Slide 1: Investor Presentation Fourth Quarter 2020
® Investor Presentation Fourth Quarter 2020
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
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, revenue growth rates, and current remaining performance obligations an
Slide 4: We make the world of work, work better for people
We make the world of work, work better for people™ ServiceNow delivers digital Our ~6,900 global enterprise Our aspiration is to be the workflows that create great customers include approximately defining enterprise software experiences and unlock 80% of the Fortune 500. They all company of the 21st
Slide 5: Now Platform: The platform of platforms for digital transformation
Now Platform®: The platform of platforms for the digital transformation IT Employee Customer App Workflows Workflows Workflows Engine Modernize IT to Transform the Reimagine the Boost productivity create great employee customer experience with embedded experiences and experience and turn to empower
Slide 6: Q4-20 Financial Highlights
Q4-20 Financial Highlights Quarterly Non-GAAP Q4 2020 Results Increase Y/Y Results Adjusted Y/Y(1) Subscription Revenues $1,184M 32% 29% Non-GAAP Subscription Billings(2) $1,828M 41% 38% Current RPO (cRPO)(3) $4.4B 33% 30% Remaining Performance Obligations (RPO) $8.9B 35% 31% Non-GAAP Operating Marg
Slide 7: FY-20 Financial Highlights
FY-20 Financial Highlights Non-GAAP FY 2020 Results Annual Results Increase Y/Y Adjusted Y/Y(1) Subscription Revenues $4,286M 32% 31% Non-GAAP Subscription Billings(2) $4,982M 32% 31% Current RPO (cRPO)(3) $4.4B 33% 30% Remaining Performance Obligations (RPO) $8.9B 35% 31% Non-GAAP Operating Margin(
Slide 8: Guidance Summary
Guidance Summary Q1 2021 Quarterly Guidance Increase Y/Y Subscription Revenues $1,275M - $1,280M 28% - 29% Non-GAAP Subscription Billings(1) $1,310M - $1,315M 24% - 25% Non-GAAP Normalized Subscription Billings 32%(3) Non-GAAP Operating Margin(1) 25% ~100bps Current RPO (cRPO) Growth(2) 32% NA Incre
Slide 9: Comparison to Previously Issued Guidance
Comparison to Previously Issued Guidance $1,184 $4,260 $8 $18 $4,286 $1,158 $8 $18 ($M) Subscription Revenues 29% 32% 31% 32% Y/Y Growth 27% 29% 31% 31% Non-GAAP Adjusted Y/Y Growth(3) $174 $1,828 $5 $174 $4,982 $5 $4,790 $13 $1,635 $13 Non-GAAP Subscription Billings(3) Y/Y Growth 26% 41% 26% 32% No
Slide 10: Revenues and Billings Growth
Year-Over-Year Subscription Revenues and Billings Growth 36% 34% 36% 35% 34% 32% 33% 33% 31% 30% 32% 29% 32% 29% 31% Subscription Revenues 41% 36% 38% 32% 32% 31% 32% 31% 27% 30% 28% 25% 26% 25% 24% Non-GAAP Subscription Billings(1) Q1-20A Q2-20A Q3-20A Q4-20A FY20A Previous Year Growth Actual Growt
Slide 11: Currency and Duration Impact to Year-Over-Year Sub. Revenues and Billings
Currency and Duration Impact to Year-Over-Year Sub. Revenues and Billings $4,286 $4,272 $1,184 $1,161 $1,091 $1,077 ($14) ($M) $995 $12 $1,006 $1,016 $12 $1,027 ($14) ($23) Subscription Revenues Y/Y Growth 34% 36% 30% 32% 31% 29% 32% 29% 32% 31% $1,828 $4,982 $0 $4,963 $1,796 ($20) $1,081 $0 $1,069
Slide 12: Remaining Performance Obligations
Remaining Performance Obligations ($B) Current RPO Noncurrent RPO $8.9 Q4-20 Y/Y Growth $7.0 $7.3 $6.6 $6.6 $4.5 +35% / +31% cc(2) $3.5 Total RPO $3.3 $3.3 $3.5 $4.4 +33% / +30% cc(2) $3.3 $3.3 $3.5 $3.8 Current RPO (1) Q4-19 Q1-20 Q2-20 Q3-20 Q4-20 1) Current remaining performance obligations (cRPO
Slide 13: Customer Cohort Growth
Customer Cohort Growth Annual Growth of Initial ACV 77% 68% 74% 85% 90% 74% 84% 91% 127% 132% (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 $1,420 as of Q4-20, representing annual growth of initial AC
Slide 14: Expansion of Customer Relationships
Expansion of Customer Relationships 1500 34% 32% 32% 32% 31% 40% 30% 26% 1300 25% 23% 1,093 20% 1100 1,011 933 965 0% 891 900 809 766 (20%) 720 682 700 (40%) 500 (60%) 300 (80%) 100 (100%) -100 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 Q3-20 Q4-20 (120%) Customer >$1M ACV Y/Y Growth Note: Previously
Slide 15: Net New ACV Contribution Across Workflows and Products
Net New ACV Contribution Across Workflows and Products (1) IT Workflows Customer & Employee Workflows Now Platform App Engine & Others 10% 11% 13% 12% 15% 23% 23% 24% 26% 23% 67% 66% 63% 62% 62% Q4-19 Q1-20 Q2-20 Q3-20 Q4-20 1) Historical presentations disclosed net new ACV contribution across produ
Slide 16: Renewal Rate
Renewal Rate 99% 98% 97% 97% 97% Q4-19 Q1-20 Q2-20 Q3-20 Q4-20 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. Additionally, starting in 2020, we simplified our methodology re
Slide 17: Revenues and Billings Mix
Revenues and Billings Mix GAAP Revenues Q4-19 Q1-20 Q2-20 Q3-20 Q4-20 FY19 FY20 6% 5% 5% 5% 5% 6% 5% 94% 95% 95% 95% 95% 94% 95% Non-GAAP Billings Q4-19 Q1-20 Q2-20 Q3-20 Q4-20 FY19 FY20 4% 4% 6% 5% 4% 5% 5% 96% 96% 94% 95% 96% 95% 95% Subscription PS & Other Note: See appendix for reconciliation of
Slide 18: GAAP Revenues by Geography
GAAP Revenues by Geography North America EMEA APAC & Other 9% 9% 9% 9% 10% 26% 24% 25% 25% 26% 65% 67% 66% 66% 64% Q4-19 Q1-20 Q2-20 Q3-20 Q4-20 ® 18 © 2021 ServiceNow, Inc. All Rights Reserved.
Slide 19: Average Contract Terms
Average Contract Terms New Customer Expansion Renewal 37.8 37.7 33.8 33.6 32.5 31.5 32.6 32.3 28.3 28.2 26.3 25.4 23.0 21.9 21.2 Q4-19 Q1-20 Q2-20 Q3-20 Q4-20 Q4-19 Q1-20 Q2-20 Q3-20 Q4-20 Q4-19 Q1-20 Q2-20 Q3-20 Q4-20 Note: All figures represent number of months. Revised mapping of customers in the
Slide 20: Headcount by Department
Headcount by Department PS & Other Cost of Sales Sub. Cost of Sales S&M R&D G&A 13,096 12,643 11,901 11,148 1,798 1,761 10,371 1,656 1,534 1,403 3,915 3,769 3,436 3,120 2,926 4,599 4,762 4,211 4,444 3,857 1,411 1,516 1,595 1,715 1,790 774 767 770 799 831 Q4-19 Q1-20 Q2-20 Q3-20 Q4-20 ® 20 © 2021 Ser
Slide 21: Non-GAAP Gross Margins
Non-GAAP Gross Margins Non-GAAP Subscription Gross Margin 87% 87% 86% 86% 86% 86% 85% Q4-19 Q1-20 Q2-20 Q3-20 Q4-20 FY19 FY20 Non-GAAP PS & Other Gross Margin 19% 16% 13% 12% 1% 0% 1% Q4-19 Q1-20 Q2-20 Q3-20 Q4-20 FY19 FY20 Non-GAAP Total Gross Margin 82% 83% 83% 82% 82% 81% 82% Q4-19 Q1-20 Q2-20 Q3
Slide 22: Non-GAAP Operating and Free Cash Flow Margins
Non-GAAP Operating and Free Cash Flow Margins Non-GAAP Operating Margin 28% 26% 25% 24% 22% 22% 21% Q4-19 Q1-20 Q2-20 Q3-20 Q4-20 FY19 FY20 Non-GAAP Free Cash Flow Margin 45% 36% 39% 32% 28% 24% 19% Q4-19 Q1-20 Q2-20 Q3-20 Q4-20 FY19 FY20 Note: All figures are calculated on a non-GAAP basis. See app
Slide 23: Non-GAAP Net Income and Diluted EPS
Non-GAAP Net Income and Diluted EPS $926 Non-GAAP Net Income ($M) $646 $207 $243 $241 $235 $187 Q4-19 Q1-20 Q2-20 Q3-20 Q4-20 FY19 FY20 $4.63 Non-GAAP Diluted EPS $3.32 $0.96 $1.05 $1.23 $1.21 $1.17 Q4-19 Q1-20 Q2-20 Q3-20 Q4-20 FY19 FY20 Note: All figures are calculated on a non-GAAP basis. See app
Slide 24: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation ® 24 © 2021 ServiceNow, Inc. All Rights Reserved.
Slide 25: GAAP to Non-GAAP Reconciliation – Revenues and Billings
GAAP to Non-GAAP Reconciliation – Revenues and Billings in millions (except %'s) Q1-19 Q2-19 Q3-19 Q4-19 2019 Q1-20 Q2-20 Q3-20 Q4-20 2020 GAAP Subscription Revenues $ 740 $ 781 $ 835 $ 899 $ 3,255 $ 995 $ 1,016 $ 1,091 $ 1,184 $ 4,286 (+) Effects of Foreign Currency Rate Fluctuations 20 17 13 8 58
Slide 26: GAAP to Non-GAAP Reconciliation – Remaining Performance Obligations
GAAP to Non-GAAP Reconciliation – Remaining Performance Obligations in billions (except %'s) Q1-19 Q2-19 Q3-19 Q4-19 2019 Q1-20 Q2-20 Q3-20 Q4-20 2020 GAAP Current Remaining Performance Obligations at Period End $ 2.5 $ 2.7 $ 2.8 $ 3.3 $ 3.3 $ 3.3 $ 3.5 $ 3.8 $ 4.4 $ 4.4 (+) Effects of Foreign Curre
Slide 27: GAAP to Non-GAAP Reconciliation – Billings and Normalized Billings
GAAP to Non-GAAP Reconciliation – Billings and Normalized Billings in millions (except %'s) Q4-20 2020 Q1-21E Midpoint 2021E Midpoint GAAP Subscription Revenues $ 1,184 $ 4,286 $ 1,278 $ 5,490 (+/-) Change in Subscription Deferred Revenue, Unbilled Receivables, and 643 696 35 725 Customer Deposits N
Slide 28: GAAP to Non-GAAP Reconciliation – Other
GAAP to Non-GAAP Reconciliation – Other in millions (except %'s and per share data) Q1-19 Margin Q2-19 Margin Q3-19 Margin Q4-19 Margin 2019 Margin Q1-20 Margin Q2-20 Margin Q3-20 Margin Q4-20 Margin 2020 Margin Q1'21E 2021E GAAP Subscription Gross Profit $ 613 83% $ 646 83% $ 696 83% $ 751 84% $ 2,
Slide 29: GAAP to Non-GAAP Reconciliation – Other (cont.)
GAAP to Non-GAAP Reconciliation – Other (cont.) in millions (except %'s and per share data) Q1-19 Margin Q2-19 Margin Q3-19 Margin Q4-19 Margin 2019 Margin Q1-20 Margin Q2-20 Margin Q3-20 Margin Q4-20 Margin 2020 Margin Q1'21E 2021E GAAP Weighted-Average Shares Used to Compute Net Income (Loss) per