Slide 1: Investor Presentation Second Quarter 2020
® Investor Presentation Second 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 remaining performance obligations growth rat
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
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
Slide 6: Q2-20 Financial Highlights
Q2-20 Financial Highlights Increase Non-GAAP Q2 2020 Results Quarterly Results (Decrease) Y/Y Adjusted Y/Y(1) Subscription Revenues $1,016M 30% 32% Non-GAAP Subscription Billings(2) $1,018M 25% 26% Current RPO (cRPO)(3) $3.5B 31% 32% Remaining Performance Obligations (RPO) $7.0B 30% 31% Non-GAAP Ope
Slide 7: Guidance Summary
Guidance Summary Increase (Decrease) Q3 2020 Quarterly Guidance Non-GAAP Adjusted Y/Y(1) Y/Y Subscription Revenues $1,055M - $1,060M 26% - 27% 26% - 27% Non-GAAP Subscription Billings(2) $995M - $1,015M 15% - 17% 16% - 18% Non-GAAP Operating Margin(2) 22% ~(400bps) NA Full-Year 2020 Full-Year Guidan
Slide 8: Comparison to Previously Issued Guidance
Comparison to Previously Issued Guidance ($M) $998 $2 $16 $1,016 $4,135 $19 $39 $4,193 Subscription Revenues Y/Y Growth 28% 30% 27% 29% Non-GAAP Adjusted Y/Y Growth(3) 29% 32% 28% 30% $46 $1,018 $4,630 $22 $28 $4,680 $970 $2 Non-GAAP Subscription Billings(3) Y/Y Growth 19% 25% 22% 24% Non-GAAP Adjus
Slide 9: Year-Over-Year Subscription Revenues and Billings Growth
Year-Over-Year Subscription Revenues and Billings Growth 39% 39% 33% 35% 33% 35% 36% 36% 34% 36% 33% 30% 32% 33% 34% 37% 34% 27% 27% 29% 30% Subscription Revenues 35% 38% 36% 37% 36% 32% 32% 31% 34% 31% 28% 29% 27% 30% 25% 26% 28% 24% 25% Non-GAAP 16% 17% Subscription Billings(1) Q3-19A Q4-19A Q1-20
Slide 10: Currency and Duration Impact to Year-Over-Year Sub. Revenues and Billings
Currency and Duration Impact to Year-Over-Year Sub. Revenues and Billings ($M) $995 $1,006 $1,016 $12 $1,027 $1,058 $0 $1,058 $4,193 $4,218 $12 $25 $3,255 $58 $3,313 $835 $848 $899 $8 $907 $13 Subscription Revenues Y/Y Growth 33% 35% 35% 36% 34% 36% 30% 32% 27% 27% 34% 37% 29% 30% $1,298 $12 $1,303
Slide 11: Remaining Performance Obligations
Remaining Performance Obligations ($B) Current RPO Noncurrent RPO $7.0 $6.6 $6.6 Q2-20 Y/Y Growth $5.4 $5.6 $3.5 +30% / +31% cc(2) $3.3 $3.3 Total RPO $2.7 $2.7 $3.3 $3.3 $3.5 +31% / +32% cc(2) $2.7 $2.8 Current RPO (1) Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 1) Current remaining performance obligations (cRPO
Slide 12: Customer Cohort Growth
Customer Cohort Growth Annual Growth of Initial ACV 2020 2019 72% 2018 66% 2017 70% 2016 2015 83% 2014 81% 2013 70% 2012 79% 2011 2010 83% 113% 127% (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 (
Slide 13: Expansion of Customer Relationships
Expansion of Customer Relationships 1500 42% 37% 33% 32% 32% 32% 31% 30% 40% 1300 26% 20% 1100 933 964 0% 890 900 806 764 -20% 718 678 700 610 579 -40% 500 -60% 300 -80% 100 -100% -100 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 -120% Customer >$1M ACV Y/Y Growth Note: Previously disclosed
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 10% 9% 10% 11% 13% 21% 22% 23% 23% 24% 69% 69% 67% 66% 63% Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 1) Historical presentations disclosed net new ACV contribution across produc
Slide 15: Renewal Rate
Renewal Rate 99% 98% 97% 97% 97% Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 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 16: Revenues and Billings Mix
Revenues and Billings Mix GAAP Revenues Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 FY18 FY19 6% 6% 6% 5% 5% 7% 6% 94% 94% 94% 95% 95% 93% 94% Non-GAAP Billings Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 FY18 FY19 6% 6% 4% 4% 6% 7% 5% 94% 94% 96% 96% 94% 93% 95% Subscription PS & Other Note: See appendix for reconciliation of
Slide 17: GAAP Revenues by Geography
GAAP Revenues by Geography North America EMEA APAC & Other 9% 9% 9% 9% 9% 26% 24% 26% 24% 25% 65% 67% 65% 67% 66% Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 ® 17 © 2020 ServiceNow, Inc. All Rights Reserved.
Slide 18: Average Contract Terms
Average Contract Terms New Customer Expansion Renewal 39.0 37.8 34.7 33.8 32.5 32.6 32.3 29.7 28.3 25.7 26.3 24.3 21.3 21.2 23.0 Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 Note: All figures represent number of months. Revised mapping of customers in the
Slide 19: Headcount by Department
Headcount by Department PS & Other Cost of Sales Sub. Cost of Sales S&M R&D G&A 11,901 11,148 10,371 1,656 9,929 1,534 9,382 1,403 1,375 1,304 3,436 3,120 2,926 2,747 2,500 4,211 4,444 3,683 3,857 3,575 1,306 1,365 1,411 1,516 1,595 697 759 774 767 770 Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 ® 19 © 2020 Servi
Slide 20: Non-GAAP Gross Margins
Non-GAAP Gross Margins Non-GAAP Subscription Gross Margin 87% 87% 86% 86% 86% 86% 86% Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 FY18 FY19 Non-GAAP PS & Other Gross Margin 13% 8% 2% 1% 1% 0% 1% Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 FY18 FY19 Non-GAAP Total Gross Margin 81% 82% 83% 83% 81% 81% 80% Q2-19 Q3-19 Q4-19 Q1-20
Slide 21: Non-GAAP Operating and Free Cash Flow Margins
Non-GAAP Operating and Free Cash Flow Margins Non-GAAP Operating Margin 28% 26% 24% 22% 21% 18% 20% Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 FY18 FY19 Non-GAAP Free Cash Flow Margin 36% 39% 28% 28% 23% 24% 14% Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 FY18 FY19 Note: All figures are calculated on a non-GAAP basis. See app
Slide 22: Non-GAAP Net Income and Diluted EPS
Non-GAAP Net Income and Diluted EPS $646 Non-GAAP Net Income ($M) $470 $207 $243 $193 $187 $138 Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 FY18 FY19 $3.32 $2.49 Non-GAAP Diluted EPS $1.05 $1.23 $0.99 $0.96 $0.71 Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 FY18 FY19 Note: All figures are calculated on a non-GAAP basis. See app
Slide 23: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation ® 23 © 2020 ServiceNow, Inc. All Rights Reserved.
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 Q2-20 Q3-20E Midpoint 2020E Midpoint GAAP Subscription Revenues $ 2,421 $ 740 $ 781 $ 835 $ 899 $ 3,255 $ 995 $ 1,016 $ 1,058 $ 4,193 (+) Effects of Foreign Currency Rate Fluctuat
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 Q2-20 Q3-20E 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 $ 3.5 N/A N/A (+) Effects o
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 Q2-20 Margin Q3'20E 2020E GAAP Subscription Gross Profit $ 2,004 83% $ 613 83% $ 646 83% $ 696 83% $ 751 84% $ 2,705 83% $ 835
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 Q2-20 Margin Q3'20E 2020E GAAP Weighted-Average Shares Used to Compute Net Income (Loss) per Share - 178 N/A 182 N/A 18