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ServiceNow Reports First Quarter 2024 Financial Results

  • ServiceNow exceeds guidance across all Q1 2024 topline growth and profitability metrics; raises midpoint of 2024 subscription revenues guidance range
  • Subscription revenues of $2,523 million in Q1 2024, representing 25% year-over-year growth, 24.5% in constant currency
  • Total revenues of $2,603 million in Q1 2024, representing 24% year-over-year growth, 24% in constant currency
  • Current remaining performance obligations of $8.45 billion as of Q1 2024, representing 21% year-over-year growth, 21% in constant currency
  • 8 transactions over $5 million in net new ACV in Q1 2024, up 100% year-over-year

ServiceNow (NYSE: NOW), the leading digital workflow company making the world work better for everyone, today announced financial results for its first quarter ended March 31, 2024, with subscription revenues of $2,523 million in Q1 2024, representing 25% year-over-year growth and 24.5% in constant currency.

“ServiceNow is off to a fast start with an outstanding first quarter,” said ServiceNow Chairman and CEO Bill McDermott. “As leaders seek significant productivity improvements, ServiceNow has first mover advantage with years of investment in AI technology and talent. Our GenAI offerings are the fastest selling in the company’s history. We are humbled by the trust our customers are investing in our platform. As we engineer Now Assist AI into every business workflow across every enterprise, we are giving people the power to know more, care more, and do more.”

As of March 31, 2024, current remaining performance obligations (“cRPO”), contract revenue that will be recognized as revenue in the next 12 months, was $8.45 billion, representing 21% year-over-year growth and 21% in constant currency. The company now has 1,933 total customers with more than $1 million in annual contract value (“ACV”), representing 15% year-over-year growth in customers.

“Building on the momentum from Q4, our team delivered another exceptional quarter of outperformance across all of our topline and profitability guidance metrics,” said ServiceNow CFO Gina Mastantuono. “We have the platform enterprises need to reinvent their business models, and it's showing in our results. Our teams are consistently executing against the massive opportunity in front of us. With GenAI conversations serving as a digital transformation catalyst, we are as confident as ever about becoming the defining enterprise software company of the 21st century.”

Recent Business Highlights

(1)

©2024 Fortune Media IP Limited All rights reserved. Used under license. Fortune and Fortune Media IP Limited are not affiliated with, and do not endorse products or services of, ServiceNow.

First Quarter 2024 GAAP and Non-GAAP Results:

The following table summarizes our financial results for the first quarter 2024:

 

 

 

 

 

 

 

First Quarter 2024 GAAP Results

 

First Quarter 2024 Non-GAAP Results(1)

 

Amount

($ millions)

Year/Year

Growth (%)

 

Amount

($ millions)(3)

Year/Year

Growth (%)

Subscription revenues

$2,523

25%

 

$2,517

24.5%

Professional services and other revenues

$80

11%

 

$80

11%

Total revenues

$2,603

24%

 

$2,597

24%

 

 

 

 

 

 

 

Amount

($ billions)

Year/Year

Growth (%)

 

Amount

($ billions)(3)

Year/Year

Growth (%)

cRPO

$8.45

21%

 

$8.49

21%

RPO

$17.7

26%

 

$17.8

27%

 

 

 

 

 

 

 

Amount

($ millions)

Margin (%)

 

Amount

($ millions)(2)

Margin (%)(2)

Subscription gross profit

$2,082

83%

 

$2,161

86%

Professional services and other gross profit

$1

1%

 

$13

16%

Total gross profit

$2,083

80%

 

$2,174

83%

Income from operations

$332

13%

 

$791

30%

Net cash provided by operating activities

$1,341

52%

 

 

 

Free cash flow

 

 

 

$1,225

47%

 

 

 

 

 

 

 

Amount

($ millions)

Earnings per

Basic/Diluted

Share ($)

 

Amount

($ millions)(2)

Earnings per

Basic/Diluted

Share ($)(2)

Net income

$347

$1.69 / $1.67

 

$707

$3.45 / $3.41

(1)

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. See the section entitled “Statement Regarding Use of Non-GAAP Financial Measures” for an explanation of non-GAAP measures.

(2)

Refer to the table entitled “GAAP to Non-GAAP Reconciliation” for a reconciliation of GAAP to non-GAAP measures.

(3)

Non-GAAP subscription revenues and total revenues are adjusted for constant currency by excluding effects of foreign currency rate fluctuations and any gains or losses from foreign currency hedge contracts. Professional services and other revenues, cRPO, and RPO are adjusted only for constant currency. See the section entitled “Statement Regarding Use of Non-GAAP Financial Measures” for an explanation of non-GAAP measures.

 

Note: Numbers rounded for presentation purposes and may not foot.

Financial Outlook

Our guidance includes GAAP and non-GAAP financial measures. The non-GAAP growth rates for subscription revenues are adjusted for constant currency by excluding effects of foreign currency rate fluctuations and any gains or losses from foreign currency hedge contracts, and cRPO are adjusted only for constant currency to provide better visibility into the underlying business trends. In Q1 2024, we initiated a program to hedge a portion of our forecasted foreign currency denominated revenues. While the cash flow hedging program is designed to reduce the impact of foreign currency exchange rate fluctuations on our subscription revenues, the strengthening of the U.S. Dollar since December 31, 2023 has still resulted in an adverse impact to our 2024 guidance. As we have previously mentioned, the Q3 2023 strength of our U.S. Federal business has resulted in a higher mix of contracts containing 12-month renewal terms. This will create a negative 2-point impact to Q2 2024 cRPO growth, as that balance is amortized into revenue. We expect that these contracts will renew in Q3 2024 as ServiceNow’s U.S. Federal renewal rates have been 99%.

The following table summarizes our guidance for the second quarter 2024:

 

Second Quarter 2024

GAAP Guidance

 

Second Quarter 2024

Non-GAAP Guidance(1)

 

Amount

($ millions)(3)

Year/Year

Growth (%)(3)

 

Constant Currency

Year/Year Growth (%)

Subscription revenues

$2,525 - $2,530

21.5% - 22%

 

22%

 

 

 

 

 

cRPO

 

20.5%

 

20.5%

Note: Includes impact from strength of public sector business noted above

 

 

 

 

 

 

 

 

Margin (%)(2)

Income from operations

 

 

 

25%

 

 

 

 

 

 

 

Amount

(millions)

 

 

Weighted-average shares used to compute diluted net income per share

 

208

 

 

(1)

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. See the section entitled “Statement Regarding Use of Non-GAAP Financial Measures” for an explanation of non-GAAP measures.

(2)

Refer to the table entitled “Reconciliation of Non-GAAP Financial Guidance” for a reconciliation of GAAP to non-GAAP measures.

(3)

Guidance for GAAP subscription revenues and GAAP subscription revenues and cRPO growth rates are based on the 31-day average of foreign exchange rates for March 2024 for entities reporting in currencies other than U.S. Dollars.

The following table summarizes our guidance for the full-year 2024:

 

Full-Year 2024

GAAP Guidance

 

Full-Year 2024

Non-GAAP Guidance(1)

 

Amount

($ millions)(3)

Year/Year

Growth (%)(3)

 

Constant Currency

Year/Year Growth (%)

Subscription revenues

$10,560 - $10,575

21.5% - 22%

 

21.5%

 

 

 

 

 

 

 

 

 

Margin (%)(2)

Subscription gross profit

 

 

 

84.5%

Income from operations

 

 

 

29%

Free cash flow

 

 

 

31%

 

 

 

 

 

 

 

Amount

(millions)

 

 

Weighted-average shares used to compute diluted net income per share

 

208

 

 

(1)

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. See the section entitled “Statement Regarding Use of Non-GAAP Financial Measures” for an explanation of non-GAAP measures.

(2)

Refer to the table entitled “Reconciliation of Non-GAAP Financial Guidance” for a reconciliation of GAAP to non-GAAP measures.

(3)

GAAP subscription revenues and related growth rate for the future quarter included in our full-year 2024 guidance are based on the 31-day average of foreign exchange rates for March 2024 for entities reporting in currencies other than U.S. Dollars.

 

Note: Numbers are rounded for presentation purposes and may not foot.

Conference Call Details

The conference call will begin at 2 p.m. Pacific Time (“PT”) (21:00 GMT) on April 24, 2024. Interested parties may listen to the call by dialing (888) 330‑2455 (Passcode: 8135305), or if outside North America, by dialing (240) 789‑2717 (Passcode: 8135305). Individuals may access the live teleconference from this webcast.

https://events.q4inc.com/attendee/528191825

An audio replay of the conference call and webcast will be available two hours after its completion and will be accessible for 30 days. To hear the replay, interested parties may go to the investor relations section of the ServiceNow website or dial (800) 770‑2030 (Passcode: 8135305), or if outside North America, by dialing (609) 800‑9909 (Passcode: 8135305).

Investor Presentation Details

An investor presentation providing additional information, including forward-looking guidance, and analysis can be found at https://investors.servicenow.com.

Financial Analyst Day

ServiceNow will host its Financial Analyst Day 2024 on Monday, May 6, 2024 at 1:30 p.m. PT in Las Vegas. This half‑day program will feature presentations by ServiceNow executives providing updates on the company’s strategy, product and GenAI roadmap, financials, and customer momentum. A webcast will also be available the day of the event at https://investors.servicenow.com

Event Details: May 6, 2024, from 1:30‑4:30 p.m. PT

Upcoming Investor Conferences

ServiceNow today announced that it will attend and have executives present at four upcoming investor conferences.

These include:

  • ServiceNow President and Chief Operating Officer CJ Desai will participate in a fireside chat at the JP Morgan 52nd Annual Global Technology, Media & Communications Conference on Tuesday, May 21, 2024, at 11:25 a.m. PT.
  • ServiceNow President and Chief Operating Officer CJ Desai will participate in a fireside chat at the TD Cowen 52nd Annual Technology, Media and Telecom Conference on Wednesday, May 29, 2024, at 10:15 a.m. PT.
  • ServiceNow Chief Financial Officer Gina Mastantuono will participate in a fireside chat at the Jefferies Software Conference on Wednesday, May 29, 2024, at 11:00 a.m. PT.
  • ServiceNow President and Chief Operating Officer CJ Desai will participate in a fireside chat at the Bernstein 40th Annual Strategic Decisions Conference on Wednesday, May 29, 2024, at 11:30 a.m. PT.

The live webcast will be accessible on the investor relations section of the ServiceNow website at https://investors.servicenow.com and archived on the ServiceNow site for a period of 30 days.

Statement Regarding Use of Non-GAAP Financial Measures

We use the following non-GAAP financial measures in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP.

  • Revenues. We adjust revenues and related growth rates for constant currency to provide a framework for assessing how our business performed excluding the effect of foreign currency rate fluctuations and any gains or losses from foreign currency hedge contracts that are reported in the current and comparative period. To exclude the effect of foreign currency rate fluctuations, current period results for entities reporting in currencies other than U.S. Dollars (“USD”) are converted into USD at the average exchange rates in effect during the comparison period (for Q1 2023, the average exchange rates in effect for our major currencies were 1 USD to 0.93 Euros and 1 USD to 0.82 British Pound Sterling (“GBP”)), rather than the actual average exchange rates in effect during the current period (for Q1 2024, the average exchange rates in effect for our major currencies were 1 USD to 0.92 Euros and 1 USD to 0.79 GBP). Guidance for related growth rates is derived by applying the average exchange rates in effect during the comparison period, rather than the exchange rates for the guidance period, adjusted for any foreign currency hedging effects. We believe the presentation of revenues and related growth rates adjusted for constant currency facilitates the comparison of revenues year-over-year.
  • Remaining performance obligations and current remaining performance obligations. We adjust cRPO and remaining performance obligations (“RPO”) and related growth rates for constant currency to provide a framework for assessing how our business performed. To present this information, current period results for entities reporting in currencies other than USD are converted into USD at the exchange rates in effect at the end of the comparison period (for Q1 2023, the end of the period exchange rates in effect for our major currencies were 1 USD to 0.92 Euros and 1 USD to 0.81 GBP), rather than the actual end of the period exchange rates in effect during the current period (for Q1 2024, the end of the period exchange rates in effect for our major currencies were 1 USD to 0.93 Euros and 1 USD to 0.79 GBP). Guidance for the related growth rate is derived by applying the end of period exchange rates in effect during the comparison period rather than the exchange rates in effect during the guidance period. We believe the presentation of cRPO and RPO and related growth rates adjusted for constant currency facilitates the comparison of cRPO and RPO year-over-year, respectively.
  • Gross profit, Income from operations, Net income and Net income per share - diluted. Our non-GAAP presentation of gross profit, income from operations, and net income measures exclude certain non-cash or non-recurring items, including stock-based compensation expense, amortization of debt discount and issuance costs related to our convertible senior notes, loss on early note conversions, amortization of purchased intangibles, legal settlements, business combination and other related costs, income tax effects and adjustments, and the income tax benefit from the release of a valuation allowance on deferred tax assets. The non-GAAP weighted-average shares used to compute our non-GAAP net income per share - diluted excludes the dilutive effect of the in-the-money portion of convertible senior notes as they are covered by our note hedges, and includes the dilutive effect of time-based stock awards, the dilutive effect of warrants and the potentially dilutive effect of our stock awards with performance conditions not yet satisfied at forecasted attainment levels to the extent we believe it is probable that the performance condition will be met. We believe these adjustments provide useful supplemental information to investors and facilitates the analysis of our operating results and comparison of operating results across reporting periods.
  • Free cash flow. Free cash flow is defined as net cash provided by operating activities plus cash outflows for legal settlements, repayments of convertible senior notes attributable to debt discount and business combination and other related costs including compensation expense, reduced by purchases of property and equipment. Free cash flow margin is calculated as free cash flow as a percentage of total revenues. We believe information regarding free cash flow and free cash flow margin provides useful information to investors because it is an indicator of the strength and performance of our business operations.

Our presentation of non-GAAP financial measures may not be comparable to similar measures used by other companies. We encourage investors to carefully consider our results under GAAP, as well as our supplemental non-GAAP information and the reconciliation between these presentations, to more fully understand our business. Please see the tables included at the end of this release for the reconciliation of GAAP and non-GAAP results for gross profit, income from operations, net income, net income per share, and free cash flow.

Use of Forward-Looking Statements

This release contains “forward-looking statements” regarding our performance, including but not limited to statements in the section entitled “Financial Outlook.” Forward-looking statements are subject to known and unknown risks and uncertainties and are based on potentially inaccurate assumptions that could cause actual results to differ materially from those expected or implied by the forward-looking statements. If any such risks or uncertainties materialize or if any of the assumptions prove incorrect, our results could differ materially from the results expressed or implied by the forward-looking statements we make.

Factors that may cause actual results to differ materially from those in any forward-looking statements include, among others, experiencing an actual or perceived cyber-security event or weakness; our ability to comply with evolving privacy laws, data transfer restrictions, and other foreign and domestic standards related to data and the Internet; errors, interruptions, delays or security breaches in or of our service or data centers; our ability to maintain and attract key employees and manage workplace culture; alleged violations of laws and regulations, including those relating to anti-bribery and anti-corruption and those relating to public sector contracting requirements; our ability to compete successfully against existing and new competitors; our ability to predict, prepare for and respond promptly to rapidly evolving technological, market and customer developments; our ability to grow our business, including converting remaining performance obligations into revenue, adding and retaining customers, selling additional subscriptions to existing customers, selling to larger enterprises, government and regulated organizations with complex sales cycles and certification processes, and entering new geographies and markets; our ability to develop and gain customer demand for and acceptance of existing, new and improved products and services; our ability to expand and maintain our partnerships and partner programs, including expected market opportunity from such relationships; global economic conditions; fluctuations in the value of foreign currencies relative to the U.S. Dollar; fluctuations in interest rates; our ability to consummate and realize the benefits of any strategic transactions or acquisitions; the impact of armed conflicts and bank failures on macroeconomic conditions; inflation; and fluctuations and volatility in our stock price.

Further information on these and other factors that could affect our financial results are included in our Form 10-K for the year ended December 31, 2023, and in other filings we make with the Securities and Exchange Commission from time to time.

We undertake no obligation, and do not intend, to update these forward-looking statements, to review or confirm analysts’ expectations, or to provide interim reports or updates on the progress of the current financial quarter.

About ServiceNow

ServiceNow (NYSE: NOW) makes the world work better for everyone. Our cloud-based platform and solutions help digitize and unify organizations so that they can find smarter, faster, better ways to make work flow. So employees and customers can be more connected, more innovative, and more agile. And we can all create the future we imagine. The world works with ServiceNowTM. For more information, visit: www.servicenow.com.

© 2024 ServiceNow, Inc. All rights reserved. ServiceNow, the ServiceNow logo, Now, and other ServiceNow marks are trademarks and/or registered trademarks of ServiceNow, Inc. in the United States and/or other countries. Other company names, product names, and logos may be trademarks of the respective companies with which they are associated.

ServiceNow, Inc.

Condensed Consolidated Statements of Operations

(in millions, except per share data)

(unaudited)

 

 

Three Months Ended

 

March 31, 2024

 

March 31, 2023

Revenues:

 

 

 

Subscription

$

2,523

 

 

$

2,024

 

Professional services and other

 

80

 

 

 

72

 

Total revenues

 

2,603

 

 

 

2,096

 

Cost of revenues (1):

 

 

 

Subscription

 

441

 

 

 

354

 

Professional services and other

 

79

 

 

 

84

 

Total cost of revenues

 

520

 

 

 

438

 

Gross profit

 

2,083

 

 

 

1,658

 

Operating expenses (1):

 

 

 

Sales and marketing

 

923

 

 

 

823

 

Research and development

 

606

 

 

 

492

 

General and administrative

 

222

 

 

 

199

 

Total operating expenses

 

1,751

 

 

 

1,514

 

Income from operations

 

332

 

 

 

144

 

Interest income

 

101

 

 

 

60

 

Other expense, net

 

(8

)

 

 

(16

)

Income before income taxes

 

425

 

 

 

188

 

Provision for income taxes

 

78

 

 

 

38

 

Net income

$

347

 

 

$

150

 

Net income per share - basic

$

1.69

 

 

$

0.74

 

Net income per share - diluted

$

1.67

 

 

$

0.73

 

Weighted-average shares used to compute net income per share - basic

 

205

 

 

 

203

 

Weighted-average shares used to compute net income per share - diluted

 

208

 

 

 

204

 

(1) Includes stock-based compensation as follows:

 

 

Three Months Ended

 

March 31, 2024

 

March 31, 2023

Cost of revenues:

 

 

 

Subscription

$

58

 

$

46

Professional services and other

 

12

 

 

 

14

 

Operating expenses:

 

 

 

Sales and marketing

 

134

 

 

 

126

 

Research and development

 

159

 

 

 

135

 

General and administrative

 

59

 

 

 

60

 

ServiceNow, Inc.

Condensed Consolidated Balance Sheets

(in millions)

 

 

March 31, 2024

 

December 31, 2023

 

(unaudited)

 

 

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

2,056

 

$

1,897

Short-term investments

 

3,054

 

 

 

2,980

 

Accounts receivable, net

 

1,306

 

 

 

2,036

 

Current portion of deferred commissions

 

474

 

 

 

461

 

Prepaid expenses and other current assets

 

482

 

 

 

403

 

Total current assets

 

7,372

 

 

 

7,777

 

Deferred commissions, less current portion

 

930

 

 

 

919

 

Long-term investments

 

3,666

 

 

 

3,203

 

Property and equipment, net

 

1,450

 

 

 

1,358

 

Operating lease right-of-use assets

 

698

 

 

 

715

 

Intangible assets, net

 

224

 

 

 

224

 

Goodwill

 

1,224

 

 

 

1,231

 

Deferred tax assets

 

1,478

 

 

 

1,508

 

Other assets

 

502

 

 

 

452

 

Total assets

$

17,544

 

 

$

17,387

 

Liabilities and Stockholders’ Equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

223

 

 

$

126

 

Accrued expenses and other current liabilities

 

1,018

 

 

 

1,365

 

Current portion of deferred revenue

 

5,700

 

 

 

5,785

 

Current portion of operating lease liabilities

 

92

 

 

 

89

 

Total current liabilities

 

7,033

 

 

 

7,365

 

Deferred revenue, less current portion

 

100

 

 

 

81

 

Operating lease liabilities, less current portion

 

693

 

 

 

707

 

Long-term debt, net

 

1,488

 

 

 

1,488

 

Other long-term liabilities

 

123

 

 

 

118

 

Stockholders’ equity

 

8,107

 

 

 

7,628

 

Total liabilities and stockholders’ equity

$

17,544

 

 

$

17,387

 

ServiceNow, Inc.

Condensed Consolidated Statements of Cash Flows

(in millions)

(unaudited)

 

 

Three Months Ended

 

March 31, 2024

 

March 31, 2023

Cash flows from operating activities:

 

 

 

Net income

$

347

 

 

$

150

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

Depreciation and amortization

 

130

 

 

 

126

 

Amortization of deferred commissions

 

131

 

 

 

106

 

Stock-based compensation

 

422

 

 

 

381

 

Deferred income taxes

 

28

 

 

 

7

 

Other

 

(18

)

 

 

1

 

Changes in operating assets and liabilities, net of effect of business combinations:

 

 

 

Accounts receivable

 

715

 

 

 

619

 

Deferred commissions

 

(165

)

 

 

(159

)

Prepaid expenses and other assets

 

(106

)

 

 

(64

)

Accounts payable

 

107

 

 

 

(46

)

Deferred revenue

 

(10

)

 

 

40

 

Accrued expenses and other liabilities

 

(240

)

 

 

(259

)

Net cash provided by operating activities

$

1,341

 

 

$

902

 

Cash flows from investing activities:

 

 

 

Purchases of property and equipment

 

(135

)

 

 

(165

)

Business combinations, net of cash acquired

 

(194

)

 

 

 

Purchases of other intangibles

 

(21

)

 

 

 

Purchases of investments

 

(1,605

)

 

 

(1,222

)

Purchases of non-marketable investments

 

(42

)

 

 

(30

)

Sales and maturities of investments

 

1,073

 

 

 

880

 

Other

 

6

 

 

 

13

 

Net cash used in investing activities

 

(918

)

 

 

(524

)

Cash flows from financing activities:

 

 

 

Proceeds from employee stock plans

 

131

 

 

 

117

 

Repurchases of common stock

 

(175

)

 

 

 

Taxes paid related to net share settlement of equity awards

 

(215

)

 

 

(112

)

Net cash (used in) provided by financing activities

 

(259

)

 

 

5

 

Foreign currency effect on cash, cash equivalents and restricted cash

 

(4

)

 

 

1

 

Net change in cash, cash equivalents and restricted cash

 

160

 

 

 

384

 

Cash, cash equivalents and restricted cash at beginning of period

 

1,904

 

 

 

1,475

 

Cash, cash equivalents and restricted cash at end of period

$

2,064

 

 

$

1,859

 

ServiceNow, Inc.

GAAP to Non-GAAP Reconciliation

(in millions, except per share data)

(unaudited)

 

 

Three Months Ended

 

March 31, 2024

 

March 31, 2023

 

 

 

 

Gross profit:

 

 

 

GAAP subscription gross profit

$

2,082

 

 

$

1,670

 

Stock-based compensation

 

58

 

 

 

46

 

Amortization of purchased intangibles

 

21

 

 

 

18

 

Non-GAAP subscription gross profit

$

2,161

 

 

$

1,734

 

 

 

 

 

GAAP professional services and other gross profit (loss)

$

1

 

 

$

(12

)

Stock-based compensation

 

12

 

 

 

14

 

Non-GAAP professional services and other gross profit

$

13

 

 

$

2

 

 

 

 

 

GAAP gross profit

$

2,083

 

 

$

1,658

 

Stock-based compensation

 

70

 

 

 

60

 

Amortization of purchased intangibles

 

21

 

 

 

18

 

Non-GAAP gross profit

$

2,174

 

 

$

1,736

 

 

 

 

 

Gross margin:

 

 

 

GAAP subscription gross margin

 

83

%

 

 

83

%

Stock-based compensation as % of subscription revenues

 

2

%

 

 

2

%

Amortization of purchased intangibles as % of subscription revenues

 

1

%

 

 

1

%

Non-GAAP subscription gross margin

 

86

%

 

 

86

%

 

 

 

 

GAAP professional services and other gross margin

 

1

%

 

 

(17

%)

Stock-based compensation as % of professional services and other revenues

 

15

%

 

 

20

%

Non-GAAP professional services and other gross margin

 

16

%

 

 

4

%

 

 

GAAP gross margin

 

80

%

 

 

79

%

Stock-based compensation as % of total revenues

 

3

%

 

 

3

%

Amortization of purchased intangibles as % of total revenues

 

1

%

 

 

1

%

Non-GAAP gross margin

 

83

%

 

 

83

%

 

 

 

 

Income from operations:

 

 

 

GAAP income from operations

$

332

 

 

$

144

 

Stock-based compensation

 

422

 

 

 

381

 

Amortization of purchased intangibles

 

24

 

 

 

20

 

Business combination and other related costs

 

13

 

 

 

7

 

Non-GAAP income from operations

$

791

 

 

$

552

 

 

 

 

 

Operating margin:

 

 

 

GAAP operating margin

 

13

%

 

 

7

%

Stock-based compensation as % of total revenues

 

16

%

 

 

18

%

Amortization of purchased intangibles as % of total revenues

 

1

%

 

 

1

%

Business combination and other related costs as % of total revenues

 

%

 

 

%

Non-GAAP operating margin

 

30

%

 

 

26

%

 

 

 

 

Net income:

 

 

 

GAAP net income

$

347

 

 

$

150

 

Stock-based compensation

 

422

 

 

 

381

 

Amortization of purchased intangibles

 

24

 

 

 

20

 

Business combination and other related costs

 

13

 

 

 

7

 

Income tax effects and adjustments(1)

 

(99

)

 

 

(75

)

Non-GAAP net income

$

707

 

 

$

483

 

 

 

 

 

Net income per share - basic and diluted:

 

 

 

GAAP net income per share - basic

$

1.69

 

 

$

0.74

 

GAAP net income per share - diluted

$

1.67

 

 

$

0.73

 

Non-GAAP net income per share - basic

$

3.45

 

 

$

2.38

 

Non-GAAP net income per share - diluted

$

3.41

 

 

$

2.37

 

 

 

 

 

Weighted-average shares used to compute net income per share - basic

 

205

 

 

 

203

 

 

 

 

 

Weighted-average shares used to compute net income per share - diluted

 

208

 

 

 

204

 

 

 

 

 

Free cash flow:

 

 

 

GAAP net cash provided by operating activities

$

1,341

 

 

$

902

 

Purchases of property and equipment

 

(135

)

 

 

(165

)

Business combination and other related costs

 

19

 

 

 

 

Non-GAAP free cash flow

$

1,225

 

 

$

737

 

 

 

 

 

Free cash flow margin:

 

 

 

GAAP net cash provided by operating activities as % of total revenues

 

52

%

 

 

43

%

Purchases of property and equipment as % of total revenues

 

(5

%)

 

 

(8

%)

Business combination and other related costs as % of total revenues

 

1

%

 

 

%

Non-GAAP free cash flow margin

 

47

%

 

 

35

%

(1)

We use a non-GAAP effective tax rate for evaluating our operating results to provide consistency across reporting periods. Based on our long-term projections, we are using a non-GAAP tax rate of 20% and 19% for the three months ended March 31, 2024 and 2023, respectively. This non-GAAP tax rate could change for various reasons including significant changes in our geographic earnings mix or fundamental tax law changes in major jurisdictions in which we operate.

 

Note: Numbers are rounded for presentation purposes and may not foot.

ServiceNow, Inc.

Reconciliation of Non-GAAP Financial Guidance

 

 

Three Months Ending

 

June 30, 2024

 

 

 

 

GAAP operating margin

7

%

 

 

Stock-based compensation expense as % of total revenues

17

%

 

 

Amortization of purchased intangibles as % of total revenues

1

%

 

 

Business combination and other related costs as % of total revenues

%

 

 

Non-GAAP operating margin

25

%

 

 

Twelve Months Ending

 

December 31, 2024

 

 

 

 

GAAP subscription gross margin

81.5

%

 

 

Stock-based compensation expense as % of subscription revenues

2

%

 

 

Amortization of purchased intangibles as % of subscription revenues

1

%

 

 

Non-GAAP subscription margin

84.5

%

 

 

GAAP operating margin

12

%

 

 

Stock-based compensation expense as % of total revenues

16

%

 

 

Amortization of purchased intangibles as % of total revenues

1

%

 

 

Business combination and other related costs as % of total revenues

%

 

 

Non-GAAP operating margin

29

%

 

 

GAAP net cash provided by operating activities as % of total revenues

39

%

 

 

Purchases of property and equipment as % of total revenues

(8

%)

 

 

Business combination and other related costs as % of total revenues

%

 

 

Non-GAAP free cash flow margin

31

%

 

 

Note: Numbers are rounded for presentation purposes and may not foot.

 

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