Servicenow, Inc. · NYSE:NOW

Servicenow — Investor Day (May 2019)

60 slides from Servicenow's investor day presentation, May 6, 2019

Slide 1: Financial Analyst Day
Financial Analyst Day Las Vegas, Nevada May 6, 2019
Slide 2: Agenda
Agenda Lisa Banks, Welcome Vice President, Investor Relations Innovating for the future CJ Desai, Chief Product Officer David Schneider, Capturing the opportunity ahead President, Global Customer Operations Andrew Wilson, Customer experience Chief Information Officer, Accenture Break Investing for g
Slide 3: 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
Slide 4: 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 believe billings is a useful leading indicator regarding the performance of our business
Slide 5: Innovating for the future
Innovating for the future CJ Desai Chief Product Officer
Slide 6: The leading global companies rely on our products
The leading global companies rely on our products # of NOW customers in each industry’s top 10 10 9 8 8 of top 10 7 8 7 of top 10 of top 10 of top 10 of top 10 of top 10 of top 10 Communication Consumer Information Financial Healthcare Consumer Utilities Services Staples Technology Services Discreti
Slide 7: Product investment strategy
Product investment strategy Now Platform and Emerging technologies Future bets current products and new products On-board next generation for Meet performance Develop options for future future growth commitments growth 60% 30% 10% Horizon 1 Horizon 2 Horizon 3 ROI in 0 to ROI in 12 to ROI in 36 to 1
Slide 11: Enterprises expanding use of ServiceNow from IT to enterprise-wide platform
Enterprises across industries and governments around the world are expanding their use of ServiceNow from an IT platform to an enterprise- wide platform © 2019 ServiceNow, Inc. All Rights Reserved.
Slide 12: Our product portfolio
Our product portfolio Now Platform 3 Core Workflows IT Employee Customer Workflows Workflows Workflows On- Field ITSM ITBM ITOM ITAM ITSM HRSD CSM Services boarding Dev Security GRC Ops Ops © 2019 ServiceNow, Inc. All Rights Reserved.
Slide 13: The Now Platform is the platform for Digital Workflows
The Now Platform is the platform for Digital Workflows Platform delivers digital workflows across any organization, silos & systems Digital Workflows Experiences Now Platform ® Intelligence Integrations IT Public Sales Marketing Manufacturing HR Finance Customer Service cloud automation © 2019 Servi
Slide 14: Customers are leveraging our Platform to extend or create workflows
Customers are leveraging our Platform to extend NOW workflows or create new workflows IT Employee Customer Workflows Workflows Workflows • Internal audits • Visitor tracking • Warranty claims • Loaner equipment • Vacation requests • Sales proposal approvals • Project approvals • Time and attendance
Slide 15: Digital Experience focus
Digital Experience focus Mobile Studio Service Portal and Workspace Conversational Quickly build Web Interfaces for employees and Designer and deploy native, Knowledge workers Anyone can build mobile-first experiences conversations for self-service © 2019 ServiceNow, Inc. All Rights Reserved.
Slide 16: Delivering intelligent platform for smart applications
Delivering intelligent platform for smart applications Automated Recommendations Virtual Agent outcomes Recommends incident natural Uncovers insights across resolution and suggests conversations various sources of records relevant Knowledge articles Natural conversations drive for faster time-to-res
Slide 17: Now Platform delivers simple connected experiences
Now Platform delivers simple connected experiences Connect Now Platform to enterprise applications Synchronize data, automate workflows, and create end-to- end connected customer experiences Integrations built by us, our partners, or 3rd party developers © 2019 ServiceNow, Inc. All Rights Reserved.
Slide 18: We continue to expand our Now Platform global footprint
We continue to expand our Now Platform global footprint 10 99.996% 95K paired cloud uptime instances* under datacenters management Amsterdam London Calgary Düsseldorf Frankfurt Toronto Ashburn Culpeper Geneva Zurich Hong Japan Kong Miami Tokyo datacenters Osaka opening in Santa Clara June’19 Sao Sin
Slide 19: Strengths of the Now Platform drive customer adoption
Strengths of the Now Platform drive customer adoption # production # daily active # customer instances users transactions per month 8500 3 Million 20 Billion © 2019 ServiceNow, Inc. All Rights Reserved. March’19 data. Arrows indicate comparison with prior year numbers.
Slide 21: Investing in current and future product innovation
Investing in current and future product innovation 2.5x 6x 3x 2 Releases engineers across + user experience + product/program = per year, 10 R&D centers designers managers all products Growth in the past two years London Amsterdam Chicago Tel Aviv Kirkland Hyderabad San Francisco Santa Clara San Die
Slide 22: Platform Product major release roadmap
Platform Product major release roadmap 2019 2020 2021 Madrid New York Orlando Paris Quebec Rome Q1 Q3 Q1 Q3 Q1 Q3 March September March September March September © 2019 ServiceNow, Inc. All Rights Reserved.
Slide 23: Continuing innovation in our current products
Continuing innovation in our current products Highlighting single product roadmap in each Workflow New York - Q3’19 Orlando – Q1’20 Paris – Q3’20 Integrated Service-owner Workforce Optimization Enterprise-wide self- & Vendor Management empowers teams to service experiences ITSM workspaces for manage
Slide 24: DevOps update
DevOps update Controlled availability now, general availability in second half 2019 Initial Functionality DevOps Change Automation DevOps Insights DevOps Integrations Deliver innovation faster without risk Improve collaboration with shared insights Lower engineering overhead managing integrations ©
Slide 25: Future products: NowX
Future products: “NowX” Incubate great ideas and turn them into products “NowX” is a global team • Founded in January 2018 Jan’18: started with 2 FTE • Goal: Launch 1-2 products per year Q4’18: 45 FTE Expected Q2’19: 75 FTE Examples of new products in the works: • Finance operations management • Ent
Slide 26: First NowX product: Finance Operations Management
First “NowX” product: Finance Operations Management The first product targeted to the Office of the Chief Financial Officer Controlled availability now, general availability in Q3 2019 Initial Functionality Workspace for managing end-to-end accounting procedures for finance close Reduce close risk I
Slide 27: Finance Operations Management: Initial Customer Feedback
Finance Operations Management Initial Customer Feedback “In recent years, certain technologies have emerged that significantly improve financial processes. The common challenges these technologies address are simplification, transparency, controls and efficiency. The ServiceNow product for finance i
Slide 28: We believe we have a winning product portfolio
We believe we have a winning product portfolio A Leader A Visionary ServiceNOW named a Leader in Gartner ServiceNOW named a Visionary in Gartner: • Magic Quadrant for IT Service Management • Magic Quadrant for CRM Customer Tools (2018)1 Engagement Center (2018)4 • Magic Quadrant for Integrated Risk
Slide 29: Capturing The Opportunity Ahead
Capturing The Opportunity Ahead David Schneider President, Global Customer Operations
Slide 31: Making customers successful drives long-term relationships and growth
Making customers successful drives long-term relationships and growth “Simply closing a sale isn’t our goal. We want to create a partnership. Making our customers successful in how they work is what matters most.” 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 © 2019 ServiceNow, Inc. All Rights R
Slide 32: We must continue to build large relationships
We must continue to build large relationships Customers > $1M ACV Customers > $5M ACV + 160% + 722% 2015 2016 2017 2018 2015 2016 2017 2018 © 2019 ServiceNow, Inc. All Rights Reserved.
Slide 33: We are a strategic partner at every phase of the customer journey
We are a strategic partner at every phase of the customer journey Get me Keep me excited Help me engaged, Make sure Review my about determine Get me Validate Support me learning, and I’m ready business ServiceNow specific to live(s) outcomes and plan for advocating needs outcomes and and value upgra
Slide 34: Building a robust partner ecosystem to deliver greater value
Building a robust partner ecosystem to deliver greater value to customers “At ServiceNow, partner success is synonymous with customer success.” Double-down on current global partners (G5) Subscription Revenue Expand and evolve global partner ecosystem (+G11) + 8 to be announced Services Revenue 2016
Slide 35: Our shared commitment will accelerate customer outcomes
Our shared commitment will accelerate customer outcomes Customer sponsorship functional expertise governance Customer outcomes ServiceNow Partner innovation business process design expert services application config & testing best practices change management © 2019 ServiceNow, Inc. All Rights Reserv
Slide 36: Training and certification programs build a skilled ecosystem
Innovative training and certification programs are critical to building a skilled ecosystem of ServiceNow professionals Recruiting requirements and career progression Partner practice differentiation and CoE Cross-workflow development expansion and specialization today © 2019 ServiceNow, Inc. All Ri
Slide 37: Continuing to invest in priority markets while expanding global footprint
Continuing to invest in priority markets while expanding global footprint Tier 1 Tier 2 Tier 3 Largest opportunity Critical to short- and long-term success Invest for the future Establish stronger presence © 2019 ServiceNow, Inc. All Rights Reserved.
Slide 38: Building industry-relevant teams and products to unlock potential
Building industry-relevant teams and products to unlock potential Customers investing Customers investing to Our Full in a strategic meet industry-specific platform need Potential + = © 2019 ServiceNow, Inc. All Rights Reserved.
Slide 40: Investing for growth
Investing for growth Mike Scarpelli Chief Financial Officer
Slide 42: Delivering sustained high growth at scale
Delivering sustained high growth at scale… Subscription Revenues ($M) and Y/Y Growth 62% 50% 46% 41% 39% $2,421 $1,740 $1,234 $848 $567 (1) (1) 2014 2015 2016 2017 2018 (1) Numbers reported under ASC605 Note: Numbers rounded for presentation purposes © 2019 ServiceNow, Inc. All Rights Reserved.
Slide 43: Improving Non-GAAP free cash flow leverage
…With improving Non-GAAP free cash flow leverage Non-GAAP Free Cash Flow ($M) and Margin %(2) 28% 26% 23% 23% $732 13% $492 $321 $230 $87 (1) (1) 2014 2015 2016 2017 2018 (1) Numbers reported under ASC605 (2) See the tables included at the end of this presentation for a reconciliation to GAAP Note:
Slide 44: Non-GAAP Billings represents another indicator of high growth
Non-GAAP Billings represents another indicator of high growth... Non-GAAP Subscription Billings ($M) and Y/Y Growth(2) 65% 42% 45% 41% 36% $2,881 $2,124 $1,507 $1,038 $731 (1) (1) 2014 2015 2016 2017 2018 (1) Numbers reported under ASC605 (2) See the tables included at the end of this presentation f
Slide 45: Billings is not the best measure of performance
...But billings is not the best measure of performance 1 Contract Start Dates 2 Duration 3 Seasonality © 2019 ServiceNow, Inc. All Rights Reserved.
Slide 46: Remaining Performance Obligation is a better measure of performance
Remaining Performance Obligation (RPO) is a better (1) measure of performance Unbilled 1 Aligns with bookings period Current RPO revenue recognized in next 12 months S/T Deferred Revenue 2 Current RPO neutralizes for duration Unbilled Noncurrent RPO revenue recognized in12 months+ 3 Consistent and p
Slide 47: Current RPO providing insight into near-term revenues
With current RPO providing insight into near-term (1) revenues Noncurrent RPO Current RPO Q1-19 4.9 5.1 Y/Y Growth 4.2 4.0 3.8 ($B) 3.6 2.5 2.5 +33% Current RPO 2.0 2.1 1.8 1.9 +33% 2.5 2.5 Noncurrent RPO 1.8 1.9 2.0 2.1 ($B) Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 (1) Transaction price allocated to rem
Slide 48: Large and growing total addressable market
Large and growing total addressable market… 8% CAGR $165B $110B Fin Ops Mgmt 2018 2019 2020 2021 2022 2023 Note: Calculations performed by ServiceNow and graphics created by ServiceNow based on Gartner research. (1) Source: markets defined from three Gartner reports: Gartner, Forecast: (i) Infrastru
Slide 49: Driving growth in emerging products
…Is driving growth in emerging products Net New ACV mix shift to emerging products IT Emerging Products Platform Add-Ons & Other 8% 10% 11% 12% 12% 3% 4% 12% 23% 29% 89% 86% 77% 65% 59% 2014 2015 2016 2017 2018 Note: IT = IT Service Mgmt, IT Operations Mgmt, IT Asset Mgmt, IT Business Mgmt *Integrat
Slide 50: Landing new customers is an important indicator of future growth
Landing new customers is an important indicator of future growth… Enterprise Customers Y/Y Growth 28% 30% 20% 22% 23% 5,400 4,400 3,600 3,000 2,300 2014 2015 2016 2017 2018 Note: We adjust our customer count for acquisitions, consolidations and other customer events that cause the merging of two or
Slide 51: Expanding existing customer relationships is a key growth driver
…But expanding existing customer relationships is a key growth driver 130%+ dollar-based net expansion rate in 2018 Expansion Net New ACV New Customer Net New ACV 19% 27% 24% 34% 31% 81% 73% 76% 66% 69% 2014 2015 2016 2017 2018 Note: Original version of this slide included an error that has been cor
Slide 52: Existing investments have resulted in large customer relationships
Existing investments have resulted in large customer relationships… 675 Customers paying $1M+ annually $1M-$5M $5M-$10M $10M-$20M $20M+ 601 56 158 15 2 3 0 0 2014 2018 2014 2018 2014 2018 2014 2018 Note: Previously disclosed number of customers with ACV greater than $1 million is restated to allow f
Slide 53: Investments are leading to larger customer relationships
...Our investments are leading to larger customer relationships... (1) ~2,000 Customers paying $1M+ $1M - $5M $5M-$10M $10M-$20M $20M+ ~1,670 601 ~200 ~100 ~30 158 2 56 0 0 3 15 2014 2018 202X 2014 2018 202X 2014 2018 202X 2014 2018 202X Note: Previously disclosed number of customers with ACV greate
Slide 54: Large customer relationships are highly profitable
…And large customer relationships are highly profitable Customer ACV / Cost to book and serve* Fortune 500 Customer Examples $1M+ $5M+ $10M+ $20M+ 1.8x 3.2x 4.1x 5.7x Energy Pharmaceutical Technology Retail *Cost to book and serve represents direct and allocated S&M, R&D, G&A, and Sub COGS expenses
Slide 55: Our long-term growth opportunity requires efficient investments
Our long-term growth opportunity requires efficient investments… Platform and Customer Brand Talent Product Success © 2019 ServiceNow, Inc. All Rights Reserved.
Slide 56: We will continue to be disciplined as we invest
…And we will continue to be disciplined as we invest Non-GAAP Operating Profit ($M) and Margin %(2) 18% 20% 16% $528 10% 1% $352 $222 $103 $10 (1) (1) 2014 2015 2016 2017 2018 (1) Numbers reported under ASC 605 (2) See the tables included at the end of this presentation for a reconciliation to GAAP
Slide 57: Target operating model
Target operating model 2020 Total Revenues >$4B Non-GAAP Subscription Gross Margin 84-86% Annual Non-GAAP Operating Margin Expansion ~100 bps Annual Non-GAAP Free Cash Flow Margin Expansion > 0 bps Non-GAAP Tax Rate 18-20% Annual Dilution Increase <3% © 2019 ServiceNow, Inc. All Rights Reserved.
Slide 58: servicenow
servicenow
Slide 59: GAAP to Non-GAAP Reconciliation – Revenues and Billings
GAAP to Non-GAAP Reconciliation – Revenues and Billings in millions (except %'s) 2014* 2015* 2016 2017 2018 GAAP Subscription Revenues (1) $ 567 $ 848 $ 1,234 $ 1,740 $ 2,421 (+/-) Change in Subscription Deferred Revenue, Unbilled Receivables, and Customer Deposits 164 190 273 384 460 Non-GAAP Subsc
Slide 60: GAAP to Non-GAAP Reconciliation – Other
GAAP to Non-GAAP Reconciliation – Other in millions (except %'s) 2014* Margin 2015* Margin 2016 Margin 2017 Margin 2018 Margin GAAP Income (Loss) from Operations (1) $ (152) -23% $ (166) -17% $ (382) -27% $ (64) -3% $ (42) -2% (+) SBC 154 23% 258 26% 318 23% 394 21% 544 21% (+) Amort of Purchased In

ServiceNow — Investor Day (May 2019) on 6ix

Servicenow — Investor Day (May 2019)

Slide 1: Financial Analyst Day

Slide 2: Agenda

Slide 3: Safe Harbor and Other Information

Slide 4: Statement Regarding Use of Non-GAAP Financial Measures

Slide 5: Innovating for the future

Slide 6: The leading global companies rely on our products

Slide 7: Product investment strategy

Slide 8: Our strategy informs R&D priorities

Slide 9: Now Platform

Slide 10: Our unique differentiation

Slide 11: Enterprises expanding use of ServiceNow from IT to enterprise-wide platform

Slide 12: Our product portfolio

Slide 13: The Now Platform is the platform for Digital Workflows

Slide 14: Customers are leveraging our Platform to extend or create workflows

Slide 15: Digital Experience focus

Slide 16: Delivering intelligent platform for smart applications

Slide 17: Now Platform delivers simple connected experiences

Slide 18: We continue to expand our Now Platform global footprint

Slide 19: Strengths of the Now Platform drive customer adoption

Slide 20: Delivering innovative products

Slide 21: Investing in current and future product innovation

Slide 22: Platform Product major release roadmap

Slide 23: Continuing innovation in our current products

Slide 24: DevOps update

Slide 25: Future products: NowX

Slide 26: First NowX product: Finance Operations Management

Slide 27: Finance Operations Management: Initial Customer Feedback

Slide 28: We believe we have a winning product portfolio

Slide 29: Capturing The Opportunity Ahead

Slide 30: Introduction

Slide 31: Making customers successful drives long-term relationships and growth

Slide 32: We must continue to build large relationships

Slide 33: We are a strategic partner at every phase of the customer journey

Slide 34: Building a robust partner ecosystem to deliver greater value

Slide 35: Our shared commitment will accelerate customer outcomes

Slide 36: Training and certification programs build a skilled ecosystem

Slide 37: Continuing to invest in priority markets while expanding global footprint

Slide 38: Building industry-relevant teams and products to unlock potential

Slide 39: Customer perspective

Slide 40: Investing for growth

Slide 41: Key financial priorities

Slide 42: Delivering sustained high growth at scale

Slide 43: Improving Non-GAAP free cash flow leverage

Slide 44: Non-GAAP Billings represents another indicator of high growth

Slide 45: Billings is not the best measure of performance

Slide 46: Remaining Performance Obligation is a better measure of performance

Slide 47: Current RPO providing insight into near-term revenues

Slide 48: Large and growing total addressable market

Slide 49: Driving growth in emerging products

Slide 50: Landing new customers is an important indicator of future growth

Slide 51: Expanding existing customer relationships is a key growth driver

Slide 52: Existing investments have resulted in large customer relationships

Slide 53: Investments are leading to larger customer relationships

Slide 54: Large customer relationships are highly profitable

Slide 55: Our long-term growth opportunity requires efficient investments

Slide 56: We will continue to be disciplined as we invest

Slide 57: Target operating model

Slide 58: servicenow

Slide 59: GAAP to Non-GAAP Reconciliation – Revenues and Billings

Slide 60: GAAP to Non-GAAP Reconciliation – Other