Delaware |
001-35580 | 20-2056195 |
||||||||||||
(State or other jurisdiction of
incorporation or organization)
|
(Commission File Number) |
(I.R.S. Employer
Identification Number)
|
Not Applicable | ||
(Former Name or Former Address, if Changed Since Last Report) |
☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | ||||
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | ||||
☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | ||||
☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||||||||
Common stock, par value $0.001 per share | NOW | The New York Stock Exchange |
(d) | Exhibits. | |||||||
104 | Cover Page Interactive Data File – the cover page XBRL tags are embedded within the Inline XBRL document | |||||||
SERVICENOW, INC. |
||||||||||||||
By: | /s/ Russell S. Elmer |
|||||||||||||
Russell S. Elmer General Counsel |
||||||||||||||
Date: July 24, 2024 |
ServiceNow
www.servicenow.com
|
2225 Lawson Lane
Santa Clara, CA 95054
|
Tel+1 (408) 501-8550
Fax+1 (408) 501 8550
|
Second Quarter 2024 GAAP Results | Second Quarter 2024 Non-GAAP Results(1) |
||||||||||||||||
Amount ($ millions) |
Year/Year Growth (%) |
Amount
($ millions)(3)
|
Year/Year Growth (%) |
||||||||||||||
Subscription revenues | $2,542 | 23 | % | $2,552 | 23 | % | |||||||||||
Professional services and other revenues | $85 | 13 | % | $85 | 13.5 | % | |||||||||||
Total revenues | $2,627 | 22 | % | $2,637 | 22.5 | % | |||||||||||
Amount ($ billions) |
Year/Year Growth (%) |
Amount ($ billions)(3) |
Year/Year Growth (%) |
||||||||||||||
cRPO | $8.78 | 22 | % | $8.84 | 22.5 | % | |||||||||||
RPO | $18.6 | 31 | % | $18.7 | 31.5 | % | |||||||||||
Amount ($ millions) |
Margin (%) |
Amount
($ millions)(2)
|
Margin (%)(2) |
||||||||||||||
Subscription gross profit | $2,073 | 82 | % | $2,156 | 85 | % | |||||||||||
Professional services and other gross profit |
$2 | 2 | % | $14 | 16 | % | |||||||||||
Total gross profit | $2,075 | 79 | % | $2,170 | 83 | % | |||||||||||
Income from operations | $240 | 9 | % | $720 | 27 | % | |||||||||||
Net cash provided by operating activities | $620 | 24 | % | ||||||||||||||
Free cash flow | $359 | 14 | % | ||||||||||||||
Amount ($ millions) |
Earnings per Basic/Diluted Share ($) |
Amount
($ millions)(2)
|
Earnings per
Basic/Diluted
Share ($)(2)
|
||||||||||||||
Net income | $262 | $1.27 / $1.26 | $651 | $3.16 / $3.13 |
Third Quarter 2024
GAAP Guidance
|
Third Quarter 2024
Non-GAAP Guidance(1)
|
||||||||||||||||
Amount ($ millions)(3) |
Year/Year
Growth (%)(3)
|
Constant Currency Year/Year Growth (%)
|
|||||||||||||||
Subscription revenues | $2,660 - $2,665 | 20% - 20.5% | 20.5 | % | |||||||||||||
cRPO |
22.5 | % | 22 | % | |||||||||||||
Margin (%)(2) |
|||||||||||||||||
Income from operations | 29.5 | % | |||||||||||||||
Amount (millions) |
|||||||||||||||||
Weighted-average shares used to compute diluted net income per share | 209 |
Full-Year 2024
GAAP Guidance
|
Full-Year 2024
Non-GAAP Guidance(1)
|
|||||||||||||
Amount ($ millions)(3) |
Year/Year
Growth (%)(3)
|
Constant Currency Year/Year Growth (%)
|
||||||||||||
Subscription revenues | $10,575 - $10,585 | 22 | % | 22 | % | |||||||||
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 |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
June 30, 2024 | June 30, 2023 | June 30, 2024 | June 30, 2023 | ||||||||||||||||||||
Revenues: | |||||||||||||||||||||||
Subscription | $ | 2,542 | $ | 2,075 | $ | 5,065 | $ | 4,099 | |||||||||||||||
Professional services and other | 85 | 75 | 165 | 147 | |||||||||||||||||||
Total revenues | 2,627 | 2,150 | 5,230 | 4,246 | |||||||||||||||||||
Cost of revenues (1): |
|||||||||||||||||||||||
Subscription | 469 | 389 | 910 | 743 | |||||||||||||||||||
Professional services and other | 83 | 82 | 162 | 166 | |||||||||||||||||||
Total cost of revenues | 552 | 471 | 1,072 | 909 | |||||||||||||||||||
Gross profit | 2,075 | 1,679 | 4,158 | 3,337 | |||||||||||||||||||
Operating expenses (1): |
|||||||||||||||||||||||
Sales and marketing | 960 | 832 | 1,883 | 1,655 | |||||||||||||||||||
Research and development | 643 | 521 | 1,249 | 1,013 | |||||||||||||||||||
General and administrative | 232 | 209 | 454 | 408 | |||||||||||||||||||
Total operating expenses | 1,835 | 1,562 | 3,586 | 3,076 | |||||||||||||||||||
Income from operations | 240 | 117 | 572 | 261 | |||||||||||||||||||
Interest income | 104 | 74 | 205 | 134 | |||||||||||||||||||
Other expense, net | (10) | (17) | (18) | (33) | |||||||||||||||||||
Income before income taxes | 334 | 174 | 759 | 362 | |||||||||||||||||||
Provision for (benefit from) income taxes |
72 | (870) | 150 | (832) | |||||||||||||||||||
Net income | $ | 262 | $ | 1,044 | $ | 609 | $ | 1,194 | |||||||||||||||
Net income per share - basic | $ | 1.27 | $ | 5.12 | $ | 2.97 | $ | 5.86 | |||||||||||||||
Net income per share - diluted | $ | 1.26 | $ | 5.08 | $ | 2.93 | $ | 5.83 | |||||||||||||||
Weighted-average shares used to compute net income per share - basic | 206 | 204 | 205 | 204 | |||||||||||||||||||
Weighted-average shares used to compute net income per share - diluted | 208 | 205 | 208 | 205 |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
June 30, 2024 | June 30, 2023 | June 30, 2024 | June 30, 2023 | ||||||||||||||||||||
Cost of revenues: | |||||||||||||||||||||||
Subscription | $ | 62 | $ | 50 | $ | 120 | $ | 96 | |||||||||||||||
Professional services and other | 12 | 15 | 24 | 29 | |||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||
Sales and marketing | 141 | 120 | 275 | 246 | |||||||||||||||||||
Research and development | 170 | 145 | 329 | 280 | |||||||||||||||||||
General and administrative | 59 | 67 | 118 | 127 |
June 30, 2024 | December 31, 2023 | ||||||||||
(unaudited) |
|||||||||||
Assets | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 2,159 | $ | 1,897 | |||||||
Short-term investments | 3,254 | 2,980 | |||||||||
Accounts receivable, net | 1,518 | 2,036 | |||||||||
Current portion of deferred commissions | 482 | 461 | |||||||||
Prepaid expenses and other current assets | 608 | 403 | |||||||||
Total current assets | 8,021 | 7,777 | |||||||||
Deferred commissions, less current portion | 928 | 919 | |||||||||
Long-term investments | 3,472 | 3,203 | |||||||||
Property and equipment, net | 1,606 | 1,358 | |||||||||
Operating lease right-of-use assets | 675 | 715 | |||||||||
Intangible assets, net | 220 | 224 | |||||||||
Goodwill | 1,239 | 1,231 | |||||||||
Deferred tax assets | 1,447 | 1,508 | |||||||||
Other assets | 599 | 452 | |||||||||
Total assets | $ | 18,207 | $ | 17,387 | |||||||
Liabilities and Stockholders’ Equity | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | 296 | $ | 126 | |||||||
Accrued expenses and other current liabilities | 1,163 | 1,365 | |||||||||
Current portion of deferred revenue | 5,615 | 5,785 | |||||||||
Current portion of operating lease liabilities | 98 | 89 | |||||||||
Total current liabilities | 7,172 | 7,365 | |||||||||
Deferred revenue, less current portion | 85 | 81 | |||||||||
Operating lease liabilities, less current portion | 669 | 707 | |||||||||
Long-term debt, net | 1,488 | 1,488 | |||||||||
Other long-term liabilities | 127 | 118 | |||||||||
Stockholders’ equity | 8,666 | 7,628 | |||||||||
Total liabilities and stockholders’ equity | $ | 18,207 | $ | 17,387 |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
June 30, 2024 | June 30, 2023 | June 30, 2024 | June 30, 2023 | ||||||||||||||||||||
Cash flows from operating activities: | |||||||||||||||||||||||
Net income | $ | 262 | $ | 1,044 | $ | 609 | $ | 1,194 | |||||||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||||||||||
Depreciation and amortization | 136 | 136 | 266 | 262 | |||||||||||||||||||
Amortization of deferred commissions | 132 | 112 | 263 | 218 | |||||||||||||||||||
Stock-based compensation | 444 | 397 | 866 | 778 | |||||||||||||||||||
Deferred income taxes | 24 | (911) | 52 | (904) | |||||||||||||||||||
Other | (7) | (3) | (25) | (2) | |||||||||||||||||||
Changes in operating assets and liabilities, net of effect of business combinations: | |||||||||||||||||||||||
Accounts receivable | (216) | 16 | 499 | 635 | |||||||||||||||||||
Deferred commissions | (141) | (121) | (306) | (280) | |||||||||||||||||||
Prepaid expenses and other assets | (146) | (72) | (252) | (136) | |||||||||||||||||||
Accounts payable | 65 | (44) | 172 | (90) | |||||||||||||||||||
Deferred revenue | (82) | (129) | (92) | (89) | |||||||||||||||||||
Accrued expenses and other liabilities | 149 | 155 | (91) | (104) | |||||||||||||||||||
Net cash provided by operating activities | 620 | 580 | 1,961 | 1,482 | |||||||||||||||||||
Cash flows from investing activities: | |||||||||||||||||||||||
Purchases of property and equipment | (262) | (132) | (397) | (297) | |||||||||||||||||||
Business combinations, net of cash acquired(1) |
(31) | — | (41) | — | |||||||||||||||||||
Purchases of other intangibles | (9) | — | (30) | — | |||||||||||||||||||
Purchases of investments | (1,055) | (1,599) | (2,660) | (2,821) | |||||||||||||||||||
Purchases of non-marketable investments | (46) | (16) | (88) | (46) | |||||||||||||||||||
Sales and maturities of investments | 1,040 | 1,073 | 2,113 | 1,953 | |||||||||||||||||||
Other | (8) | — | (2) | 13 | |||||||||||||||||||
Net cash used in investing activities | (371) | (674) | (1,105) | (1,198) | |||||||||||||||||||
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 | (137) | (94) | (352) | (206) | |||||||||||||||||||
Business combination (1) |
— | — | (184) | — | |||||||||||||||||||
Net cash used in financing activities | (137) | (94) | (580) | (89) | |||||||||||||||||||
Foreign currency effect on cash, cash equivalents and restricted cash | (9) | (1) | (13) | — | |||||||||||||||||||
Net change in cash, cash equivalents and restricted cash | 103 | (189) | 263 | 195 | |||||||||||||||||||
Cash, cash equivalents and restricted cash at beginning of period | 2,064 | 1,859 | 1,904 | 1,475 | |||||||||||||||||||
Cash, cash equivalents and restricted cash at end of period | $ | 2,167 | $ | 1,670 | $ | 2,167 | $ | 1,670 |
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||
June 30, 2024 | June 30, 2023 | June 30, 2024 | June 30, 2023 | |||||||||||||||||||||||
Gross profit: | ||||||||||||||||||||||||||
GAAP subscription gross profit | $ | 2,073 | $ | 1,686 | $ | 4,155 | $ | 3,356 | ||||||||||||||||||
Stock-based compensation | 62 | 50 | 120 | 96 | ||||||||||||||||||||||
Amortization of purchased intangibles | 21 | 19 | 42 | 37 | ||||||||||||||||||||||
Non-GAAP subscription gross profit | $ | 2,156 | $ | 1,755 | $ | 4,317 | $ | 3,489 | ||||||||||||||||||
GAAP professional services and other gross profit (loss) | $ | 2 | $ | (7) | $ | 3 | $ | (19) | ||||||||||||||||||
Stock-based compensation | 12 | 15 | 24 | 29 | ||||||||||||||||||||||
Non-GAAP professional services and other gross profit | $ | 14 | $ | 8 | $ | 27 | $ | 10 | ||||||||||||||||||
GAAP gross profit | $ | 2,075 | $ | 1,679 | $ | 4,158 | $ | 3,337 | ||||||||||||||||||
Stock-based compensation | 74 | 65 | 144 | 125 | ||||||||||||||||||||||
Amortization of purchased intangibles | 21 | 19 | 42 | 37 | ||||||||||||||||||||||
Non-GAAP gross profit | $ | 2,170 | $ | 1,763 | $ | 4,344 | $ | 3,499 | ||||||||||||||||||
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 | % | 85 | % | 85 | % | 85 | % | ||||||||||||||||||
GAAP professional services and other gross margin | 2 | % | (9 | %) | 2 | % | (13 | %) | ||||||||||||||||||
Stock-based compensation as % of professional services and other revenues | 14 | % | 20 | % | 15 | % | 20 | % | ||||||||||||||||||
Non-GAAP professional services and other gross margin | 16 | % | 11 | % | 16 | % | 7 | % | ||||||||||||||||||
GAAP gross margin | 79 | % | 78 | % | 80 | % | 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 | % | ||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||
June 30, 2024 | June 30, 2023 | June 30, 2024 | June 30, 2023 | |||||||||||||||||||||||
Income from operations: | ||||||||||||||||||||||||||
GAAP income from operations | $ | 240 | $ | 117 | $ | 572 | $ | 261 | ||||||||||||||||||
Stock-based compensation | 444 | 397 | 866 | 778 | ||||||||||||||||||||||
Amortization of purchased intangibles | 24 | 22 | 48 | 42 | ||||||||||||||||||||||
Business combination and other related costs | 12 | 8 | 25 | 15 | ||||||||||||||||||||||
Non-GAAP income from operations | $ | 720 | $ | 544 | $ | 1,511 | $ | 1,096 | ||||||||||||||||||
Operating margin: | ||||||||||||||||||||||||||
GAAP operating margin | 9 | % | 5 | % | 11 | % | 6 | % | ||||||||||||||||||
Stock-based compensation as % of total revenues | 17 | % | 18 | % | 17 | % | 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 | 27 | % | 25 | % | 29 | % | 26 | % | ||||||||||||||||||
Net income: | ||||||||||||||||||||||||||
GAAP net income | $ | 262 | $ | 1,044 | $ | 609 | $ | 1,194 | ||||||||||||||||||
Stock-based compensation | 444 | 397 | 866 | 778 | ||||||||||||||||||||||
Amortization of purchased intangibles | 24 | 22 | 48 | 42 | ||||||||||||||||||||||
Business combination and other related costs | 12 | 8 | 25 | 15 | ||||||||||||||||||||||
Income tax effects and adjustments(1) |
(91) | (75) | (190) | (150) | ||||||||||||||||||||||
Discrete income tax benefit from the release of a valuation allowance on deferred tax assets(2) |
— | (910) | — | (910) | ||||||||||||||||||||||
Non-GAAP net income | $ | 651 | $ | 486 | $ | 1,358 | $ | 969 | ||||||||||||||||||
Net income per share - basic and diluted: | ||||||||||||||||||||||||||
GAAP net income per share - basic | $ | 1.27 | $ | 5.12 | $ | 2.97 | $ | 5.86 | ||||||||||||||||||
GAAP net income per share - diluted | $ | 1.26 | $ | 5.08 | $ | 2.93 | $ | 5.83 | ||||||||||||||||||
Non-GAAP net income per share - basic | $ | 3.16 | $ | 2.38 | $ | 6.61 | $ | 4.76 | ||||||||||||||||||
Non-GAAP net income per share - diluted | $ | 3.13 | $ | 2.37 | $ | 6.54 | $ | 4.73 | ||||||||||||||||||
Weighted-average shares used to compute net income per share - basic | 206 | 204 | 205 | 204 | ||||||||||||||||||||||
Weighted-average shares used to compute net income per share - diluted |
208 | 205 | 208 | 205 | ||||||||||||||||||||||
Free cash flow: | ||||||||||||||||||||||||||
GAAP net cash provided by operating activities | $ | 620 | $ | 580 | $ | 1,961 | $ | 1,482 | ||||||||||||||||||
Purchases of property and equipment | (262) | (132) | (397) | (297) | ||||||||||||||||||||||
Business combination and other related costs | 1 | 3 | 20 | 3 | ||||||||||||||||||||||
Non-GAAP free cash flow | $ | 359 | $ | 451 | $ | 1,584 | $ | 1,188 | ||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||
June 30, 2024 | June 30, 2023 | June 30, 2024 | June 30, 2023 | |||||||||||||||||||||||
Free cash flow margin: | ||||||||||||||||||||||||||
GAAP net cash provided by operating activities as % of total revenues | 24 | % | 27 | % | 38 | % | 35 | % | ||||||||||||||||||
Purchases of property and equipment as % of total revenues | (10 | %) | (6 | %) | (8 | %) | (7 | %) | ||||||||||||||||||
Business combination and other related costs as % of total revenues | — | % | — | % | — | % | — | % | ||||||||||||||||||
Non-GAAP free cash flow margin | 14 | % | 21 | % | 30 | % | 28 | % |
Three Months Ending | ||||||||
September 30, 2024 | ||||||||
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 | 29.5 | % | ||||||
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 | 29.5 | % | ||||||
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 | % | ||||||