 N/A 191 N/A

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