- ServiceNow exceeds guidance across all Q2 2023 topline growth
and profitability metrics; raises 2023 subscription revenues and
operating margin guidance
- Subscription revenues of $2,075 million in Q2 2023,
representing 25% year-over-year growth, 25% adjusted for constant
currency
- Total revenues of $2,150 million in Q2 2023, representing 23%
year-over-year growth, 22.5% adjusted for constant currency
- Current remaining performance obligations of $7.20 billion as
of Q2 2023, representing 25% year-over-year growth, 24% adjusted
for constant currency
- 70 transactions over $1 million in net new ACV in Q2 2023, up
30% year-over-year
- ServiceNow ended Q2 with 45 customers with more than $20
million in ACV, representing 55% year-over-year increase
ServiceNow (NYSE: NOW), the leading digital workflow company
making the world work better for everyone, today announced
financial results for its second quarter ended June 30, 2023, with
subscription revenues of $2,075 million in Q2 2023, representing
25% year-over-year growth, 25% adjusted for constant currency.
“ServiceNow results were supercharged by unprecedented demand
for our organic innovation,” said ServiceNow Chairman and CEO Bill
McDermott. “We’re in a powerful new ‘AI world,’ where imagination
is the only limit. ServiceNow is already seeing our own significant
productivity increases with the generative AI solutions we’re
releasing to the market, which will rapidly accelerate breakthrough
innovation for our customers.”
As of June 30, 2023, current remaining performance obligations
(“cRPO”), contract revenue that will be recognized as revenue in
the next 12 months, was $7.20 billion, representing 25%
year-over-year growth and 24% adjusted for constant currency. The
company now has 1,724 total customers with more than $1 million in
annual contract value (“ACV”), representing 18% year-over-year
growth in customers.
“Q2 was another strong quarter for ServiceNow as we exceeded the
high end of our guidance range for all of our key performance
metrics,” said ServiceNow CFO Gina Mastantuono. “The
better-together story is resonating with C-suites driving larger
multi-product deals, as enterprises are looking to consolidate
purchasing with strategic platforms like ServiceNow. Our
intelligent platform for end-to-end digital transformation uniquely
positions us to seize the opportunities in front of us as we
continue to deliver durable topline growth and margin expansion on
our journey to becoming the defining enterprise software company of
the 21st century.”
Recent Business Highlights
- In Q2, ServiceNow delivered new solutions that will embed
generative AI across the Now Platform. Generative AI Controller,
Now Assist for Search, and Now Assist for Virtual Agent build on
ServiceNow’s already extensive AI functionality and drive new
levels of automation.
- Today, ServiceNow announced further generative AI capabilities
with case summarization and text-to-code, its approach to
commercialization with new premium SKU offerings, and the
introduction of its AI Lighthouse program with NVIDIA and Accenture
to assist customers across industries in the design, development,
and implementation of new generative AI use cases.
- ServiceNow also announced today an expanded partnership with
KPMG to reimagine finance, supply chain, and procurement operations
with a joint investment to co-develop new offerings. This follows
ServiceNow and Cognizant’s recent partnership to accelerate
adoption of AI-driven automation across industries.
- During the quarter, ServiceNow hosted its annual Knowledge
conference, which generated significant pipeline and featured
announcements including a generative AI partnership with NVIDIA,
the launches of Finance and Supply Chain Workflows and
ServiceNow.org, and a commitment to deploy $1 billion in investment
capital by 2026 to ServiceNow Ventures.
- In addition, as announced at Financial Analyst Day in May, the
Board of Directors authorized a share repurchase program of up to
$1.5 billion in shares of common stock to manage the impact of
dilution from future employee equity grants and employee stock
purchase programs.
- ServiceNow received significant recognition during the quarter,
being named to the Fortune 500 list for the first time, and being
recognized as a Visionary in the 2023 Gartner® Magic Quadrant for
Application Performance Monitoring (APM) and Observability, and a
Leader in The Forrester Wave™: Low-Code Development Platforms for
Professional Developers, Q2 2023.
- In July, ServiceNow closed the acquisition of AI-powered
platform G2K to transform retail and other industries, and opened
two new Innovation Centers to serve as digital incubation hubs in
India and Singapore.
Second Quarter 2023 GAAP and Non-GAAP Results:
The following table summarizes our financial results for the
second quarter 2023:
Second Quarter 2023 GAAP
Results
Second Quarter 2023 Non-GAAP
Results(1)
Amount
($ millions)
Year/Year
Growth (%)
Amount
($ millions)(3)
Year/Year
Growth (%)
Subscription revenues
$2,075
25%
$2,074
25%
Professional services and other
revenues
$75
(20%)
$75
(20%)
Total revenues
$2,150
23%
$2,149
22.5%
Amount
($ billions)
Year/Year
Growth (%)
Amount ($ billions)(3)
Year/Year
Growth (%)
cRPO
$7.20
25%
$7.13
24%
RPO
$14.2
24%
$14.0
22.5%
Amount
($ millions)
Margin (%)
Amount
($ millions)(2)
Margin (%)(2)
Subscription gross profit
$1,686
81%
$1,755
85%
Professional services and other
gross profit (loss)
($7)
(9%)
$8
11%
Total gross profit
$1,679
78%
$1,763
82%
Income from operations
$117
5%
$544
25%
Net cash provided by operating
activities
$580
27%
Free cash flow
$451
21%
Amount
($ millions)
Earnings per
Basic/Diluted
Share ($)
Amount
($ millions)(2)
Earnings per
Basic/Diluted
Share ($)(2)
Net income(4)
$1,044
$5.12 / 5.08
$486
$2.38 / 2.37
(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,
professional services and other revenues, total 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.
(4)
Second quarter 2023 GAAP net income was
impacted by the release of $910 million of our valuation allowance
on our deferred tax assets as a discrete tax benefit and $55
million as part of the effective tax rate.
Note: Numbers rounded for presentation purposes and may not foot.
Financial Outlook
Our guidance includes GAAP and non-GAAP financial measures. The
non-GAAP growth rates for subscription revenues and cRPO are
adjusted only for constant currency to provide better visibility
into the underlying business trends.
The following table summarizes our guidance for the third
quarter 2023:
Third Quarter 2023
GAAP Guidance
Third Quarter 2023
Non-GAAP Guidance(1)
Amount ($ millions)(3)
Year/Year
Growth (%)(3)
Constant Currency
Year/Year Growth (%)
Subscription revenues
$2,185 - $2,195
25.5% - 26%
23% - 23.5%
cRPO
25.5%
21.5%
Margin (%)(2)
Income from operations
27%
Amount
(millions)
Weighted-average shares used to compute
diluted net income per share
206
(1)
We report non-GAAP financial measures in
addition to, and not as a substitute for, or superior to, financial
measures calculated in accordance with GAAP. See the section
entitled “Statement Regarding Use of Non-GAAP Financial Measures”
for an explanation of non-GAAP measures.
(2)
Refer to the table entitled
“Reconciliation of Non-GAAP Financial Guidance” for a
reconciliation of GAAP to non-GAAP measures.
(3)
Guidance for GAAP subscription revenues
and GAAP subscription revenue and cRPO growth rate is based on the
30-day average of foreign exchange rates for June 2023 for entities
reporting in currencies other than U.S. Dollars.
The following table summarizes our guidance for the full-year
2023:
Full-Year 2023
GAAP Guidance
Full-Year 2023
Non-GAAP Guidance(1)
Amount ($ millions)(3)
Year/Year
Growth (%)(3)
Constant Currency
Year/Year Growth (%)
Subscription revenues
$8,580 - $8,600
24.5% - 25%
24%
Margin (%)(2)
Subscription gross profit
84%
Income from operations
26.5%
Free cash flow
30%
Amount
(millions)
Weighted-average shares used to compute
diluted net income per share
206
(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 quarters included in our full-year 2023
guidance are based on the 30-day average of foreign exchange rates
for June 2023 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 (21:00
GMT) on July 26, 2023. 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/590657753
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 (647) 362‑9199 (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.
Upcoming Investor Conferences
ServiceNow today announced that it will attend and have
executives present at three upcoming investor conferences.
These include:
- ServiceNow President and Chief Operating Officer CJ Desai will
participate in a keynote presentation at the KeyBanc Technology
Leadership Forum on Tuesday, August 8, 2023, at 11:00am PT.
- ServiceNow Senior Vice President and General Manager,
Technology Workflow Products, Pablo Stern will participate in a
fireside chat at the Deutsche Bank 2023 Technology Conference on
Thursday, August 31, 2023, at 9:30am PT.
- ServiceNow Chairman and Chief Executive Officer Bill McDermott
will participate in a keynote presentation at the Goldman Sachs
Communacopia and Technology Conference on Wednesday, September 6,
2023, at 1:05pm PT.
The live webcasts 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. To present this information, 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 Q2 2022, the average
exchange rates in effect for our major currencies were 1 USD to
0.94 Euros and 1 USD to 0.80 British Pound Sterling (“GBP”)),
rather than the actual average exchange rates in effect during the
current period (for Q2 2023, the average exchange rates in effect
for our major currencies were 1 USD to 0.92 Euros and 1 USD to 0.80
GBP). Guidance for related growth rates are derived by applying the
average exchange rates in effect during the comparison period
rather than the exchange rates for the guidance period. 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 Q2 2022, the end of the period exchange rates in effect for
our major currencies were 1 USD to 0.96 Euros and 1 USD to 0.82
GBP), rather than the actual end of the period exchange rates in
effect during the current period (for Q2 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 0.79 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, the related income tax effect
of these 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 (used in) operating activities plus cash paid 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; 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 the Russian invasion of Ukraine 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, 2022, our Form 10-Q that will be filed for the
quarter ended June 30, 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 ServiceNow™. For more information,
visit: www.servicenow.com.
© 2023 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
Six Months Ended
June 30, 2023
June 30, 2022
June 30, 2023
June 30, 2022
Revenues:
Subscription
$
2,075
$
1,658
$
4,099
$
3,289
Professional services and other
75
94
147
185
Total revenues
2,150
1,752
4,246
3,474
Cost of revenues (1):
Subscription
389
287
743
562
Professional services and other
82
102
166
196
Total cost of revenues
471
389
909
758
Gross profit
1,679
1,363
3,337
2,716
Operating expenses (1):
Sales and marketing
832
722
1,655
1,395
Research and development
521
444
1,013
858
General and administrative
209
175
408
354
Total operating expenses
1,562
1,341
3,076
2,607
Income from operations
117
22
261
109
Interest income
74
12
134
17
Other expense, net
(17
)
(5
)
(33
)
(12
)
Income before income taxes
174
29
362
114
(Benefit from) provision for income
taxes
(870
)
9
(832
)
19
Net income
$
1,044
$
20
$
1,194
$
95
Net income per share - basic
$
5.12
$
0.10
$
5.86
$
0.47
Net income per share - diluted
$
5.08
$
0.10
$
5.83
$
0.47
Weighted-average shares used to compute
net income per share - basic
204
201
204
201
Weighted-average shares used to compute
net income per share - diluted
205
203
205
203
(1) Includes stock-based compensation as
follows:
Three Months Ended
Six Months Ended
June 30, 2023
June 30, 2022
June 30, 2023
June 30, 2022
Cost of revenues:
Subscription
$
50
$
39
$
96
$
75
Professional services and other
15
18
29
34
Operating expenses:
Sales and marketing
120
113
246
218
Research and development
145
126
280
241
General and administrative
67
56
127
109
ServiceNow, Inc.
Condensed Consolidated Balance
Sheets
(in millions)
June 30, 2023
December 31, 2022
(unaudited)
Assets
Current assets:
Cash and cash equivalents
$
1,663
$
1,470
Short-term investments
3,084
2,810
Accounts receivable, net
1,093
1,725
Current portion of deferred
commissions
401
369
Prepaid expenses and other current
assets
362
280
Total current assets
6,603
6,654
Deferred commissions, less current
portion
777
742
Long-term investments
2,740
2,117
Property and equipment, net
1,148
1,053
Operating lease right-of-use assets
656
682
Intangible assets, net
191
232
Goodwill
821
824
Deferred tax assets
1,551
636
Other assets
436
359
Total assets
$
14,923
$
13,299
Liabilities and Stockholders’
Equity
Current liabilities:
Accounts payable
$
171
$
274
Accrued expenses and other current
liabilities
893
975
Current portion of deferred revenue
4,613
4,660
Current portion of operating lease
liabilities
90
96
Total current liabilities
5,767
6,005
Deferred revenue, less current portion
45
70
Operating lease liabilities, less current
portion
635
650
Long-term debt, net
1,487
1,486
Other long-term liabilities
63
56
Stockholders’ equity
6,926
5,032
Total liabilities and stockholders’
equity
$
14,923
$
13,299
ServiceNow, Inc.
Condensed Consolidated
Statements of Cash Flows
(in millions)
(unaudited)
Three Months Ended
Six Months Ended
June 30, 2023
June 30, 2022
June 30, 2023
June 30, 2022
Cash flows from operating
activities:
Net income
$
1,044
$
20
$
1,194
$
95
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
136
105
262
206
Amortization of deferred commissions
112
86
218
169
Stock-based compensation
397
352
778
677
Deferred income taxes
(911
)
(1
)
(904
)
(3
)
Other
(3
)
4
(2
)
19
Changes in operating assets and
liabilities, net of effect of business combinations:
Accounts receivable
16
(51
)
635
511
Deferred commissions
(121
)
(100
)
(280
)
(237
)
Prepaid expenses and other assets
(72
)
(26
)
(136
)
(72
)
Accounts payable
(44
)
71
(90
)
140
Deferred revenue
(129
)
(65
)
(89
)
(44
)
Accrued expenses and other liabilities
155
38
(104
)
(165
)
Net cash provided by operating
activities
580
433
1,482
1,296
Cash flows from investing
activities:
Purchases of property and equipment
(132
)
(151
)
(297
)
(244
)
Business combinations, net of cash
acquired
—
(57
)
—
(57
)
Purchases of investments
(1,599
)
(1,112
)
(2,821
)
(1,774
)
Purchases of non-marketable
investments
(16
)
(35
)
(46
)
(136
)
Sales and maturities of investments
1,073
554
1,953
1,131
Other
—
1
13
—
Net cash used in investing activities
(674
)
(800
)
(1,198
)
(1,080
)
Cash flows from financing
activities:
Repayments of convertible senior notes
attributable to principal
—
(88
)
—
(94
)
Proceeds from employee stock plans
—
1
117
106
Taxes paid related to net share settlement
of equity awards
(94
)
(91
)
(206
)
(241
)
Net cash used in financing activities
(94
)
(178
)
(89
)
(229
)
Foreign currency effect on cash, cash
equivalents and restricted cash
(1
)
(44
)
—
(49
)
Net change in cash, cash equivalents and
restricted cash
(189
)
(589
)
195
(62
)
Cash, cash equivalents and restricted cash
at beginning of period
1,859
2,259
1,475
1,732
Cash, cash equivalents and restricted cash
at end of period
$
1,670
$
1,670
$
1,670
$
1,670
ServiceNow, Inc.
GAAP to Non-GAAP
Reconciliation
(in millions, except per share
data)
(unaudited)
Three Months Ended
Six Months Ended
June 30, 2023
June 30, 2022
June 30, 2023
June 30, 2022
Gross profit:
GAAP subscription gross profit
$
1,686
$
1,371
$
3,356
$
2,727
Stock-based compensation
50
39
96
75
Amortization of purchased intangibles
19
18
37
36
Non-GAAP subscription gross profit
$
1,755
$
1,427
$
3,489
$
2,837
GAAP professional services and other gross
loss
$
(7
)
$
(8
)
$
(19
)
$
(11
)
Stock-based compensation
15
18
29
34
Non-GAAP professional services and other
gross profit
$
8
$
10
$
10
$
23
GAAP gross profit
$
1,679
$
1,363
$
3,337
$
2,716
Stock-based compensation
65
56
125
108
Amortization of purchased intangibles
19
18
37
36
Non-GAAP gross profit
$
1,763
$
1,437
$
3,499
$
2,860
Gross margin:
GAAP subscription gross margin
81
%
83
%
82
%
83
%
Stock-based compensation as % of
subscription revenues
2
%
2
%
2
%
2
%
Amortization of purchased intangibles as %
of subscription revenues
1
%
1
%
1
%
1
%
Non-GAAP subscription gross margin
85
%
86
%
85
%
86
%
GAAP professional services and other gross
margin
(9
%)
(9
%)
(13
%)
(6
%)
Stock-based compensation as % of
professional services and other revenues
20
%
19
%
20
%
18
%
Non-GAAP professional services and other
gross margin
11
%
10
%
7
%
12
%
GAAP gross margin
78
%
78
%
79
%
78
%
Stock-based compensation as % of total
revenues
3
%
3
%
3
%
3
%
Amortization of purchased intangibles as %
of total revenues
1
%
1
%
1
%
1
%
Non-GAAP gross margin
82
%
82
%
82
%
82
%
Income from operations:
GAAP income from operations
$
117
$
22
$
261
$
109
Stock-based compensation
397
352
778
677
Amortization of purchased intangibles
22
20
42
40
Business combination and other related
costs
8
5
15
10
Non-GAAP income from operations
$
544
$
399
$
1,096
$
836
Operating margin:
GAAP operating margin
5
%
1
%
6
%
3
%
Stock-based compensation as % of total
revenues
18
%
20
%
18
%
20
%
Amortization of purchased intangibles as %
of total revenues
1
%
1
%
1
%
1
%
Business combination and other related
costs as % of total revenues
—
%
—
%
—
%
—
%
Non-GAAP operating margin
25
%
23
%
26
%
24
%
Net income:
GAAP net income
$
1,044
$
20
$
1,194
$
95
Stock-based compensation
397
352
778
677
Amortization of purchased intangibles
22
20
42
40
Business combination and other related
costs
8
5
15
10
Income tax expense effects related to the
above adjustments
(75
)
(68
)
(150
)
(141
)
Discrete income tax benefit from the
release of a valuation allowance on deferred tax assets (1)
(910
)
—
(910
)
—
Non-GAAP net income
$
486
$
329
$
969
$
681
Net income per share - basic and
diluted:
GAAP net income per share - basic
$
5.12
$
0.10
$
5.86
$
0.47
GAAP net income per share - diluted
$
5.08
$
0.10
$
5.83
$
0.47
Non-GAAP net income per share - basic
$
2.38
$
1.63
$
4.76
$
3.39
Non-GAAP net income per share -
diluted
$
2.37
$
1.62
$
4.73
$
3.35
GAAP weighted-average shares used to
compute net income per share - basic
204
201
204
201
GAAP and Non-GAAP weighted-average shares
used to compute net income per share - diluted
205
203
205
203
Free cash flow:
GAAP net cash provided by operating
activities
$
580
$
433
$
1,482
$
1,296
Purchases of property and equipment
(132
)
(151
)
(297
)
(244
)
Business combination and other related
costs
3
5
3
5
Non-GAAP free cash flow
$
451
$
287
$
1,188
$
1,057
Free cash flow margin:
GAAP net cash provided by operating
activities as % of total revenues
27
%
25
%
35
%
37
%
Purchases of property and equipment as %
of total revenues
(6
%)
(9
%)
(7
%)
(7
%)
Business combination and other related
costs as % of total revenues
—
%
—
%
—
%
—
%
Non-GAAP free cash flow margin
21
%
16
%
28
%
30
%
(1)
GAAP net income for the three and six
months ended June 30, 2023 was impacted by a $910 million release
of a valuation allowance on our deferred tax assets as a discrete
tax benefit.
Note: Numbers are rounded for presentation purposes and may not
foot.
ServiceNow, Inc.
Reconciliation of Non-GAAP
Financial Guidance
Three Months Ending
September 30, 2023
GAAP operating margin
8
%
Stock-based compensation expense as % of
total revenues
18
%
Amortization of purchased intangibles as %
of total revenues
1
%
Business combination and other related
costs as % of total revenues
—
%
Non-GAAP operating margin
27
%
Twelve Months Ending
December 31, 2023
GAAP subscription gross margin
81
%
Stock-based compensation expense as % of
subscription revenues
2
%
Amortization of purchased intangibles as %
of subscription revenues
1
%
Non-GAAP subscription margin
84
%
GAAP operating margin
7
%
Stock-based compensation expense as % of
total revenues
18
%
Amortization of purchased intangibles as %
of total revenues
1
%
Business combination and other related
costs as % of total revenues
—
%
Non-GAAP operating margin
26.5
%
GAAP net cash provided by operating
activities as % of total revenues
37
%
Purchases of property and equipment as %
of total revenues
(7
)%
Business combination and other related
costs as % of total revenues
—
%
Non-GAAP free cash flow margin
30
%
Note: Numbers are rounded for presentation
purposes and may not foot.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230726922430/en/
Media Contact: Johnna Hoff 408.250.8644
press@servicenow.com
Investor Contact: Darren Yip 925.388.7205
ir@servicenow.com
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