Servicenow, Inc. · NYSE:NOW
Servicenow — Investor Day (May 2018)
73 slides from Servicenow's investor day presentation, May 7, 2018
Slide 1: Financial Analyst Day
Financial Analyst Day Las Vegas, Nevada May 7, 2018
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
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. Our non-GAAP presentation of gross profit, income from operations and net income measures e
Slide 4: Agenda
Agenda • Purpose, strategy and culture – John Donahoe, President and Chief Executive Officer • Innovation – CJ Desai, Chief Product Officer • Break • The Customer Perspective: Deloitte – David Schneider, ServiceNow Chief Revenue Officer – Dejan Slokar, Deloitte Partner and Global ServiceNow Alliance
Slide 5: Building An Enduring Company: Purpose, Strategy and Culture
Building An Enduring Company Purpose, Strategy and Culture John Donahoe President and Chief Executive Officer
Slide 6: Why I joined…to build a great, enduring company
Why I joined…to build a great, enduring company Aspiration • Build great, enduring company (“Built-to-last”) • Clear leader in enterprise software • $1.5B $15B • $15B $100B • Most admired and respected company • Great place to work 6 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.
Slide 7: What I’m hearing from customers
What I’m hearing from customers 7 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.
Slide 8: What I think
What I think 1 Cloud tailwind is still in early days 2 Our opportunity is enormous 3 Our focus is building a great, enduring company 8 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.
Slide 9: Great enduring companies
Great enduring companies Pillar 1 Pillar 2 Pillar 3 Pillar 3 Exhibit “will to They are Innovation and They invest in fight” purpose driven execution talent and “will to win” Additional content, Additional content, Additional content, Additional content, if necessary if necessary if necessary if nece
Slide 10: A simple framework: Purpose, Strategy, Culture
A simple framework Why? Our Purpose What? Our Strategy How? Our Culture 10 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.
Slide 11: To bring inspiration and innovation to every athlete
To bring inspiration and innovation to every athlete* in the world *If you have a body, you are an athlete 11 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.
Slide 12: Make people around the world feel like they can belong anywhere
Make people around the world feel like they can “belong anywhere.” 12 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.
Slide 13: When I started ServiceNow in 2004, my vision
“When I started ServiceNow in 2004, my vision was to build a cloud-based platform that would enable regular people to route work effectively through an enterprise.” 13 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.
Slide 14: Work matters
Work matters It’s where we spend a third of our lives. It shapes who we are, how we feel, and how we interact with the world, so we must create great work experiences. Experiences that bring out the best in us. When we’re at our best, we make everything around us better. Our jobs, our coworkers and
Slide 15: Our Purpose
Our Purpose We make the world of work, work better for people. 15 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.
Slide 16: A simple framework
A simple framework Why? Our Purpose What? Our Strategy How? Our Culture 16 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.
Slide 17: Our 2018 priorities and action plan
Our 2018 priorities and action plan Build great products and platform Build Customer Success Grow our talent Establish company brand 17 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.
Slide 18: We have the products to win
We have the products to win Emerging products Security Customer Service HR IT products ITSM ITOM ITBM & ITAM User and Service Service Intelligence Experience Now Platform™ 18 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.
Slide 19: We continue to evolve our strategy to drive growth
We continue to evolve our strategy to drive growth FY15 FY16 FY17 FY18+ Added PLS (ITOM, PA) Expanded PLS (HR, SEC, CSM) Segmented Commercial vs. Enterprise (US only) Added Added Client Directors Inspire Added Med-Sled (Top ACV Accts) Re-constituted Vertical (US only) Alliances & Piloting Channels C
Slide 20: Expansion requires more world-class teaming
Expansion requires more world-class teaming Global Go-To-Market Team Certified Customer Partner Success Ecosystem Group 20 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.
Slide 21: Grow our talent
Grow our talent 21 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.
Slide 22: Establish a company brand
Establish a company brand 22 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.
Slide 23: Our long-term vision
Our long-term vision Phase 1 & 2 $10B $10,000 Get product market fit 8 $8,000 Scale product to market Maintain focus on what we’re doing 6 $6,000 4 $4,000 $2,000 2 0$0 23 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.
Slide 24: Our long-term vision
Our long-term vision Phase 1Phase &2 3 $10B $10,000 Get product Keep buildingmarket fit great products 8 $8,000 Scale product Execute to market outstanding GTM Maintain Build focus success customer on what we’re doing 6 Invest in talent $6,000 Establish company brand 4 $4,000 $2,000 2 0$0 24 © 2018
Slide 25: Our long-term vision
Our long-term vision Phase 1Phase Phase & 2 34 $10B $10,000 How will customer Get product Keep building needs market great fit evolve in the future? products How Scaleshould Execute we to product innovate market outstanding GTM and evolve our 8 $8,000 product and platform? Maintain Build focus succe
Slide 26: Innovation
Building An Enduring Company Innovation CJ Desai Chief Product Officer
Slide 27: ServiceNow architecture: One platform, many products
ServiceNow architecture: One platform, many products Emerging products Security Customer Service HR IT products ITSM ITOM ITBM & ITAM User and Service Service Intelligence Experience Now Platform™ 27 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.
Slide 28: Customers are using the Now Platform in creative ways
Customers are using the Now Platform in creative ways User and Service Service Intelligence Experience Now Platform Workflow Industry Delivering smart citizen services State & local government Automated multicurrency expenses and usage Global industrial manufacturing reporting of 150k mobile devices
Slide 29: Strengths of the Now Platform drive adoption
Strengths of the Now Platform drive adoption User and Service Service Intelligence Experience Now Platform • Cloud platform that is secure, scalable, and elastic • Automates unique and complex business processes that span different systems • Built-in analytics and intelligence • Comprehensive featur
Slide 30: The Now Platform uniquely serves digital transformation initiatives
The Now Platform uniquely serves digital transformation initiatives Deliver great experiences for Automate and optimize customers and employees manual workflows Now Platform User Experiences Service Service Knowledge Status Community Portal Catalog Base Notifications Service Intelligence Machine Lea
Slide 31: Disruptive technologies get adopted over decades
Our guiding framework: Disruptive technologies get adopted over decades Systems of engagement Systems of autonomy (action) Vehicles, focus on objects, Mobile apps, focus on end user, AI is king (2020 – 2040) customer is king (2000 – 2020) Systems of record Systems of intelligence ERP, CRM, HCM, SCP
Slide 32: Phases of product evolution
Our guiding framework: Phases of product evolution Core Break-out categories Future categories IT will always be our Service Management Develop products for core products for Security, HR, future growth and Customer Service Phases 1-4 Phase 3,4 Phase 4 Investments Current made in Phase 2 investments
Slide 33: Platform and product team priorities
Platform and product team priorities Deliver great Deliver experiences innovation Customer success 33 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.
Slide 34: Organic innovation, combined with talent-based and technology-oriented M&A
Organic innovation, combined with talent-based and technology-oriented M&A Deliver great experiences Deliver innovation 34 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.
Slide 35: IT products
IT products 35 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.
Slide 36: IT products of ServiceNow serve major functions of CIO
IT products of ServiceNow serve major functions of CIO Service Operations Business Asset Management Management Management Management 36 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.
Slide 37: IT products roadmap
IT products roadmap 1 2 3 Natively built intelligent Virtual Agent workspace for Service IT Walk-up App, Major Incident ITSM Agent and Integration with Desks and integration with Management, Business Crisis Major Collaboration Tools intelligent Virtual Agents Management Discover assets across public
Slide 38: Emerging products
Emerging products 38 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.
Slide 39: Emerging products roadmap
Emerging products roadmap 1 2 3 Modern UX to enhance End to End Risk Scorecards for Security productivity of a SOC Analyst Vulnerability Response Vulnerability Response and guided setup with guided setup Major Issue management Service Workspace for Mobile App for CSM Customer Service Agent and Enhan
Slide 40: Now Platform
Now Platform 40 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.
Slide 41: Snapshot of the Now Platform scale
Snapshot of the Now Platform scale # Production # Customer instances transactions per month ~7,500 ~12 Billion # of Cloud API calls # licensed users per month ~18 Million ~18 Billion 41 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.
Slide 42: The Now Platform has three key stakeholders
The Now Platform has three key stakeholders Our product Platform as a service Developers, OEMs, teams at for our customers and ISVs building on ServiceNow building Intelligent our platform Applications 42 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.
Slide 43: The Now Platform roadmap priorities
The Now Platform roadmap priorities Flow designer and integration Native mobile hub for low code/no code experiences and application development and experience-aaS 3rd party integration 43 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.
Slide 44: Platform and product innovation schedule
Platform and product innovation schedule L London N New York P Paris Q3-18 Q3-19 Q3-20 Kingston Madrid Orlando K M O Q1-18 Q1-19 Q1-20 2018 2019 2020 44 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.
Slide 45: What’s new
What’s new 45 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.
Slide 46: New: Virtual Agent
Available in New: Virtual Agent LONDON 46 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.
Slide 47: New: Agent Workspace
Available in New: Agent Workspace LONDON 47 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.
Slide 48: New: Native mobile interfaces
New: Native mobile interfaces MADRID Incidents Incidents Details Map View Activity Stream Swipe Actions Call/Text/GPS Filter by Time/Location Add Attachments, Images, Comments 48 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.
Slide 49: New: Enterprise DevOps
PLAN DEVELOP New: Enterprise Decide what to do Write code DevOps • Scale agile • Integration with framework Open Source • Integration with Agile Repository tools Planning tools and Collaboration tools London MONITOR BUILD Make sure code Aggregate code works as expected from all Madrid developers • I
Slide 50: NOW Innovation Unit
NOW Innovation Unit 50 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.
Slide 51: Summary
Summary 51 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.
Slide 52: Platform and product team priorities
Platform and product team priorities Deliver great Deliver experiences innovation Customer success 52 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.
Slide 53: Break
Break
Slide 54: The Customer Perspective: Deloitte
The Customer Perspective: Deloitte Dejan Slokar, Partner and Global ServiceNow Alliance Lead Stephen Mansfield, Chief Information officer David Schneider, ServiceNow Chief Revenue Officer
Slide 55: Building An Enduring Company: Sustainable Growth
Building An Enduring Company Sustainable Growth Michael Scarpelli Chief Financial Officer
Slide 56: Key takeaways
Key takeaways Consistent Market Financial Model Performance Opportunity Additional content, Additional content, Additional content, if necessary if necessary if necessary 56 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.
Slide 57: Combination of high revenue and free cash flow growth
Combination of high revenue and free cash flow growth Revenue ($M) and Growth % 250 0 74% 61% 47% 38% 39% 1 $1,933 0 200 0 -1 150 0 $1,391 -2 $1,005 -3 100 0 $683 -4 500 $425 -5 -6 0 -7 2013 2014 2015 2016 2017 Non-GAAP Free Cash Flow ($M) and Growth % (1) 600 294% 3 $492 208% 500 2.5 400 166% 2 $32
Slide 58: Unmatched relative to enterprise software peers
Unmatched relative to enterprise software peers 2017 Revenue Growth + 2017 Non-GAAP FCF Margin % for Enterprise Software Companies > $1B in Rev. 64% 63% 62% 58% 51% 49% 48% 48% 46% 45% 42% 42% 41% 39% 37% 37% 37% Median: 37% 33% 29% 28% 27% 27% 26% 22% 20% 19% 18% 14% 14% 14% 5% 4% (1%) 58 © 2018 Se
Slide 59: Driven by mix shifting to emerging products
Driven by mix shifting to emerging products… IT Emerging Products Platform Add-Ons & Other 3% 5% 2% 8% 9% 11% 3% 4% 12% 23% 95% 92% 88% 78% 66% 2013 2014 2015 2016 2017 Note: IT = IT Service Mgmt, IT Operations Mgmt, IT Asset Mgmt, IT Business Mgmt 59 © 2018 ServiceNow, Inc. All Rights Reserved. Con
Slide 60: Expanding relationships with our largest customers
…Expanding relationships with our largest customers… $1M+ Customers Top Customers 501 2017 2013 >$1M >$5M IT Emerging Products Platform Add Ons & Other 47 10% 100% 16% ~$20M ~$8M 349 74% 22 7% 98% 233 11% 9 2% 454 ~$20M ~$5M 161 3 82% 327 91 2 224 7% 99% 15% 158 1% 89 ~$15M ~$4M 78% 2013 2014 2015 2
Slide 61: Continued competition from legacy SW and manual workflows
… And continued competition from legacy SW and manual workflows Legacy Software Manual Workflows Other 2% 2% 3% 3% 7% 25% 23% 25% 26% 25% 73% 75% 72% 71% 68% 2013 2014 2015 2016 2017 61 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.
Slide 62: Large and growing opportunity to automate enterprise workflows
Large and growing opportunity to automate enterprise workflows 60% of Work is Unstructured Work Today 61% of Work Week Spent on Admin Work(1) Structured Answering Email Unstructured Gathering Info $575B spent on Communicating 28% 40% 60% administrative tasks(2) 19% 14% Shipping & Administrative Cust
Slide 63: Large market opportunity remains: Customer penetration
Large market opportunity remains: Customer penetration 2,000 G2K 850 G2K Customers or 43% 63 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential. Note: G2K count as of Q1-18
Slide 64: Large market opportunity remains: Customer penetration
Large market opportunity remains: Customer penetration ~28,000 Enterprises(1) ~4,400 Customers or 16% (1) Based on Capital IQ screen of global companies with more than 1,000 employees and $500M 64 Note: Customer count as a Q4-17 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential. in annual re
Slide 65: Large customer opportunities outside of G2K
Large customer opportunities Outside of G2K Customer Mix >$1M ACV G2K Non-G2K 23% 24% 26% 32% 37% 77% 76% 74% 68% 63% 2013 2014 2015 2016 2017 65 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.
Slide 66: Large market opportunity remains: Customer expansion
Large market opportunity remains: Customer expansion ~100M Enterprise Customer Employees 18M active fulfillers or 18% 66 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.
Slide 67: Expansion within existing customers drives majority of new ACV
Expansion within existing customers drives majority of new ACV… Expansion NNACV New Customer NNACV 20% 20% 29% 25% 37% 80% 80% 71% 75% 63% 2013 2014 2015 2016 2017 67 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.
Slide 68: But landing new customers is equally important
…But landing new customers is equally important Annual Growth of Initial ACV 55% 2017 68% 2016 71% 2015 2014 64% 2013 65% 2012 2011 61% 2010 85% 97% 2010 2011 2012 2013 2014 2015 2016 2017 Note: Data as of Q4-17 68 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.
Slide 69: Profiling a Fortune 50 customer
Profiling a Fortune 50 customer ~$20M $8M $7M $5M IT Platform IT Analytics $3M Platform IT Sec Ops Platform Analytics HR Analytics Sec Ops CSM Sec Ops HR $730k IT $50k HR Platform IT IT 2012 2013 2014 2015 2016 2017 TBD 69 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.
Slide 70: Investments to build an enduring company
Investments to build an enduring company 1 Build great products and platform 2 Build Customer Success 3 Grow our talent 4 Establish company brand 70 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.
Slide 71: Target operating model
Target operating model 2020 Total Revenue >$4B 2020 Non-GAAP Subscription Gross Margin 84-86% Annual Non-GAAP Operating Margin Expansion >1% Annual Non-GAAP Free Cash Flow Margin Expansion >0% 2020 Non-GAAP Tax Rate ~20% Annual Dilution Increase <3% 71 © 2018 ServiceNow, Inc. All Rights Reserved. Co
Slide 72: Q&A
Q&A
Slide 73: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation in millions (except %'s) 2013* Margin 2014* Margin 2015* Margin 2016* Margin 2017* Margin GAAP Net Cash Provided by Operating Activities (1) $ 83 20% $ 141 21% $ 318 32% $ 160 12% $ 643 33% (-) Purchases of Property and Equipment 55 13% 54 8% 88 9% 106 8% 151 8% (+) C