Slide 1: Investor Presentation Third Quarter 2019
Investor Presentation Third Quarter 2019
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. We present revenues, revenue growth rates, and remaining performance obligations growth rat
Slide 4: Comparison to Previously Issued Guidance
Comparison to Previously Issued Guidance ($M) Prev. Guidance Currency Impact(2) Duration Impact(4) Q3-19 Performance Actual Results Guidance Change Current Guidance Midpoint(1) Midpoint(5) $3,250 $11 $3,243 $833 $9 $835 ($18) Subscription ($7) Q3: ($7M) Revenues Q4: ($11M) Y/Y Growth 33% 33% 34% 34%
Slide 5: Year-Over-Year Subscription Revenues and Billings Growth
Year-Over-Year Subscription Revenues and Billings Growth Previous Year Growth Actual Growth Guidance Midpoint Growth Non-GAAP Adjusted Growth(3) Sub Rev: Constant Currency(1) Sub Billings: Constant Currency + Constant Duration(2) 45% 40% 36% 40% 39% 41% 39% 39% 36% 38% 33% 35% 33% 33% 35% 33% 33% 35
Slide 6: Currency and Duration Impact to Year-Over-Year Sub. Revenues and Billings
Currency and Duration Impact to Year-Over-Year Sub. Revenues and Billings ($M) Actuals Guidance Midpoint Currency Impact(1) Duration Impact(2) Non-GAAP Adjusted Sub. Revenue and Sub. Billings(3) $7 $674 $740 $20 $760 $798 $887 $13 $899 $666 $781 $17 $835 $13 $848 $3,243 $62 $3,305 $2,421 $2,394 Subs
Slide 7: Remaining Performance Obligations
Remaining Performance Obligations(1) ($B) Current RPO Noncurrent RPO 5.4 5.6 4.9 5.1 Q3-19 Y/Y Growth 4.2 2.7 2.7 +33% / +36% cc(2)(3) 2.5 2.5 Total RPO 2.1 2.7 2.8 +34% / +36% cc(2)(3) 2.5 2.5 2.1 Current RPO(1) Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 (1)Transaction price allocated to remaining performance o
Slide 8: Annual contract value growth by customer cohort
Note: Chart reflects growth in total annual contract value over time, inclusive of losses, for the group of customers that joined ServiceNow in each respective year. Annual Growth represents increases in total 8 annual contract value after the initial contract of each customer. © 2019 ServiceNow, In
Slide 9: Expansion of Customer Relationships
Expansion of Customer Relationships Cust >$1M ACV Y/Y Growth 44% 46% 45% 42% 37% 34% 32% 33% 32% 809 767 721 680 612 578 545 508 447 Q3-17 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Note: Previously disclosed number of customers with ACV greater than $1 million is restated to allow for comparab
Slide 10: Net New ACV Contribution Across Products
Net New ACV Contribution Across Products IT Emerging Products Platform Add-ons & Other 13% 13% 17% 14% 15% 26% 31% 29% 30% 28% 61% 57% 56% 55% 55% Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Note: IT = IT Service Mgmt, IT Operations Mgmt*, IT Asset Mgmt, IT Business Mgmt Emerging Products = CSM, HR, Security, Fin
Slide 11: Q3-19 Top 20 New Deals
Q3-19 Top 20 New Deals 18 of top 20 deals 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 Customer 2 X X X X X X X Custo
Slide 12: Headcount by Department
Headcount by Department PS & Other Cost of Sales Sub. Cost of Sales S&M R&D G&A 9,929 9,382 1,375 8,666 1,304 8,154 7,661 1,257 1,178 1,149 2,747 2,500 2,214 2,080 1,860 3,575 3,683 3,061 3,296 2,890 1,171 1,218 1,306 1,365 1,121 641 664 681 697 759 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 12 © 2019 ServiceNow
Slide 13: Renewal Rate
Renewal Rate 99% 98% 98% 98% 97% Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Note: We adjust our Renewal Rate for acquisitions, consolidations and other customer events that cause the merging of two or more accounts 13 occurring at the time of renewal. Previously disclosed Renewal Rates may be restated to reflect
Slide 14: Revenues and Billings Mix
Revenues and Billings Mix GAAP Revenues Subscription PS & Other 7% 7% 6% 6% 6% 9% 7% 93% 93% 94% 94% 94% 91% 93% Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 FY17 FY18 Non-GAAP Billings Subscription PS & Other 6% 6% 6% 6% 6% 8% 7% 94% 94% 94% 94% 94% 92% 93% Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 FY17 FY18 Note: See append
Slide 15: GAAP Revenues by Geography
GAAP Revenues by Geography North America EMEA APAC & Other 9% 9% 9% 9% 9% 24% 25% 25% 26% 24% 67% 66% 66% 65% 67% Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 15 © 2019 ServiceNow, Inc. All Rights Reserved.
Slide 16: Average Contract Terms
Average Contract Terms New Customer Expansion Renewal 39.0 35.7 34.7 31.9 32.5 29.7 25.7 26.9 25.4 26.0 26.2 25.3 25.7 23.8 22.1 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Note: All figures represent number of months. Revised mapping of customers in the
Slide 17: Non-GAAP Gross Margins
Non-GAAP Gross Margins Non-GAAP Subscription Gross Margin 86% 86% 86% 86% 86% 86% 85% Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 FY17 FY18 Non-GAAP PS & Other Gross Margin 8% 6% 12% 8% 2% 1% -2% Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 FY17 FY18 Non-GAAP Total Gross Margin 80% 80% 80% 81% 81% 80% 78% Q3-18 Q4-18 Q1-19 Q2-1
Slide 18: Non-GAAP Operating and Free Cash Flow Margins
Non-GAAP Operating and Free Cash Flow Margins Non-GAAP Operating Margin 26% 24% 21% 20% 19% 18% 18% Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 FY17 FY18 Non-GAAP Free Cash Flow Margin 40% 34% 28% 26% 23% 17% 14% Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 FY17 FY18 Note: All figures are calculated on a non-GAAP basis. See app
Slide 19: Non-GAAP Net Income and Diluted EPS
Non-GAAP Net Income and Diluted EPS Non-GAAP Net Income ($M) $470 $242 $193 $129 $146 $129 $138 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 FY17 FY18 Non-GAAP Diluted EPS $2.49 $1.35 $0.99 $0.68 $0.77 $0.67 $0.71 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 FY17 FY18 Note: All figures are calculated on a non-GAAP basis. See app
Slide 20: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation 20 © 2019 ServiceNow, Inc. All Rights Reserved.
Slide 21: 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 Q2-19 Q3-19 Q4-19E Midpoint 2019E Midpoint GAAP Subscription Revenues $ 1,740 $ 543 $ 585 $ 627 $ 666 $ 2,421 $ 740 $ 781 $ 835 $ 887 $ 3,243 (+) Effects of Foreign Currency Rate
Slide 22: GAAP to Non-GAAP Reconciliation – Remaining Performance Obligations
GAAP to Non-GAAP Reconciliation – Remaining Performance Obligations in billions (except %'s) 2017 Q1-18 Q2-18 Q3-18 Q4-18 2018 Q1-19 Q2-19 Q3-19 Q4-19E Midpoint 2019E Midpoint GAAP Current Remaining Performance Obligations at Period End N/A $ 1.9 $ 2.0 $ 2.1 $ 2.5 $ 2.5 $ 2.5 $ 2.7 $ 2.8 N/A N/A (+)
Slide 23: 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 Q2-19 Margin Q3-19 Margin Q4-19E 2019E GAAP Subscription Gross Profit $ 1,424 82% $ 448 82% $ 484 83% $ 520 83% $ 553 83% $ 2,0
Slide 24: 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 Q2-19 Margin Q3-19 Margin Q4-19E 2019E GAAP Weighted-Average Shares Used to Compute Net Income (Loss) per Share - 171 N