Slide 1: Investor Presentation Fourth Quarter 2022
Investor Presentation Fourth Quarter 2022
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 adjust revenues and related growth rates, and current remaining performance obligations
Slide 4: Now Platform: Optimize processes, connect silos, and create new value
Now Platform®: Optimize processes, connect silos, and create new value on a single, unifying platform to digitize your entire business. Technology Employee Customer and Creator Workflows Workflows Industry Workflows Workflows Accelerate digital Deliver a unified Build connected transformation with e
Slide 5: We make the world work better for everyone
We make the world work better for everyone™ Our 7,700+ global enterprise ServiceNow helps digitize and customers(1) include approximately Our aspiration is to be the unify organizations so that they 85% of the Fortune 500. They all rely defining enterprise software can find smarter, faster, better o
Slide 6: Q4-22 Financial Highlights
Q4-22 Financial Highlights Increase Non-GAAP Constant Q4 2022 Results Quarterly Results Currency Impact(1) (Decrease) Y/Y Currency Y/Y(2) Subscription Revenues $1,860M 22% ~550bps headwind 27.5% Current RPO (cRPO) $6.94B 22% ~350bps headwind 25.5% Remaining Performance Obligations (RPO) $14.0B 22% ~
Slide 7: FY22 Financial Highlights
FY22 Financial Highlights Increase Non-GAAP Constant FY 2022 Results Annual Results Currency Impact(1) (Decrease) Y/Y Currency Y/Y(2) Subscription Revenues $6,891M 24% ~450bps headwind 28.5% Current RPO (cRPO) $6.94B 22% ~350bps headwind 25.5% Remaining Performance Obligations (RPO) $14.0B 22% ~300b
Slide 8: Guidance Summary
Guidance Summary Currency Impact Quarterly Increase Non-GAAP Constant Q1 2023 Guidance Included in Guidance (Decrease) Y/Y Currency Y/Y(2) Guidance(1) Subscription Revenues $1,990M - $2,000M 22% - 22.5% ~300bps headwind 25% - 25.5% Non-GAAP Operating Margin(3) 24% ~(150)bps NA NA Current RPO (cRPO)
Slide 9: Comparison to Previously Issued Guidance
Comparison to Previously Issued Guidance ($M) Subscription Revenues Y/Y Growth 21% 22% 23% 24% Q4-22A FY22A Prev. Guidance Midpoint(1) Currency Impact(2) Q4 Performance Actual Results (1) Refers to previously issued financial guidance dated 10/26/22 (2) GAAP subscription revenues included in our pre
Slide 10: Year-Over-Year Subscription Revenues Growth
Year-Over-Year Subscription Revenues Growth 32% 31% 31% 29% 30% 30% 29% 30% 29% 29% 30% 29% 27% 26% 25% 24% 22% 22% Subscription Revenues Q4-21A Q1-22A Q2-22A Q3-22A Q4-22A FY22A Previous Year Growth Actual Growth Non-GAAP Constant Currency Sub Revenue Growth (1) (1) Non-GAAP constant currency subsc
Slide 11: Currency Impact to Year-Over-Year Sub. Revenues
Currency Impact to Year-Over-Year Sub. Revenues $1,631 $1,666 $1,658 $1,724 $1,834 $1,860 $1,941 $7,165 $1,742 $6,891 $35 $66 $92 $81 $274 ($M) Subscription Revenues Q1-22A Q2-22A Q3-22A Q4-22A FY22A Y/Y Growth 26% 29% 25% 30% 22% 29% 22% 27% 24% 29% Actuals Currency Impact Non-GAAP Constant Currenc
Slide 12: Remaining Performance Obligations
Remaining Performance Obligations ($B) Current RPO Noncurrent RPO Q4-22 $14.0 Y/Y Growth $11.5 $11.5 $11.5 $11.4 +22% / +25% cc(1) $7.1 Total RPO $5.8 $5.8 $5.8 $5.5 $5.69 $5.75 $5.87 $6.94 $5.68 Q4-21 Q1-22 Q2-22 Q3-22 Q4-22 cRPO Y/Y Growth 29% 29% 21% 18% 22% cRPO cc(1) Y/Y Growth 32% 30.5% 27% 25
Slide 13: Relationship between cRPO and Subscription Revenue
Relationship between cRPO and Subscription Revenue Q4: NNACV outperformed expectations; cRPO results achieved with lower early renewals mix Components Impact on Future Net New ACV (NNACV) of cRPO(1) Subscription Revenue Incremental ACV from new logos and Contributes incremental revenue (growth) NNAC
Slide 14: Customer Cohort Growth
Customer Cohort Growth Annual Growth of Initial ACV 2022 63% 66% 2021 62% 2020 84% 78% 2019 74% 2018 2017 99% 2016 106% 2015 95% 2014 2013 132% 2012 2011 121% 2010 172% 192% (1) (1) As an illustrative example, 2010 customer cohort started with a contract of initial ACV (annual contract value) of $10
Slide 15: Expansion of Customer Relationships
Expansion of Customer Relationships $4.1 $4.0 $3.9 $3.9 $3.8 $3.7 $3.6 1,637 $3.5 $3.5 1,529 ($M) 1,460 1,399 1,346 1,253 1,191 1,134 1,082 Q4-20 Q1-21 Q2-21 Q3-21 Q4-21 Q1-22 Q2-22 Q3-22 Q4-22 Number of Customers with $1M+ ACV Avg ACV of Customers with $1M+ ACV Note: Previously disclosed number of
Slide 16: Net New ACV Contribution Across Workflows and Products
Net New ACV Contribution Across Workflows and Products (1) Technology Workflows Customer & Employee Workflows Creator Workflows & Others 15% 14% 16% 17% 15% 28% 27% 22% 24% 26% 57% 59% 62% 59% 59% Q4-21 Q1-22 Q2-22 Q3-22 Q4-22 (1) Historical presentations disclosed net new ACV contribution across pr
Slide 17: Renewal Rate
Renewal Rate 99% 99% 98% 98% 98% Q4-21 Q1-22 Q2-22 Q3-22 Q4-22 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. © 2022 ServiceNow, Inc. All Rights Reserved © 2022 ServiceNow, I
Slide 18: GAAP Revenues by Geography
GAAP Revenues by Geography North America EMEA APAC & Other 10% 10% 10% 10% 10% 27% 25% 25% 24% 25% 63% 65% 65% 66% 65% Q4-21 Q1-22 Q2-22 Q3-22 Q4-22 © 2022 ServiceNow, Inc. All Rights Reserved © 2022 ServiceNow, Inc. All Rights Reserved. Confidential. 18 ®
Slide 19: Headcount by Department
Headcount by Department PS & Other Cost of Sales Sub. Cost of Sales S&M R&D G&A 20,072 20,433 19,046 17,884 2,632 2,648 16,881 2,532 2,459 2,353 6,086 6,219 5,768 5,422 5,138 6,918 7,368 7,490 5,969 6,362 2,286 2,407 2,508 2,669 2,775 1,135 1,234 1,320 1,317 1,301 Q4-21 Q1-22 Q2-22 Q3-22 Q4-22 © 202
Slide 20: Non-GAAP Gross Margins
Non-GAAP Gross Margins Non-GAAP Subscription Gross Margin 86% 86% 86% 86% 86% 85% 85% Q4-21 Q1-22 Q2-22 Q3-22 Q4-22 FY21 FY22 Non-GAAP PS & Other Gross Margin 15% 15% 10% 8% 16% 6% 10% Q4-21 Q1-22 Q2-22 Q3-22 Q4-22 FY21 FY22 Non-GAAP Total Gross Margin 81% 83% 82% 82% 83% 81% 82% Q4-21 Q1-22 Q2-22 Q
Slide 21: Non-GAAP Operating and Free Cash Flow Margins
Non-GAAP Operating and Free Cash Flow Margins Non-GAAP Operating Margin 28% 25% 26% 25% 26% 23% 23% Q4-21 Q1-22 Q2-22 Q3-22 Q4-22 FY21 FY22 Non-GAAP Free Cash Flow Margin 53% 46% 45% 32% 30% 16% 6% Q4-21 Q1-22 Q2-22 Q3-22 Q4-22 FY21 FY22 Note: All figures are calculated on a non-GAAP basis. See appe
Slide 22: Non-GAAP Net Income and Diluted EPS
Non-GAAP Net Income and Diluted EPS Non-GAAP Net Income ($M) $1,543 $1,201 $398 $464 $296 $352 $329 Q4-21 Q1-22 Q2-22 Q3-22 Q4-22 FY21 FY22 $7.59 $5.92 Non-GAAP Diluted EPS $1.96 $2.28 $1.46 $1.73 $1.62 Q4-21 Q1-22 Q2-22 Q3-22 Q4-22 FY21 FY22 Note: All figures are calculated on a non-GAAP basis. See
Slide 23: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation © 2022 ServiceNow, Inc. All Rights Reserved. Confidential. 23 ®
Slide 24: GAAP to Non-GAAP Reconciliation – Revenues
GAAP to Non-GAAP Reconciliation – Revenues Note: Numbers rounded for presentation purposes and may not foot. © 2022 ServiceNow, Inc. All Rights Reserved. Confidential. 24 ®
Slide 25: GAAP to Non-GAAP Reconciliation – Remaining Performance Obligations
GAAP to Non-GAAP Reconciliation – Remaining Performance Obligations in billions (except %'s) Q1-21 Q2-21 Q3-21 Q4-21 2021 Q1-22 Q2-22 Q3-22 Q4-22 2022 Q1-23E GAAP Current Remaining Performance Obligations at Period End $ 4.42 $ 4.75 $ 4.96 $ 5.68 $ 5.68 $ 5.69 $ 5.75 $ 5.87 $ 6.94 $ 6.94 N/A YoY Cur
Slide 26: GAAP to Non-GAAP Reconciliation – Other
GAAP to Non-GAAP Reconciliation – Other in millions (except %'s and per share data) Q1-21 Margin Q2-21 Margin Q3-21 Margin Q4-21 Margin 2021 Margin Q1'22 Margin Q2'22 Margin Q3'22 Margin Q4'22 Margin 2022 Margin Q1'23E Margin 2023E Margin GAAP Subscription Gross Profit $ 1,065 82% $ 1,082 81% $ 1,16
Slide 27: GAAP to Non-GAAP Reconciliation – Other (cont.)
GAAP to Non-GAAP Reconciliation – Other (cont.) in millions (except %'s and per share data) Q1-21 Margin Q2-21 Margin Q3-21 Margin Q4-21 Margin 2021 Margin Q1'22 Margin Q2'22 Margin Q3'22 Margin Q4'22 Margin 2022 Margin Q1'23E Margin 2023E Margin GAAP Weighted-Average Shares Used to Compute Net Inco