• Subscription revenues of $1,184 million in Q4 2020, representing 32% year-over-year growth, 29% adjusted for constant currency
  • Subscription billings of $1,828 million in Q4 2020, representing 41% year-over-year growth, 38% adjusted for constant currency and duration
  • 1,093 total customers with over $1 million in annual contract value

SANTA CLARA, Calif.–(BUSINESS WIRE)–ServiceNow (NYSE: NOW), the leading digital workflow company making work, work better for people, today announced financial results for its fourth quarter ended December 31, 2020, with subscription revenues of $1,184 million in Q4 2020, representing 32% year-over-year growth.

During the quarter, ServiceNow closed 89 transactions with more than $1 million in net new annual contract value (“ACV”). The company now has 1,093 total customers with more than $1 million in ACV, representing 23% year-over-year growth in customers.

“ServiceNow delivered a market leading 2020 and significantly beat expectations across the board,” said Bill McDermott, ServiceNow president and CEO. “The secular tailwinds of digital transformation, cloud computing, and business model innovation have all intersected at the perfect moment in time. ServiceNow is the platform for digital business, enabling seamless workflows that create the great experiences people deserve. Now, we are focused on managing the world’s greatest workflow challenge: helping convert vaccines into vaccinations. We are changing the world one workflow at a time and are well on our way to becoming the defining enterprise software company of the 21st century.”

ServiceNow CFO Gina Mastantuono said, “We delivered another fantastic quarter to cap a very strong 2020, ending the year with nearly $9 billion in remaining performance obligations. These outstanding results continue to demonstrate ServiceNow’s strong platform and product portfolio, our focus on building deep customer relationships, and commitment to enabling their digital transformations. I’m extremely proud of our team’s performance and their unrelenting execution in a turbulent year. We are well on our way to becoming a $10 billion revenue company. I’m excited about the opportunities ahead of us in 2021.”

During the quarter, ServiceNow saw continued progress and customer adoption across its IT, Employee, and Customer workflows, as well as with its artificial intelligence (“AI”) and machine learning capabilities. The acquisition of Element AI, which closed in January, brings to ServiceNow a deep bench of world-class technical talent, underscoring our commitment to be the leader in AI-enabled workflows. As ServiceNow continues to innovate to help its customers navigate COVID-19, this week it launched its first vaccine management solution to solve last mile vaccine challenges and drive better healthcare outcomes for people. ServiceNow’s comprehensive approach enables workflow solutions that simplify the complex challenges of vaccine distribution, administration, and monitoring.

Fourth Quarter 2020 GAAP and Non-GAAP Results:

The following table summarizes our financial results for the fourth quarter 2020:

 

Fourth Quarter 2020
GAAP Results

 

Fourth Quarter 2020 Non-GAAP Results(1)

 

Amount
($ millions)

Year/Year
Growth (%)

 

Amount
($ millions)

Year/Year
Growth (%)

Adjusted

Amount

($ millions)(2)

Adjusted

Year/Year

Growth (%)

Subscription revenues

$1,184

32%

 

 

 

$1,161

29%

Professional services and other revenues

$66

26%

 

 

 

$65

23%

Total revenues

$1,250

31%

 

 

 

$1,226

29%

 

 

 

 

 

 

 

 

Subscription billings

 

 

 

$1,828

41%

$1,796

38%

Professional services and other billings

 

 

 

$80

31%

$78

29%

Total billings

 

 

 

$1,907

40%

$1,874

38%

 

 

 

 

 

 

 

 

 

Amount
($ millions)

Margin (%)

 

Amount
($ millions)

Margin (%)

 

 

Subscription gross profit

$974

82%

 

$1,009

85%

 

 

Professional services and other gross profit (loss)

($3)

(5%)

 

$11

16%

 

 

Total gross profit

$971

78%

 

$1,019

82%

 

 

Income from operations

$18

1%

 

$276

22%

 

 

Net cash provided by operating activities

$686

55%

 

 

 

 

 

Free cash flow

 

 

 

$565

45%

 

 

 

 

 

 

 

 

 

 

 

Amount
($ millions)

Earnings per

Basic/Diluted

Share ($)

 

Amount
($ millions)

Earnings per

Basic/Diluted

Share ($)

 

 

Net income

$17

$0.09/ $0.08

 

$235

$1.20/ $1.17

 

 

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

(2)

 

Non-GAAP adjusted subscription revenues, professional services and other revenues, total revenues and professional services and other billings are adjusted for constant currency. Non-GAAP adjusted subscription billings and total billings are adjusted for constant currency and constant billings duration. See the section entitled “Statement Regarding Use of Non-GAAP Financial Measures” for an explanation of non-GAAP measures, and the table entitled “GAAP to Non-GAAP Reconciliation” for a reconciliation of GAAP to non-GAAP measures.

 

 

Note: Numbers rounded for presentation purposes.

Full-Year 2020 GAAP and Non-GAAP Results:

The following table summarizes our financial results for the full-year 2020:

 

 

 

 

 

 

 

 

 

Full-Year 2020
GAAP Results

 

Full-Year 2020 Non-GAAP Results(1)

 

Amount
($ millions)

Year/Year
Growth (%)

 

Amount
($ millions)

Year/Year
Growth (%)

Adjusted

Amount

($ millions)(2)

Adjusted

Year/Year

Growth (%)

Subscription revenues

$4,286

32%

 

 

 

$4,272

31%

Professional services and other revenues

$234

14%

 

 

 

$233

13%

Total revenues

$4,519

31%

 

 

 

$4,505

30%

 

 

 

 

 

 

 

 

Subscription billings

 

 

 

$4,982

32%

$4,963

31%

Professional services and other billings

 

 

 

$247

15%

$246

15%

Total billings

 

 

 

$5,229

31%

$5,209

30%

 

 

 

 

 

 

 

 

 

Amount
($ millions)

Margin (%)

 

Amount
($ millions)

Margin (%)

 

 

Subscription gross profit

$3,555

83%

 

$3,689

86%

 

 

Professional services and other gross profit (loss)

($23)

(10%)

 

$29

12%

 

 

Total gross profit

$3,532

78%

 

$3,718

82%

 

 

Income from operations

$199

5%

 

$1,121

25%

 

 

Net cash provided by operating activities

$1,787

39%

 

 

 

 

 

Free cash flow

 

 

 

$1,449

32%

 

 

 

 

 

 

 

 

 

 

 

Amount
($ millions)

Earnings per

Basic/Diluted

Share ($)

 

Amount
($ millions)

Earnings per

Basic/Diluted

Share ($)

 

 

Net income

$119

$0.61/ $0.59

 

$926

$4.79/ $4.63

 

 

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

(2)

 

Non-GAAP adjusted subscription revenues, professional services and other revenues, total revenues and professional services and other billings are adjusted for constant currency. Non-GAAP adjusted subscription billings and total billings are adjusted for constant currency and constant billings duration. See the section entitled “Statement Regarding Use of Non-GAAP Financial Measures” for an explanation of non-GAAP measures, and the table entitled “GAAP to Non-GAAP Reconciliation” for a reconciliation of GAAP to non-GAAP measures.

 

 

Note: Numbers rounded for presentation purposes.

Financial Outlook

ServiceNow will provide forward-looking guidance in connection with this quarterly announcement on its earnings conference call and webcast, and it will introduce current remaining performance obligations (“cRPO”) as a new guidance metric for Q1 2021.

Conference Call Details

The conference call will begin at 2 p.m. Pacific Time (22:00 GMT) on January 27, 2021. Interested parties may listen to the call by dialing (833) 513‑0567 (Passcode: 7862176), or if outside North America, by dialing (236) 714‑2186 (Passcode: 7862176). Individuals may access the live teleconference from this webcast link:

https://event.on24.com/wcc/r/2924209/3989884C5B58ED139BE2D9AE3152B4D5

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) 585‑8367 (Passcode: 7862176), or if outside North America, by dialing (416) 621‑4642 (Passcode: 7862176).

Investor Presentation Details

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

Statement Regarding Use of Non-GAAP Financial Measures

We report 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.

  • Adjusted revenues. We present revenues adjusted 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 Q4 2019, the average exchange rates in effect for our major currencies were 1 USD to 0.90 Euros and 1 USD to 0.78 British Pound Sterling (“GBP”), rather than the actual average exchange rates in effect during the current period (for Q4 2020, the average exchange rates in effect for our major currencies were 1 USD to 0.84 Euros and 1 USD to 0.76 GBP). We believe the presentation of revenues adjusted for constant currency facilitates the comparison of revenues year-over-year.
  • Billings and Adjusted billings. We define subscription billings, professional services and other billings, and total billings as the applicable revenue plus the applicable change in deferred revenue, unbilled receivables and customer deposits as presented or derived from the statement of cash flows. We adjust billings for constant currency, as described above, and for constant duration by replacing the portion of multi-year billings in excess of twelve months during the current period with the portion of multi-year billings in excess of twelve months during the comparison period. We believe these adjustments facilitate greater comparability in our billings information year-over-year. We believe billings is one indicator of the performance of our business.
  • 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, and the related income tax effect of these adjustments. 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 and repayments of convertible senior notes attributable to debt discount, 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.

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: (i) the impact and duration of the health impact of COVID-19 and the economic impact of safety measures to mitigate its impact, including the effectiveness, extent and duration of efforts to limit the spread and impact of the disease, such as “shelter in place” and similar government directives; (ii) our ability to compete successfully against existing and new competitors, (iii) our ability to comply with evolving privacy laws, data transfer restrictions, and other foreign and domestic standards related to data and the Internet, (iv) our ability to predict, prepare for and respond promptly to rapidly evolving technological, market and customer developments, (v) errors, interruptions, delays, or security breaches in or of our service or data centers, (vi) 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, (vii) our ability to develop and gain customer acceptance of new and improved products and services, including those acquired through strategic transactions, and (viii) material changes in the value of foreign currencies relative to the U.S. Dollar. Additionally, these forward-looking statements involve risk, uncertainties and assumptions, including those related to the continued impacts of COVID-19 on our business and global economic conditions. Many of these assumptions relate to matters that are beyond our control and changing rapidly, including, but not limited to, the timeframes for and severity of social distancing and other mitigation requirements, the timing of headwinds from COVID-19, the continued impact of COVID-19 on new or existing customers’ purchasing decisions and the length of our sales cycles, renewal timing or billings terms, particularly for customers in certain industries highly affected by COVID-19. Significant variation from the assumptions underlying our forward-looking statements could cause our actual results to vary, and the impact could be significant.

Further information on these and other factors that could affect our financial results are included in our Form 10-Q for the quarter ended September 30, 2020 and in other filings we make with the Securities and Exchange Commission from time to time, including our Form 10-K that will be filed for the year ended December 31, 2020.

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 making the world of work, work better for people. Our cloud-based platform and solutions deliver digital workflows that create great experiences and unlock productivity for employees and the enterprise. For more information, visit: www.servicenow.com.

© 2021 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 thousands, except per share data)

(unaudited)

 

 

Three Months Ended

 

Twelve Months Ended

 

December 31,

2020

 

December 31,

2019

 

December 31,

2020

 

December 31,

2019

Revenues:

 

 

 

 

 

 

 

Subscription

$

1,184,181

 

 

$

899,194

 

 

$

4,285,797

 

 

$

3,255,079

 

Professional services and other

66,149

 

 

52,580

 

 

233,687

 

 

205,358

 

Total revenues

1,250,330

 

 

951,774

 

 

4,519,484

 

 

3,460,437

 

Cost of revenues (1):

 

 

 

 

 

 

 

Subscription

209,900

 

 

148,244

 

 

730,835

 

 

549,642

 

Professional services and other

69,204

 

 

63,209

 

 

256,278

 

 

247,003

 

Total cost of revenues

279,104

 

 

211,453

 

 

987,113

 

 

796,645

 

Gross profit

971,226

 

 

740,321

 

 

3,532,371

 

 

2,663,792

 

Operating expenses (1):

 

 

 

 

 

 

 

Sales and marketing

533,853

 

 

416,005

 

 

1,855,016

 

 

1,534,284

 

Research and development

284,297

 

 

202,328

 

 

1,024,327

 

 

748,369

 

General and administrative

135,146

 

 

93,476

 

 

454,165

 

 

339,016

 

Total operating expenses

953,296

 

 

711,809

 

 

3,333,508

 

 

2,621,669

 

Income from operations

17,930

 

 

28,512

 

 

198,863

 

 

42,123

 

Interest expense

(7,708

)

 

(8,475

)

 

(32,746

)

 

(33,283

)

Other income (expense), net

3,138

 

 

14,149

 

 

(16,932

)

 

58,345

 

Income before income taxes

13,360

 

 

34,186

 

 

149,185

 

 

67,185

 

Provision for (benefit from) income taxes

(3,288

)

 

(564,538

)

 

30,682

 

 

(559,513

)

Net income

$

16,648

 

 

$

598,724

 

 

$

118,503

 

 

$

626,698

 

Net income per share – basic

$

0.09

 

 

$

3.17

 

 

$

0.61

 

 

$

3.36

 

Net income per share – diluted

$

0.08

 

 

$

3.03

 

 

$

0.59

 

 

$

3.18

 

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

195,461

 

 

189,042

 

 

193,096

 

 

186,466

 

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

202,455

 

 

197,843

 

 

202,478

 

 

197,223

 

 

(1) Includes stock-based compensation as follows:

 

Three Months Ended

 

Twelve Months Ended

 

December 31,

2020

 

December 31,

2019

 

December 31,

2020

 

December 31,

2019

Cost of revenues:

 

 

 

 

 

 

 

Subscription

$

26,172

 

 

$

18,709

 

 

$

98,258

 

 

$

72,728

 

Professional services and other

13,696

 

 

11,374

 

 

51,553

 

 

43,123

 

Sales and marketing

92,330

 

 

68,337

 

 

320,328

 

 

268,408

 

Research and development

78,965

 

 

50,562

 

 

282,244

 

 

194,821

 

General and administrative

34,236

 

 

21,069

 

 

118,070

 

 

83,115

 

ServiceNow, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

 

December 31, 2020

 

December 31, 2019

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

1,676,794

 

 

$

775,778

 

Short-term investments

1,415,242

 

 

915,317

 

Accounts receivable, net

1,009,415

 

 

835,279

 

Current portion of deferred commissions

228,924

 

 

175,039

 

Prepaid expenses and other current assets

191,467

 

 

125,488

 

Total current assets

4,521,842

 

 

2,826,901

 

Deferred commissions, less current portion

444,068

 

 

333,448

 

Long-term investments

1,468,006

 

 

1,013,332

 

Property and equipment, net

659,641

 

 

468,085

 

Operating lease right-of-use assets

454,218

 

 

402,428

 

Intangible assets, net

153,367

 

 

143,850

 

Goodwill

240,764

 

 

156,756

 

Deferred tax assets

673,111

 

 

599,633

 

Other assets

100,040

 

 

77,997

 

Total assets

$

8,715,057

 

 

$

6,022,430

 

Liabilities and Stockholders’ Equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

34,236

 

 

$

52,960

 

Accrued expenses and other current liabilities

668,093

 

 

461,403

 

Current portion of deferred revenue

2,962,579

 

 

2,185,754

 

Current portion of operating lease liabilities

72,236

 

 

52,668

 

Total current liabilities

3,737,144

 

 

2,752,785

 

Deferred revenue, less current portion

45,346

 

 

40,038

 

Operating lease liabilities, less current portion

422,779

 

 

383,221

 

Long-term debt

1,640,153

 

 

694,981

 

Other long-term liabilities

35,154

 

 

23,464

 

Stockholders’ equity

2,834,481

 

 

2,127,941

 

Total liabilities and stockholders’ equity

$

8,715,057

 

 

$

6,022,430

 

ServiceNow, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

 

Three Months Ended

 

Twelve Months Ended

 

December 31,

2020

 

December 31,

2019

 

December 31,

2020

 

December 31,

2019

Cash flows from operating activities:

 

 

 

 

 

 

 

Net income

$

16,648

 

 

$

598,724

 

 

$

118,503

 

 

$

626,698

 

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

 

 

 

 

 

 

 

Depreciation and amortization

93,033

 

 

72,331

 

 

336,381

 

 

252,114

 

Amortization of deferred commissions

60,440

 

 

45,788

 

 

217,631

 

 

168,014

 

Amortization of debt discount and issuance costs

2,492

 

 

8,475

 

 

24,478

 

 

33,283

 

Stock-based compensation

245,399

 

 

170,051

 

 

870,453

 

 

662,195

 

Deferred income taxes

(18,041

)

 

(572,923

)

 

(24,481

)

 

(575,765

)

Repayments of convertible senior notes attributable to debt discount

(13,449

)

 

 

 

(81,958

)

 

 

Loss on extinguishment of 2022 Notes

4,954

 

 

 

 

46,611

 

 

 

Other

(3,134

)

 

(4,300

)

 

(2,493

)

 

(8,921

)

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

 

 

 

 

 

 

 

Accounts receivable

(361,706

)

 

(288,166

)

 

(151,431

)

 

(259,835

)

Deferred commissions

(143,863

)

 

(97,296

)

 

(365,264

)

 

(255,605

)

Prepaid expenses and other assets

(12,507

)

 

(4,338

)

 

(54,203

)

 

(29,907

)

Accounts payable

(35,375

)

 

(8,733

)

 

(33,583

)

 

21,355

 

Deferred revenue

644,453

 

 

401,794

 

 

710,998

 

 

537,249

 

Accrued expenses and other liabilities

206,181

 

 

99,804

 

 

174,957

 

 

65,097

 

Net cash provided by operating activities

685,525

 

 

421,211

 

 

1,786,599

 

 

1,235,972

 

Cash flows from investing activities:

 

 

 

 

 

 

 

Purchases of property and equipment

(134,000

)

 

(79,003

)

 

(419,327

)

 

(264,892

)

Business combinations, net of cash acquired

411

 

 

(7,414

)

 

(107,236

)

 

(7,414

)

Purchases of intangibles

(6,690

)

 

(35,329

)

 

(13,190

)

 

(72,689

)

Purchases of investments

(704,791

)

 

(339,976

)

 

(2,933,876

)

 

(1,595,667

)

Sales and maturities of investments

666,460

 

 

261,297

 

 

1,965,429

 

 

1,192,750

 

Realized gains on derivatives not designated as hedging instruments, net

2,091

 

 

1,693

 

 

1,328

 

 

23,435

 

Net cash used in investing activities

(176,519

)

 

(198,732

)

 

(1,506,872

)

 

(724,477

)

Cash flows from financing activities:

 

 

 

 

 

 

 

Net proceeds from borrowings on 2030 Notes

 

 

 

 

1,481,633

 

 

 

Repayments of convertible senior notes attributable to principal

(58,824

)

 

(9

)

 

(1,627,690

)

 

(9

)

Net proceeds from unwind of 2022 Note Hedge

 

 

 

 

1,105,542

 

 

 

Proceeds from employee stock plans

3,266

 

 

2,641

 

 

145,766

 

 

107,868

 

Taxes paid related to net share settlement of equity awards

(147,934

)

 

(78,913

)

 

(508,604

)

 

(409,715

)

Net cash provided by (used in) financing activities

(203,492

)

 

(76,281

)

 

596,647

 

 

(301,856

)

Foreign currency effect on cash, cash equivalents and restricted cash

22,106

 

 

6,253

 

 

25,065

 

 

(186

)

Net increase in cash, cash equivalents and restricted cash

327,620

 

 

152,451

 

 

901,439

 

 

209,453

 

Cash, cash equivalents and restricted cash at beginning of period

1,351,810

 

 

625,540

 

 

777,991

 

 

568,538

 

Cash, cash equivalents and restricted cash at end of period

$

1,679,430

 

 

$

777,991

 

 

$

1,679,430

 

 

$

777,991

 

Contacts

Media Contact:
Sara Day

650.336.3123

press@servicenow.com

Investor Contact:
Darren Yip

925.388.7205

ir@servicenow.com

Read full story here

The post ServiceNow Reports Fourth Quarter and Full-Year 2020 Financial Results appeared first on Web Hosting | Cloud Computing | Datacenter | Domain News.



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