Servicenow, Inc. · NYSE:NOW

Servicenow — Q4 2023 Earnings Presentation

25 slides from Servicenow's earnings presentation, Jan 24, 2024

  1. Slide 1: Investor Presentation Fourth Quarter 2023

    Investor Presentation Fourth Quarter 2023

  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 mana gement. Forward‐looking statements include information concerning our possible or assumed strategy, futu

  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 wit h GAAP. We adjust revenues and related growth rates, and current remaining performance obligations

  4. Slide 4: Now Platform: Optimize processes, connect data and silos, and accelerate innovation

    Now Platform®: Optimize processes, connect data and silos, and accelerate innovation at scale using the power of generative AI to create new value on a single, unifying platform built for digital transformation. Technology Employee Customer and Creator Workflows Workflows Industry Workflows Workflow

  5. Slide 5: We make the world work better for everyone

    We make the world work better for everyone™ Our 8,100+ global customers(1) ServiceNow helps digitize and include approximately 85% of the Our aspiration is to be the unify organizations so that they Fortune 500. They all rely on defining enterprise software can find smarter, faster, better ServiceNo

  6. Slide 6: Q4-23 Financial Highlights

    Q4-23 Financial Highlights Increase Non-GAAP Constant Q4 2023 Results Quarterly Results Currency Impact(1) (Decrease) Y/Y Currency Y/Y(2) Subscription Revenues $2,365M 27% ~150bps tailwind 25.5% Current RPO (cRPO) $8.60B 24% ~100bps tailwind 23% Remaining Performance Obligations (RPO) $18.0B 29% ~15

  7. Slide 7: FY23 Financial Highlights

    FY23 Financial Highlights Increase Non-GAAP Constant FY 2023 Results Annual Results Currency Impact(1) (Decrease) Y/Y Currency Y/Y(2) Subscription Revenues $8,680M 26% ~50bps tailwind 25.5% Current RPO (cRPO) $8.60B 24% ~100bps tailwind 23% Remaining Performance Obligations (RPO) $18.0B 29% ~150bps

  8. Slide 8: Guidance Summary

    Guidance Summary Currency Impact Increase Non-GAAP Constant Q1 2024 Guidance Quarterly Guidance Included in (Decrease) Y/Y Currency Y/Y(2) Guidance(1) Subscription Revenues $2,510M - $2,515M 24% - 24.5% ~50bps tailwind 23.5% - 24% Non-GAAP Operating Margin(3) 29% ~250bps NA NA Current RPO (cRPO) Gro

  9. Slide 9: Comparison to Previously Issued Guidance

    Comparison to Previously Issued Guidance ($M) Subscription Revenues Y/Y Growth 25% 27% 25.5% 26% Q4-23A FY23A Prev. Guidance Midpoint(1) Currency Impact(2) Q4 Performance Actual Results (1) Refers to previously issued financial guidance dated 10/25/23. (2) GAAP subscription revenues included in our

  10. Slide 10: Year-Over-Year Subscription Revenues Growth

    Year-Over-Year Subscription Revenues Growth 29% 27% 26% 27% 27% 27% 26% 25% 24% 25% 25% 25% 25% 25% 24% 22% 22% 22% Subscription Revenues Q4-22A Q1-23A Q2-23A Q3-23A Q4-23A FY23A Previous Year Growth Actual Growth Non-GAAP Constant Currency Sub Revenue Growth (1) (1) Non-GAAP subscription revenues g

  11. Slide 11: Currency Impact to Year-Over-Year Sub. Revenues

    Currency Impact to Year-Over-Year Sub. Revenues $2,216 $2,173 $2,365 $2,332 $2,068 $2,075 $2,074 $8,680 $8,647 $2,024 $(34) $(43) $44 $(1) $(33) ($M) Subscription Revenues Q1-23A Q2-23A Q3-23A Q4-23A FY23A Y/Y Growt h 24% 27% 25% 25% 27% 25% 27% 25% 26% 25% Actuals Currency Impact Non-GAAP Constant

  12. Slide 12: Remaining Performance Obligations

    Remaining Performance Obligations ($B) Current RPO Noncurrent RPO Q4-23 $18.0 Y/Y Growth $14.0 $14.0 $14.2 $14.4 $9.4 +29% / +27.5% cc(1) Total RPO $7.1 $7.0 $7.0 $7.0 $7.20 $7.43 $8.60 $6.94 $7.01 Q4-22 Q1-23 Q2-23 Q3-23 Q4-23 cRPO Y/Y Growth 22% 23% 25% 27% 24% cRPO cc(1) Y/Y Growth 25.5% 25% 24%

  13. Slide 13: Customer Cohort Growth

    Customer Cohort Growth Annual Growth of Initial ACV 2023 57% 2022 61% 2021 63% 85% 2020 79% 2019 73% 2018 100% 2017 2016 110% 2015 104% 2014 2013 147% 2012 139% 2011 2010 191% 215% (1) (1) As an illustrative example, 2010 customer cohort started with a contract of initial ACV (annual contract value)

  14. Slide 14: Expansion of Customer Relationships

    Expansion of Customer Relationships $4.5 $4.4 ($M) $4.2 $4.3 $4.1 $3.9 $4.0 $3.8 $3.9 1,897 1,787 1,685 1,723 1,643 1,533 1,466 1,404 1,350 Q4-21 Q1-22 Q2-22 Q3-22 Q4-22 Q1-23 Q2-23 Q3-23 Q4-23 Number of Customers with $1M+ ACV Avg ACV of Customers with $1M+ ACV Note: Prev iously disclosed number of

  15. Slide 15: Renewal Rate

    Renewal Rate 99% 99% 98% 98% 98% Q4-22 Q1-23 Q2-23 Q3-23 Q4-23 Note: W e 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,

  16. 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% 18% 16% 15% 16% 26% 25% 26% 25% 29% 59% 57% 58% 60% 55% Q4-22 Q1-23 Q2-23 Q3-23 Q4-23 (1) Historical presentations disclosed net new ACV contribution across pr

  17. Slide 17: GAAP Revenues by Geography

    GAAP Revenues by Geography North America EMEA APAC & Other 10% 11% 11% 11% 11% 25% 25% 25% 26% 26% 65% 64% 64% 63% 63% Q4-22 Q1-23 Q2-23 Q3-23 Q4-23 © 2022 ServiceNow , Inc. All Rights Reserved © 2022 ServiceNow, Inc. All Rights Reserved. Confidential. 17 ®

  18. Slide 18: Headcount by Department

    Headcount by Department PS & Other Cost of Sales Sub. Cost of Sales S&M R&D G&A 22,166 22,668 21,031 21,377 20,433 2,854 2,802 2,703 2,731 2,648 6,920 7,211 6,415 6,524 6,219 7,719 7,814 7934 7,966 7,490 2,775 2,956 3,168 3,421 3,622 1,301 1,238 1,140 1,089 1,015 Q4-22 Q1-23 Q2-23 Q3-23 Q4-23 © 2022

  19. Slide 19: Non-GAAP Gross Margins

    Non-GAAP Gross Margins Non-GAAP Subscription Gross Margin 86% 86% 86% 85% 85% 84% 84% Q4-22 Q1-23 Q2-23 Q3-23 Q4-23 FY22 FY23 Non-GAAP PS & Other Gross Margin 11% 15% 10% 10% 10% 6% 4% Q4-22 Q1-23 Q2-23 Q3-23 Q4-23 FY22 FY23 Non-GAAP Total Gross Margin 83% 83% 82% 82% 82% 82% 82% Q4-22 Q1-23 Q2-23 Q

  20. Slide 20: Non-GAAP Operating and Free Cash Flow Margins

    Non-GAAP Operating and Free Cash Flow Margins Non-GAAP Operating Margin 28% 30% 29% 28% 26% 25% 26% Q4-22 Q1-23 Q2-23 Q3-23 Q4-23 FY22 FY23 Non-GAAP Free Cash Flow Margin 53% 55% 35% 30% 30% 21% 9% Q4-22 Q1-23 Q2-23 Q3-23 Q4-23 FY22 FY23 Note: All figures are calculated on a non-GAAP basis. See appe

  21. Slide 21: Non-GAAP Net Income and Diluted EPS

    Non-GAAP Net Income and Diluted EPS Non-GAAP Net Income ($M) $2,215 $1,543 $603 $643 $464 $483 $486 Q4-22 Q1-23 Q2-23 Q3-23 Q4-23 FY22 FY23 $10.78 Non-GAAP Diluted EPS $7.59 $2.92 $3.11 $2.28 $2.37 $2.37 Q4-22 Q1-23 Q2-23 Q3-23 Q4-23 FY22 FY23 Note: All figures are calculated on a non-GAAP basis. Se

  22. Slide 22: GAAP to Non-GAAP Reconciliation and Supplemental Information

    GAAP to Non-GAAP Reconciliation and Supplemental Information © 2022 ServiceNow, Inc. All Rights Reserved. Confidential. 22 ®

  23. Slide 23: GAAP to Non-GAAP Reconciliation – Other

    GAAP to Non-GAAP Reconciliation – Other ® Note: Numbers rounded for presentation purposes and may not foot . © 2022 ServiceNow, Inc. All Rights Reserved. Confidential. 23

  24. Slide 24: GAAP to Non-GAAP Reconciliation – Other (cont.)

    GAAP to Non-GAAP Reconciliation – Other (cont.) Note: Numbers rounded for presentation purposes and may not foot . © 2022 ServiceNow, Inc. All Rights Reserved. Confidential. 24 ®

  25. Slide 25: Supplemental Information

    Supplemental Information Note: Numbers rounded for presentation purposes and may not foot . © 2022 ServiceNow, Inc. All Rights Reserved. Confidential. 25 ®

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