- ServiceNow exceeds guidance across all Q3 2024 topline growth
and profitability metrics; raises 2024 subscription revenues
guidance
- Subscription revenues of $2,715 million in Q3 2024,
representing 23% year-over-year growth, 22.5% in constant
currency
- Total revenues of $2,797 million in Q3 2024, representing 22%
year-over-year growth, 22% in constant currency
- Current remaining performance obligations of $9.36 billion as
of Q3 2024, representing 26% year-over-year growth, 23.5% in
constant currency
- Remaining performance obligations of $19.5 billion as of Q3
2024, representing 36% year-over-year growth, 33% in constant
currency
- 15 transactions over $5 million in net new ACV in Q3 2024, up
50% year-over-year
ServiceNow (NYSE: NOW), the AI platform for business
transformation, today announced financial results for its third
quarter ended September 30, 2024, with subscription revenues of
$2,715 million in Q3 2024, representing 23% year-over-year growth
and 22.5% in constant currency.
“ServiceNow raised our full year topline guidance on the
strength of our Q3 results, once again going beyond expectations,”
said ServiceNow Chairman and CEO Bill McDermott. “This remarkable
momentum stems from both existing and new customers doubling down
on their investments in ServiceNow as the AI platform for business
transformation. The mandate to put AI to work for people represents
a generational technology shift. We have never been more confident
in ServiceNow’s team, our platform, and our position as the
ultimate growth company in enterprise software.”
As of September 30, 2024, current remaining performance
obligations (“cRPO”), contract revenue that will be recognized as
revenue in the next 12 months, was $9.36 billion, representing 26%
year-over-year growth and 23.5% in constant currency. The company
now has 2,020 total customers with more than $1 million in annual
contract value (“ACV”), representing 14% year-over-year growth in
customers.
“Q3 was another spectacular quarter driven by robust demand for
the Now Platform and exceptional team execution,” said ServiceNow
CFO Gina Mastantuono. “With Now Assist already delivering fantastic
results, our latest Xanadu release marks our most comprehensive set
of new AI innovations yet, further fueling our durable topline
growth and margin expansion.”
ServiceNow also named enterprise software industry veteran Amit
Zavery as president, chief product officer (CPO), and chief
operating officer (COO) to lead product and engineering, effective
October 28, 2024. With more than three decades in enterprise
technology and previous leadership roles at Google Cloud and
Oracle, Zavery is a visionary leader who brings extensive
experience in enterprise innovation, transformation, and scale.
Zavery’s responsibilities will include ServiceNow’s platform,
products, engineering, cloud infrastructure, user experience, and
enterprise-wide operations, ensuring all solutions meet the
real-world business needs of ServiceNow customers.
Recent Business Highlights
Innovation
- ServiceNow is putting AI to work for customers. In Q3, the Now
Platform Xanadu release, ServiceNow’s largest AI release to date,
introduced hundreds of additional, new AI capabilities including
Now Assist Skill Kit and purpose-built GenAI industry solutions for
telecom, media, and technology; financial services; the public
sector; and more.
- Alongside Xanadu, the company announced its plans to integrate
Agentic AI into the ServiceNow platform and unlock 24/7
productivity at massive scale. With advanced reasoning and grounded
in cross‑enterprise data through the Now Platform, ServiceNow AI
Agents evolve from the more familiar prompt‑based activity to deep
contextual comprehension, keeping people in the loop for robust
oversight and governance. First use cases will be available in
November for Customer Service Management (CSM) and IT Service
Management (ITSM).
- Today, the company announced ServiceNow Workflow Data Fabric,
an integrated data layer that unifies business and technology data
across the enterprise, powering all workflows and AI agents with
real-time, secure access to data from any source. Powered by
Automation Engine and RaptorDB Pro high-performance database,
Workflow Data Fabric unlocks value with orchestration and
automation at ultra-speed and scale.
- At the United Nations General Assembly last month, ServiceNow
demonstrated its commitment to building a better world through
greater access to technology, knowledge, and opportunity. Through
efforts such as ServiceNow.org and others, ServiceNow has set a
bold ambition to partner with nonprofits and customers to
accelerate impact and reach 1 billion people. This includes the
company’s ambition to positively reach 20 million people through
its philanthropy efforts.
Partnerships
- Today, the company made several partnership announcements
designed to expand the ServiceNow ecosystem and accelerate business
transformation. ServiceNow and NVIDIA will co-develop native AI
Agents using NVIDIA NIM Agent Blueprints within the ServiceNow
platform, creating use cases fueled by business knowledge that
customers can simply choose to turn on; ServiceNow and Siemens
announced a collaboration designed to bolster industrial
cybersecurity and integrate GenAI into shop floor operations;
ServiceNow and Rimini Street announced a partnership to help enable
organizations to unlock value in legacy ERP systems; and ServiceNow
and Pearson announced plans to supercharge workforce development
and employee experiences in the age of AI.
- Earlier in October, ServiceNow and Zoom announced an expanded
strategic alliance to integrate the companies’ GenAI technologies –
ServiceNow Now Assist and Zoom AI Companion – to offer
organizations advanced workflow automation for tasks and
activities.
Global Expansion
- Continuing efforts to expand AI and technology skills, during
the quarter, ServiceNow announced a new National Academic
Partnership with Singapore’s Republic Polytechnic to provide
hundreds of early-in-career and lifelong learners access to
emerging AI and cloud computing roles in support of the
government's Smart Nation agenda.
- Later this month, the company plans to launch a new data center
pair located in Milan and Rome in response to growing demand for
data center infrastructure in the region. The data center pair will
help enhance customer agility, boost productivity, and promote
innovation.
- In October, ServiceNow announced plans to invest $1.5 billion
cumulatively in its UK business over the next five years. This
includes plans to increase headcount, office space, and AI skills
programs.
Investment
- ServiceNow repurchased approximately 272,000 shares of its
common stock for $225 million as part of its share repurchase
program, with the primary objective of managing the impact of
dilution. Of the original authorized amount, approximately $562
million remains available for future share repurchases under the
existing program.
Recognition
- As a testament to ServiceNow’s workplace culture, ServiceNow
was awarded 10th place on the Fortune Best Workplaces in Technology
list1, in addition to placing on the TIME World's Best Companies,
PEOPLE Companies that Care, Fast Company 100 Best Workplaces for
Innovators, and more.
(1)
©2024 Fortune Media IP Limited All rights
reserved. Used under license. Fortune and Fortune Media IP Limited
are not affiliated with, and do not endorse products or services
of, ServiceNow.
Third Quarter 2024 GAAP and Non-GAAP Results:
The following table summarizes our financial results for the
third quarter 2024:
Third Quarter 2024 GAAP
Results
Third Quarter 2024 Non-GAAP
Results(1)
Amount ($
millions)
Year/Year Growth
(%)
Amount ($
millions)(3)
Year/Year Growth
(%)
Subscription revenues
$2,715
23%
$2,711
22.5%
Professional services and other
revenues
$82
14%
$81
13.5%
Total revenues
$2,797
22%
$2,792
22%
Amount ($
billions)
Year/Year Growth
(%)
Amount ($ billions)(3)
Year/Year Growth
(%)
cRPO
$9.36
26%
$9.18
23.5%
RPO
$19.5
36%
$19.1
33%
Amount ($
millions)
Margin (%)
Amount ($
millions)(2)
Margin (%)(2)
Subscription gross profit
$2,219
82%
$2,305
85%
Professional services and other
gross (loss) profit
($6)
(7%)
$5
7%
Total gross profit
$2,213
79%
$2,310
83%
Income from operations
$418
15%
$872
31%
Net cash provided by operating
activities
$671
24%
Free cash flow
$471
17%
Amount ($
millions)
Earnings per Basic/Diluted
Share ($)
Amount ($
millions)(2)
Earnings per
Basic/Diluted Share ($)(2)
Net income
$432
$2.09 / $2.07
$775
$3.76 / $3.72
(1)
We report non-GAAP financial measures in
addition to, and not as a substitute for, or superior to, financial
measures calculated in accordance with GAAP. See the section
entitled “Statement Regarding Use of Non-GAAP Financial Measures”
for an explanation of non-GAAP measures.
(2)
Refer to the table entitled “GAAP to
Non-GAAP Reconciliation” for a reconciliation of GAAP to non-GAAP
measures.
(3)
Non-GAAP subscription revenues and total
revenues are adjusted for constant currency by excluding effects of
foreign currency rate fluctuations and any gains or losses from
foreign currency hedge contracts. Professional services and other
revenues, cRPO, and RPO are adjusted only for constant currency.
See the section entitled “Statement Regarding Use of Non-GAAP
Financial Measures” for an explanation of non-GAAP measures.
Note: Numbers rounded for presentation
purposes and may not foot.
Financial Outlook
Our guidance includes GAAP and non-GAAP financial measures. The
non-GAAP growth rates for subscription revenues are adjusted for
constant currency by excluding effects of foreign currency rate
fluctuations and any gains or losses from foreign currency hedge
contracts, and cRPO are adjusted only for constant currency to
provide better visibility into the underlying business trends.
The following table summarizes our guidance for the fourth
quarter 2024:
Fourth Quarter 2024
GAAP Guidance
Fourth Quarter 2024
Non-GAAP Guidance(1)
Amount ($ millions)(3)
Year/Year Growth
(%)(3)
Constant Currency Year/Year
Growth (%)
Subscription revenues
$2,875 - $2,880
21.5% - 22%
20.5%
cRPO
21.5%
21.5%
Margin (%)(2)
Income from operations
29%
Amount
(millions)
Weighted-average shares used to compute
diluted net income per share
209
(1)
We report non-GAAP financial measures in
addition to, and not as a substitute for, or superior to, financial
measures calculated in accordance with GAAP. See the section
entitled “Statement Regarding Use of Non-GAAP Financial Measures”
for an explanation of non-GAAP measures.
(2)
Refer to the table entitled
“Reconciliation of Non-GAAP Financial Guidance” for a
reconciliation of GAAP to non-GAAP measures.
(3)
Guidance for GAAP subscription revenues
and GAAP subscription revenues and cRPO growth rates are based on
the 30-day average of foreign exchange rates for September 2024 for
entities reporting in currencies other than U.S. Dollars.
The following table summarizes our guidance for the full-year
2024:
Full-Year 2024 GAAP
Guidance
Full-Year 2024 Non-GAAP
Guidance(1)
Amount ($ millions)(3)
Year/Year Growth
(%)(3)
Constant Currency
Year/Year Growth (%)
Subscription revenues
$10,655 - $10,660
23%
22.5%
Margin (%)(2)
Subscription gross profit
84.5%
Income from operations
29.5%
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 30-day average of foreign exchange rates
for September 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 October 23, 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/941960692
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.
Upcoming Investor Conferences
ServiceNow today announced that it will attend and have
executives present at four upcoming investor conferences.
These include:
- ServiceNow Global Executive Committee Member Nick Tzitzon will
participate in a fireside chat at the RBC Capital Markets 2024
Global TIMT Conference on Wednesday, November 20, 2024 at 10:20am
PT.
- ServiceNow Chief Financial Officer Gina Mastantuono will
participate in a keynote presentation at the UBS Global Technology
Conference on Tuesday, December 3, 2024 at 9:15am PT.
- ServiceNow Chief Financial Officer Gina Mastantuono will
participate in a keynote presentation at the Wells Fargo TMT Summit
on Wednesday, December 4, 2024 at 12:00pm PT.
- ServiceNow Chief Financial Officer Gina Mastantuono will
participate in a keynote presentation at the Barclays Global
Technology Conference on Wednesday, December 11, 2024 at 12:10pm
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 Q3 2023,
the average exchange rates in effect for our major currencies were
1 USD to 0.92 Euros and 1 USD to 0.79 British Pound Sterling
(“GBP”)), rather than the actual average exchange rates in effect
during the current period (for Q3 2024, the average exchange rates
in effect for our major currencies were 1 USD to 0.91 Euros and 1
USD to 0.77 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 Q3 2023, the end of the period exchange rates in effect for
our major currencies were 1 USD to 0.95 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 Q3 2024, the end of the
period exchange rates in effect for our major currencies were 1 USD
to 0.90 Euros and 1 USD to 0.75 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” and statements regarding the expected
benefits of our announced partnerships. 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, and realize the anticipated benefits thereof;
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) is putting AI to work for people. We move
with the pace of innovation to help customers transform
organizations across every industry while upholding a trustworthy,
human centered approach to deploying our products and services at
scale. Our AI platform for business transformation connects people,
processes, data, and devices to increase productivity and maximize
business outcomes. 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
Nine Months Ended
September 30, 2024
September 30, 2023
September 30, 2024
September 30, 2023
Revenues:
Subscription
$
2,715
$
2,216
$
7,780
$
6,315
Professional services and other
82
72
247
219
Total revenues
2,797
2,288
8,027
6,534
Cost of revenues (1):
Subscription
496
420
1,406
1,163
Professional services and other
88
76
250
242
Total cost of revenues
584
496
1,656
1,405
Gross profit
2,213
1,792
6,371
5,129
Operating expenses (1):
Sales and marketing
944
799
2,827
2,454
Research and development
626
549
1,875
1,562
General and administrative
225
213
679
621
Total operating expenses
1,795
1,561
5,381
4,637
Income from operations
418
231
990
492
Interest income
108
82
313
216
Other expense, net
(10
)
(14
)
(28
)
(47
)
Income before income taxes
516
299
1,275
661
Provision for (benefit from) income
taxes
84
57
234
(775
)
Net income
$
432
$
242
$
1,041
$
1,436
Net income per share - basic
$
2.09
$
1.18
$
5.06
$
7.04
Net income per share - diluted
$
2.07
$
1.17
$
5.00
$
7.00
Weighted-average shares used to compute
net income per share - basic
206
204
206
204
Weighted-average shares used to compute
net income per share - diluted
209
206
208
205
(1)
Includes stock-based compensation as
follows:
Three Months Ended
Nine Months Ended
September 30, 2024
September 30, 2023
September 30, 2024
September 30, 2023
Cost of revenues:
Subscription
$
64
$
52
$
184
$
148
Professional services and other
11
11
35
40
Operating expenses:
Sales and marketing
144
132
419
378
Research and development
150
150
479
430
General and administrative
57
68
175
195
ServiceNow, Inc.
Condensed Consolidated Balance
Sheets
(in millions)
September 30, 2024
December 31, 2023
(unaudited)
Assets
Current assets:
Cash and cash equivalents
$
1,885
$
1,897
Short-term investments
3,410
2,980
Accounts receivable, net
1,308
2,036
Current portion of deferred
commissions
502
461
Prepaid expenses and other current
assets
591
403
Total current assets
7,696
7,777
Deferred commissions, less current
portion
946
919
Long-term investments
3,829
3,203
Property and equipment, net
1,718
1,358
Operating lease right-of-use assets
661
715
Intangible assets, net
214
224
Goodwill
1,291
1,231
Deferred tax assets
1,444
1,508
Other assets
635
452
Total assets
$
18,434
$
17,387
Liabilities and Stockholders’
Equity
Current liabilities:
Accounts payable
$
165
$
126
Accrued expenses and other current
liabilities
1,058
1,365
Current portion of deferred revenue
5,457
5,785
Current portion of operating lease
liabilities
106
89
Total current liabilities
6,786
7,365
Deferred revenue, less current portion
77
81
Operating lease liabilities, less current
portion
650
707
Long-term debt, net
1,489
1,488
Other long-term liabilities
142
118
Stockholders’ equity
9,290
7,628
Total liabilities and stockholders’
equity
$
18,434
$
17,387
ServiceNow, Inc.
Condensed Consolidated
Statements of Cash Flows
(in millions)
(unaudited)
Three Months Ended
Nine Months Ended
September 30, 2024
September 30, 2023
September 30, 2024
September 30, 2023
Cash flows from operating
activities:
Net income
$
432
$
242
$
1,041
$
1,436
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
144
146
410
408
Amortization of deferred commissions
140
115
403
333
Stock-based compensation
426
413
1,292
1,191
Deferred income taxes
(5
)
30
47
(874
)
Other
(6
)
(11
)
(31
)
(13
)
Changes in operating assets and
liabilities, net of effect of business combinations:
Accounts receivable
228
(83
)
727
552
Deferred commissions
(155
)
(173
)
(461
)
(453
)
Prepaid expenses and other assets
(15
)
(47
)
(267
)
(183
)
Accounts payable
(130
)
(98
)
42
(188
)
Deferred revenue
(263
)
(128
)
(355
)
(217
)
Accrued expenses and other liabilities
(125
)
(95
)
(216
)
(199
)
Net cash provided by operating
activities
671
311
2,632
1,793
Cash flows from investing
activities:
Purchases of property and equipment
(202
)
(136
)
(599
)
(433
)
Business combinations, net of cash
acquired(1)
(41
)
(279
)
(82
)
(279
)
Purchases of other intangibles
—
(3
)
(30
)
(3
)
Purchases of investments
(1,292
)
(984
)
(3,952
)
(3,805
)
Purchases of non-marketable
investments
(61
)
(10
)
(149
)
(56
)
Sales and maturities of investments
911
915
3,024
2,868
Other
27
(28
)
25
(15
)
Net cash used in investing activities
(658
)
(525
)
(1,763
)
(1,723
)
Cash flows from financing
activities:
Proceeds from employee stock plans
106
76
237
193
Repurchases of common stock
(225
)
(282
)
(400
)
(282
)
Taxes paid related to net share settlement
of equity awards
(173
)
(127
)
(525
)
(333
)
Business combination (1)
—
—
(184
)
—
Net cash used in financing activities
(292
)
(333
)
(872
)
(422
)
Foreign currency effect on cash, cash
equivalents and restricted cash
5
(4
)
(8
)
(4
)
Net change in cash, cash equivalents and
restricted cash
(274
)
(551
)
(11
)
(356
)
Cash, cash equivalents and restricted cash
at beginning of period
2,167
1,670
1,904
1,475
Cash, cash equivalents and restricted cash
at end of period
$
1,893
$
1,119
$
1,893
$
1,119
(1)
The nine-months period ended September 30,
2024 reflects a reclassification of $184 million from investing
activities to financing activities related to the second
installment payment made in the acquisition of G2K Group GmbH
during the three months ended March 31, 2024.
ServiceNow, Inc.
GAAP to Non-GAAP
Reconciliation
(in millions, except per share
data)
(unaudited)
Three Months Ended
Nine Months Ended
September 30, 2024
September 30, 2023
September 30, 2024
September 30, 2023
Gross profit:
GAAP subscription gross profit
$
2,219
$
1,796
$
6,374
$
5,152
Stock-based compensation
64
52
184
148
Amortization of purchased intangibles
22
20
64
57
Non-GAAP subscription gross profit
$
2,305
$
1,868
$
6,622
$
5,357
GAAP professional services and other gross
loss
$
(6
)
$
(4
)
$
(3
)
$
(23
)
Stock-based compensation
11
11
35
40
Non-GAAP professional services and other
gross profit
$
5
$
7
$
32
$
17
GAAP gross profit
$
2,213
$
1,792
$
6,371
$
5,129
Stock-based compensation
75
63
219
188
Amortization of purchased intangibles
22
20
64
57
Non-GAAP gross profit
$
2,310
$
1,875
$
6,654
$
5,374
Gross margin:
GAAP subscription gross margin
82
%
81
%
82
%
82
%
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
%
84
%
85
%
85
%
GAAP professional services and other gross
margin
(7
%)
(6
%)
(1
%)
(11
%)
Stock-based compensation as % of
professional services and other revenues
13
%
15
%
14
%
18
%
Non-GAAP professional services and other
gross margin
7
%
10
%
13
%
8
%
GAAP gross margin
79
%
78
%
79
%
79
%
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
83
%
82
%
83
%
82
%
Income from operations:
GAAP income from operations
$
418
$
231
$
990
$
492
Stock-based compensation
426
413
1,292
1,191
Amortization of purchased intangibles
23
21
71
63
Business combination and other related
costs
4
11
29
26
Non-GAAP income from operations
$
872
$
676
$
2,383
$
1,772
Operating margin:
GAAP operating margin
15
%
10
%
12
%
8
%
Stock-based compensation as % of total
revenues
15
%
18
%
16
%
18
%
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
31
%
30
%
30
%
27
%
Net income:
GAAP net income
$
432
$
242
$
1,041
$
1,436
Stock-based compensation
426
413
1,292
1,191
Amortization of purchased intangibles
23
21
71
63
Business combination and other related
costs
4
11
29
26
Income tax effects and adjustments(1)
(110
)
(64
)
(300
)
(159
)
Release of a valuation allowance on
deferred tax assets
—
(20
)
—
(985
)
Non-GAAP net income
$
775
$
603
$
2,133
$
1,572
Net income per share - basic and
diluted:
GAAP net income per share - basic
$
2.09
$
1.18
$
5.06
$
7.04
GAAP net income per share - diluted
$
2.07
$
1.17
$
5.00
$
7.00
Non-GAAP net income per share - basic
$
3.76
$
2.95
$
10.37
$
7.71
Non-GAAP net income per share -
diluted
$
3.72
$
2.92
$
10.26
$
7.66
Weighted-average shares used to compute
net income per share - basic
206
204
206
204
Weighted-average shares used to compute
net income per share - diluted
209
206
208
205
Free cash flow:
GAAP net cash provided by operating
activities
$
671
$
311
$
2,632
$
1,793
Purchases of property and equipment
(202
)
(136
)
(599
)
(433
)
Business combination and other related
costs
2
21
22
24
Non-GAAP free cash flow
$
471
$
196
$
2,055
$
1,384
Free cash flow margin:
GAAP net cash provided by operating
activities as % of total revenues
24
%
14
%
33
%
27
%
Purchases of property and equipment as %
of total revenues
(7
%)
(6
%)
(7
%)
(7
%)
Business combination and other related
costs as % of total revenues
—
%
1
%
—
%
—
%
Non-GAAP free cash flow margin
17
%
9
%
26
%
21
%
(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 and nine months
ended September 30, 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
December 31, 2024
GAAP operating margin
13%
Stock-based compensation expense as % of
total revenues
15%
Amortization of purchased intangibles as %
of total revenues
1%
Business combination and other related
costs as % of total revenues
—%
Non-GAAP operating margin
29%
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
12.5%
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
29.5%
GAAP net cash provided by operating
activities as % of total revenues
38%
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
31%
Note: Numbers are rounded for presentation
purposes and may not foot.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241023215869/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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