Servicenow, Inc. · NYSE:NOW

Servicenow — Q2 2024 Earnings Presentation

25 slides from Servicenow's earnings presentation, Jul 24, 2024

  1. Slide 1: Investor Presentation Second Quarter 2024

    Investor Presentation Second Quarter 2024

  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 (“revenues”), and current remaining performance

  4. Slide 4: Technology, Employee, Customer and Creator Workflows

    Technology Employee Customer and Creator Workflows Workflows Industry Workflows Workflows Build connected Accelerate digital Drive employee Deliver frictionless cross-enterprise transformation with productivity, retention, customer experiences workflow apps fast resilient, cost-efficient, and growth

  5. Slide 5: We are the AI Platform for Business Transformation

    We are the AI Platform for Business Transformation We move with the pace of Our 8,100+ global customers(1) Our aspiration is to be the innovation to help customers include approximately 85% of the defining enterprise software transform organizations across Fortune 500. They all rely on company of th

  6. Slide 6: Q2-24 Financial Highlights

    Q2-24 Financial Highlights Increase Non-GAAP Constant Q2 2024 Results Quarterly Results Currency Impact(1) (Decrease) Y/Y Currency Y/Y(2) Subscription Revenues $2,542M 23% ~50bps headwind 23% Current RPO (cRPO) $8.78B 22% ~100bps headwind 22.5% Remaining Performance Obligations (RPO) $18.6B 31% ~100

  7. Slide 7: Guidance Summary

    Guidance Summary Currency Impact Increase Non-GAAP Constant Q3 2024 Guidance Quarterly Guidance Included in (Decrease) Y/Y Currency Y/Y(2) Guidance(1) Subscription Revenues $2,660M - $2,665M 20% - 20.5% ~50bps headwind 20.5% Non-GAAP Operating Margin(3) 29.5% ~Flat NA NA Current RPO (cRPO) Growth 22

  8. Slide 8: Comparison to Previously Issued Guidance

    Comparison to Previously Issued Guidance ($M) Subscription Revenues Y/Y Growth 22% 23% 21.5% 22% Q2-24A FY24E Prev. Guidance Midpoint(1) Currency Impact(2) Q2 Performance Actual Results Guidance Change Current Guidance Midpoint (1) Refers to previously issued financial guidance dated 4/24/24. (2) GA

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

    Year-Over-Year Subscription Revenues Growth Subscription Revenues (%) 27% 27% 26% 25% 25% 25% 25% 25% 25% 24% 25% 24% 25% 23% 23% 24% 22% 22% Q2-23A Q3-23A Q4-23A Q1-24A Q2-24A FY23A Previous Year Growth Actual Growth Non-GAAP Constant Currency Sub Revenue Growth (1) (1) Non-GAAP subscription revenu

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

    Currency Impact to Year-Over-Year Sub. Revenues Subscription Revenues ($M) $2,523 $2,517 $2,542 $2,552 $2,216 $2,173 $2,365 $2,332 $(6) $10 $8,680 $8,647 $(43) $(34) $(33) Q3-23A Q4-23A Q1-24A Q2-24A FY23A Y/Y Growth 27% 25% 27% 25% 25% 24% 23% 23% 26% 25% Actuals Currency Impact Non-GAAP Constant C

  11. Slide 11: Remaining Performance Obligations (RPO)

    Remaining Performance Obligations (RPO) ($B) Current RPO Noncurrent RPO Q2-24 $18.0 $18.6 $17.7 Y/Y Growth $14.2 $14.4 +31% / +31.5% $9.4 $9.2 $9.8 cc(1) $7.0 $7.0 Total RPO $7.20 $7.43 $8.60 $8.45 $8.78 Q2-23 Q3-23 Q4-23 Q1-24 Q2-24 cRPO Y/Y Growth 25% 27% 24% 21% 22% cRPO cc(1) Y/Y 24% 24% 23% 21%

  12. Slide 12: Customer Cohort Growth

    Customer Cohort Growth Annual Growth of Initial ACV 2024 51% 56% 2023 56% 2022 63% 84% 2021 76% 2020 73% 2019 100% 2018 112% 2017 108% 2016 2015 148% 2014 146% 2013 2012 201% 2011 231% (1) (1) As an illustrative example, 2010 customer cohort started with a contract of initial ACV (annual contract va

  13. Slide 13: Expansion of Customer Relationships

    Expansion of Customer Relationships ($M) $4.6 $4.7 $4.5 $4.3 $4.4 $4.1 $4.2 $4.0 1,935 1,988 $3.9 1,899 1,788 1,686 1,724 1,644 1,535 1,468 Q2-22 Q3-22 Q4-22 Q1-23 Q2-23 Q3-23 Q4-23 Q1-24 Q2-24 Number of Customers with $1M+ ACV Avg ACV of Customers with $1M+ ACV Note: Previously disclosed number of

  14. Slide 14: Renewal Rate

    Renewal Rate 99% 99% 98% 98% 98% Q2-23 Q3-23 Q4-23 Q1-24 Q2-24 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. © 2024 ServiceNow, Inc. All Rights Reserved. 14

  15. Slide 15: 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 16% 15% 16% 18% 17% 26% 25% 29% 30% 29% 58% 60% 55% 54% 52% Q2-23 Q3-23 Q4-23 Q1-24 Q2-24 (1) Historical presentations disclosed net new ACV contribution across pr

  16. Slide 16: GAAP Revenues by Geography

    GAAP Revenues by Geography North America EMEA APAC & Other 11% 11% 11% 11% 12% 25% 26% 26% 26% 25% 64% 63% 63% 63% 63% Q2-23 Q3-23 Q4-23 Q1-24 Q2-24 © 2024 ServiceNow, Inc. All Rights Reserved. 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 24,469 23,362 22,166 22,668 21,377 2,992 2,886 2,802 2,854 2,731 7,912 7,211 7,520 6,524 6,920 7,966 8,209 8,585 7,814 7,934 3,168 3,421 3,622 3,853 4,063 1,140 1,089 1,015 894 917 Q2-23 Q3-23 Q4-23 Q1-24 Q2-24 © 2024 Se

  18. Slide 18: Non-GAAP Gross Margins

    Non-GAAP Gross Margins Non-GAAP Subscription Gross Margin 86% 86% 85% 84% 85% 85% 84% Q2-23 Q3-23 Q4-23 Q1-24 Q2-24 FY22 FY23 Non-GAAP PS & Other Gross Margin 15% 16% 16% 11% 10% 10% 10% Q2-23 Q3-23 Q4-23 Q1-24 Q2-24 FY22 FY23 Non-GAAP Total Gross Margin 82% 82% 82% 83% 83% 82% 82% Q2-23 Q3-23 Q4-23

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

    Non-GAAP Operating and Free Cash Flow Margins Non-GAAP Operating Margin 30% 29% 30% 27% 28% 25% 26% Q2-23 Q3-23 Q4-23 Q1-24 Q2-24 FY22 FY23 Non-GAAP Free Cash Flow Margin 55% 47% 30% 30% 21% 14% 9% Q2-23 Q3-23 Q4-23 Q1-24 Q2-24 FY22 FY23 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 Non-GAAP Net Income ($M) $2,215 $1,543 $603 $643 $707 $651 $486 Q2-23 Q3-23 Q4-23 Q1-24 Q2-24 FY22 FY23 $10.78 Non-GAAP Diluted EPS $7.59 $2.92 $3.11 $3.41 $3.13 $2.37 Q2-23 Q3-23 Q4-23 Q1-24 Q2-24 FY22 FY23 Note: All figures are calculated on a non-GAAP basis. Se

  21. Slide 21: GAAP to Non-GAAP Reconciliation and Supplemental Information

    GAAP to Non-GAAP Reconciliation and Supplemental Information © 2024 ServiceNow, Inc. All Rights Reserved. 21

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

    GAAP to Non-GAAP Reconciliation – Other in millions (except %'s and per share data) 2022 Margin Q1'23 Margin Q2'23 Margin Q3'23 Margin Q4'23 Margin 2023 Margin Q1'24 Margin Q2'24 Margin Q3'24E 2024E GAAP Subscription Gross Profit $ 5,704 83% $ 1,670 83% $ 1,686 81% $ 1,796 81% $ 1,922 81% $ 7,074 82

  23. Slide 23: GAAP to Non-GAAP Reconciliation – Other (cont.)

    GAAP to Non-GAAP Reconciliation – Other (cont.) Note: Numbers rounded for presentation purposes and may not foot. © 2024 ServiceNow, Inc. All Rights Reserved. 23

  24. Slide 24: Supplemental Information

    Supplemental Information in millions Q1'23 Q2'23 Q3'23 Q4'23 2023 Q1'24 Q2'24 Stock-based compensation Cost of revenues: Subscription $ 46 $ 50 $ 52 $ 54 $ 202 $ 58 $ 62 Professional services and other $ 14 $ 15 $ 11 $ 12 $ 52 $ 12 $ 12 Operating expenses: Sales and marketing $ 126 $ 120 $ 132 $ 127

  25. Slide 25: servicenow.

    servicenow.

ServiceNow — Q2 2024 Earnings Presentation on 6ix