Servicenow, Inc. · NYSE:NOW

Servicenow — Q1 2020 Earnings Presentation

27 slides from Servicenow's earnings presentation, Apr 29, 2020

  1. Slide 1: Investor Presentation First Quarter 2020

    ® Investor Presentation First Quarter 2020

  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. We intend for such forward‐looking statements to be covered by the safe harbor provisions for for

  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 present revenues, revenue growth rates, and remaining performance obligations growth rat

  4. 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 6,200+ 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

  5. Slide 5: Now Platform: the intelligent and intuitive cloud platform for work

    Now Platform®: the intelligent and intuitive cloud platform for work IT Employee Customer Build your Workflows Workflows Workflows own Workflow Transform your Make work life as Break down silos, Automate, optimize, business with a great as real life with be more proactive, and empower single platfor

  6. Slide 6: Q1-20 Financial Highlights

    Q1-20 Financial Highlights Increase Non-GAAP Q1 2020 Results Quarterly Results (Decrease) Y/Y Adjusted Y/Y(1) Subscription Revenues $995M 34% 36% Non-GAAP Subscription Billings(2) $1,055M 30% 32% Current RPO (cRPO)(3) $3.3B 31% 33% Remaining Performance Obligations (RPO) $6.6B 30% 32% Non-GAAP Opera

  7. Slide 7: Guidance Summary

    Guidance Summary Q2 2020 Quarterly Guidance Increase Y/Y Non-GAAP Adjusted Y/Y(1) Subscription Revenues $995M - $1,000M 27% - 28% 29% - 30% Non-GAAP Subscription Billings(2) $960M - $980M 18% - 20% 20% - 22% Non-GAAP Operating Margin(2) 23% ~500bps NA Full-Year 2020 Full-Year Guidance(1) Increase Y/

  8. Slide 8: Comparison to Previously Issued Guidance

    Comparison to Previously Issued Guidance ($M) $978 $25 $995 $4,230 $4,135 ($8) ($52) ($43) Subscription Revenues Y/Y Growth 32% 34% 30% 27% Non-GAAP Adjusted Y/Y Growth(3) 33% 36% 30% 28% $1,043 $20 $1,055 $4,815 $4,630 ($8) ($62) ($123) Non-GAAP Subscription Billings(3) Y/Y Growth 29% 30% 27% 22% N

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

    Year-Over-Year Subscription Revenues and Billings Growth 45% 39% 39% 33% 36% 33% 35% 33% 35% 36% 36% 34% 36% 33% 34% 37% 34% 28% 29% 27% 28% Subscription Revenues 36% 35% 38% 36% 37% 36% 32% 34% 32% 32% 31% 34% 31% 28% 29% 27% 30% 19% 21% 22% 24% Non-GAAP Subscription Billings(1) Q2-19A Q3-19A Q4-19

  10. Slide 10: 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) $995 $12 $1,006 $998 $13 $1,010 $4,135 $42 $4,177 $3,255 $58 $3,313 $835 $13 $848 $899 $8 $907 $781 $17 $798 Subscription Revenues Y/Y Growth 33% 36% 33% 35% 35% 36% 34% 36% 28% 29% 34% 37% 27% 28% $1,298 $12 $1,303 $4,63

  11. Slide 11: Remaining Performance Obligations

    Remaining Performance Obligations ($B) Current RPO Noncurrent RPO $6.6 $6.6 Q1-20 Y/Y Growth $5.4 $5.6 $5.1 $3.3 $3.3 +30% / +32% cc(2) Total RPO $2.7 $2.7 $2.5 $3.3 $3.3 +31% / +33% cc(2) $2.5 $2.7 $2.8 Current RPO(1) Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 1) Current remaining performance obligations (cRPO)

  12. Slide 12: Customer Cohort Growth

    Customer Cohort Growth Annual Growth 2020 of Initial ACV 2019 59% 2018 66% 2017 69% 2016 2015 85% 2014 85% 2013 69% 2012 78% 2011 82% 2010 109% 124% (1) 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 1) As an illustrative example, 2010 customer cohort started with a contract of initial ACV o

  13. Slide 13: Expansion of Customer Relationships

    Expansion of Customer Relationships 1,100 46% 43% 37% 30% 34% 32% 32% 32% 31% 35% 1,000 933 15% 890 900 -5% 805 800 763 -25% 718 700 679 -45% 610 -65% 600 578 544 -85% 500 -105% 400 -125% Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Customer >$1M ACV Y/Y Growth Note: Previously disclosed nu

  14. Slide 14: 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 12% 10% 9% 10% 11% 20% 21% 22% 23% 23% 68% 69% 69% 67% 66% Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 1) Historical presentations disclosed net new ACV contribution across produc

  15. Slide 15: Renewal Rate

    Renewal Rate 99% 98% 98% 97% 97% Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 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

  16. Slide 16: Revenues and Billings Mix

    Revenues and Billings Mix GAAP Revenues Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 FY18 FY19 6% 6% 6% 6% 5% 7% 6% 94% 94% 94% 94% 95% 93% 94% Non-GAAP Billings Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 FY18 FY19 6% 6% 6% 4% 4% 7% 5% 94% 94% 94% 96% 96% 93% 95% Subscription PS & Other Note: See appendix for reconciliation of

  17. Slide 17: GAAP Revenues by Geography

    GAAP Revenues by Geography North America EMEA APAC & Other 9% 9% 9% 9% 9% 25% 26% 24% 26% 24% 66% 65% 67% 65% 67% Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 ® 17 © 2020 ServiceNow, Inc. All Rights Reserved.

  18. Slide 18: Average Contract Terms

    Average Contract Terms New Customer Expansion Renewal 39.0 34.7 33.9 32.5 32.5 32.6 29.7 28.3 26.3 26.9 25.7 25.5 24.3 21.3 21.2 Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Note: All figures represent number of months. Revised mapping of customers in the

  19. Slide 19: Headcount by Department

    Headcount by Department PS & Other Cost of Sales Sub. Cost of Sales S&M R&D G&A 11,148 10,371 9,929 1,534 9,382 1,403 8,666 1,375 1,304 1,257 3,120 2,926 2,747 2,500 2,214 3,857 4,211 3,575 3,683 3,296 1,218 1,306 1,365 1,411 1,516 681 697 759 774 767 Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 ® 19 © 2020 Servic

  20. Slide 20: Non-GAAP Gross Margins

    Non-GAAP Gross Margins Non-GAAP Subscription Gross Margin 87% 86% 86% 86% 86% 86% 86% Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 FY18 FY19 Non-GAAP PS & Other Gross Margin 8% 2% 1% 1% 0% 1% -2% Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 FY18 FY19 Non-GAAP Total Gross Margin 81% 82% 83% 81% 80% 81% 80% Q1-19 Q2-19 Q3-19 Q4-19

  21. Slide 21: Non-GAAP Operating and Free Cash Flow Margins

    Non-GAAP Operating and Free Cash Flow Margins Non-GAAP Operating Margin 26% 24% 22% 21% 19% 18% 20% Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 FY18 FY19 Non-GAAP Free Cash Flow Margin 40% 39% 36% 28% 28% 23% 14% Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 FY18 FY19 Note: All figures are calculated on a non-GAAP basis. See app

  22. Slide 22: Non-GAAP Net Income and Diluted EPS

    Non-GAAP Net Income and Diluted EPS $646 Non-GAAP Net Income ($M) $470 $193 $187 $207 $129 $138 Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 FY18 FY19 $3.32 $2.49 Non-GAAP Diluted EPS $0.99 $0.96 $1.05 $0.67 $0.71 Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 FY18 FY19 Note: All figures are calculated on a non-GAAP basis. See app

  23. Slide 23: GAAP to Non-GAAP Reconciliation

    GAAP to Non-GAAP Reconciliation ® 23 © 2020 ServiceNow, Inc. All Rights Reserved.

  24. Slide 24: GAAP to Non-GAAP Reconciliation – Revenues and Billings

    GAAP to Non-GAAP Reconciliation – Revenues and Billings in millions (except %'s) 2018 Q1-19 Q2-19 Q3-19 Q4-19 2019 Q1-20 Q2-20E Midpoint 2020E Midpoint GAAP Subscription Revenues $ 2,421 $ 740 $ 781 $ 835 $ 899 $ 3,255 $ 995 $ 998 $ 4,135 (+) Effects of Foreign Currency Rate Fluctuations (27) 20 17

  25. Slide 25: GAAP to Non-GAAP Reconciliation – Remaining Performance Obligations

    GAAP to Non-GAAP Reconciliation – Remaining Performance Obligations in billions (except %'s) 2018 Q1-19 Q2-19 Q3-19 Q4-19 2019 Q1-20 Q2-20E Midpoint 2020E Midpoint GAAP Current Remaining Performance Obligations at Period End $ 2.5 $ 2.5 $ 2.7 $ 2.8 $ 3.3 $ 3.3 $ 3.3 N/A N/A (+) Effects of Foreign Cu

  26. Slide 26: GAAP to Non-GAAP Reconciliation – Other

    GAAP to Non-GAAP Reconciliation – Other in millions (except %'s and per share data) 2018 Margin Q1-19 Margin Q2-19 Margin Q3-19 Margin Q4-19 Margin 2019 Margin Q1-20 Margin Q2'20E 2020E GAAP Subscription Gross Profit $ 2,004 83% $ 613 83% $ 646 83% $ 696 83% $ 751 84% $ 2,705 83% $ 835 84% N/A 83% (

  27. Slide 27: GAAP to Non-GAAP Reconciliation – Other (cont.)

    GAAP to Non-GAAP Reconciliation – Other (cont.) in millions (except %'s and per share data) 2018 Margin Q1-19 Margin Q2-19 Margin Q3-19 Margin Q4-19 Margin 2019 Margin Q1-20 Margin Q2'20E 2020E GAAP Weighted-Average Shares Used to Compute Net Income (Loss) per Share - 178 N/A 182 N/A 187 N/A 198 N/A

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