Q1 2014 complete financial tables (download PDF)
SANTA CLARA – April 23, 2014 – ServiceNow® (NYSE: NOW), the
enterprise IT cloud company, today announced its financial results for
its first quarter of 2014.
First quarter 2014 results:
Revenues of $139.1 million, an increase of 62% compared to the
first quarter of 2013, and an increase of 11% from the fourth
quarter of 2013.
A GAAP net loss for the quarter of $43.3 million, or a $0.30 loss
per basic and diluted share, compared with a GAAP net loss of
$13.4 million, or a $0.10 loss per basic and diluted share, in the
first quarter of 2013.
A non‑GAAP net loss for the quarter of $11.7 million, or a $0.08
loss per basic and diluted share, compared with a non‑GAAP net
loss of $1.9 million, or a $0.01 loss per basic and diluted share,
in the first quarter of 2013 (see the table entitled "Results
of Operations GAAP to Non‑GAAP Reconciliation” for a
reconciliation of these GAAP and non‑GAAP financial
Deferred revenue of $308.5 million, a 16% increase compared to
the $266.7 million reported at the end of the prior
Billings of $180.8 million, a 9% increase compared to the $166.2
million reported in the previous quarter and a 64% increase
compared to the $110.3 million reported for the same period last
year (see the table entitled “Non‑GAAP Billings Reconciliation”
for a reconciliation of non‑GAAP billings to GAAP
“We are off to a great start in 2014. We exceeded our previously
stated financial outlook on revenue, added 134 net new customers and
had nine new deals with an annual contract value in excess of $1
million, a record for ServiceNow,” said Frank Slootman, president and
chief executive officer, ServiceNow. “We also continued to penetrate
our existing customer base, with upsells comprising 34% of our annual
contract value signed in the quarter and revenue per customer of
$241,000, an increase of 22% from the same period last year.”
“Our strong first quarter performance included year‑over‑year
billings growth of 64%, and a deferred revenue balance increase of 16%
from the end of the prior quarter,” added Michael Scarpelli, chief
financial officer, ServiceNow. “We also generated $24.2 million in
operating cash flow and $13.2 million free cash flow.”
The financial guidance discussed below is on a non‑GAAP basis,
except for revenues, and excludes stock‑based compensation expense
(see table which reconciles these non‑GAAP financial measures to the
related GAAP measures). Negative numbers are shown in parentheses.
For the second quarter of 2014, we expect:
Total revenues between $160 and $162 million, representing
year‑over‑year growth between 57% and 58%. Our total second
quarter revenue estimate consists of subscription revenues between
$128 and $129 million and professional services and other revenues
between $32 and $33 million.
Subscription gross margin of approximately 77%, professional
services and other gross margin of approximately 30%, and overall
gross margin of approximately 67%. Our professional services and
other revenues outlook includes approximately $8 million related
to Knowledge, our annual user conference to be held at the end of
April, with related expenses of approximately $15 million recorded
in sales and marketing.
Operating margin of approximately (6%).
For the full year 2014, we expect revenues to be in the range of
$652 to $657 million, representing year‑over‑year growth between
54% and 55%. Our total annual revenues estimate consists of
subscription revenues between $545 and $547 million and
professional services and other revenues between $107 and $110
Knowledge14 and 2nd Annual ServiceNow Financial Analyst Day
ServiceNow will hold its Knowledge14® conference in San Francisco on
April 27th through May 1st. Knowledge is the
largest gathering of IT professionals using cloud services for
enterprise IT service automation.Knowledge14® is expected to attract
nearly 6,000 attendees including the world's most recognizable brands.
In conjunction with the event, ServiceNow will host its 2nd
Annual Financial Analyst Day on Monday April 28th beginning
at 8 a.m. PDT (15:00 GMT). A live stream of the Financial Analyst Day
can be accessed from the investor relations section of the ServiceNow
web site at http://investors.servicenow.com.
Conference Call Details
ServiceNow will host a conference call to discuss its financial
results for the first quarter of 2014 to begin today at 2 p.m. PDT
(21:00 GMT). Interested parties may listen to the call by dialing
877.474.9503 (passcode: 50280589), or if outside North America, by
dialing 857.244.7556 (passcode: 50280589). Individuals may access the
live teleconference from the investor relations section of the
ServiceNow web site at http://investors.servicenow.com. The webcast
will be archived for a period of 30 days.
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 888.286.8010 (passcode:
32040274), or if outside North America, by dialing 617.801.6888
Statement regarding use of non‑GAAP financial measures
The company reports non‑GAAP results for gross margins, operating
margins, net income or loss, basic and diluted income or loss per
share, free cash flow and billings in addition to, and not as a
substitute for, or superior to, financial measures calculated in
accordance with GAAP.
The company’s financial measures under GAAP include stock‑based
compensation expense, the amortization of debt discount and issuance
costs related to the convertible senior notes, and the related income
tax effect of these adjustments. Management believes the presentation
of operating results that excludes these items provides useful
supplemental information to investors and facilitates the analysis of
the company’s core operating results and comparison of operating
results across reporting periods. Management also believes that this
supplemental non‑GAAP information is therefore useful to investors in
analyzing and assessing the company’s past and future operating performance.
Free cash flow, which is a non‑GAAP financial measure, is calculated
as GAAP net cash provided by operating activities reduced by purchases
of property and equipment. Management believes information regarding
free cash flow provides investors with an important perspective on the
cash available to invest in our business and fund ongoing operations.
However, our calculation of free cash flow may not be comparable to
similar measures used by other companies.
Billings is calculated as revenue plus the change in total deferred
revenue. Management believes billings offers investors useful
supplemental information regarding the performance of our business,
and will help investors better understand the sales volumes and
performance of our business.
The company encourages investors to carefully consider its results
under GAAP, as well as its supplemental non‑GAAP information and the
reconciliation between these presentations, to more fully understand
its business. Reconciliations between GAAP and non‑GAAP results are
presented in the tables of this release.
Use of forward looking statements
This release contains “forward‑looking statements” regarding our
performance, including 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.
Among the important factors that could cause actual results to
differ materially from those in any forward‑looking statements are:
(i) errors, interruptions, delays, or security breaches in or of our
service or web hosting, (ii) our ability to grow at our expected rate
of growth, including our ability to convert deferred revenue and
backlog into revenue, add and retain customers, and enter new
geographies and markets, (iii) our ability to continue to release, and
gain customer acceptance of, improved versions of our services, (iv)
our ability to develop and gain customer acceptance of new products
and services, including our platform, and (v) our ability to compete
successfully against existing and new competitors.
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, 2013 and in other filings we make with the Securities and
Exchange Commission from time to time, including our Form 10‑Q that
will be filed for the quarter ended March 31, 2014.
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.
ServiceNow is the enterprise IT cloud company. We transform IT by
automating and managing IT service relationships across the global
enterprise. Organizations deploy our service to create a single system
of record for IT and automate manual tasks, standardize processes and
consolidate legacy systems. Using our extensible platform, our
customers create custom applications and evolve the IT service model
to service domains inside and outside the enterprise. ServiceNow
transforms IT from the department of no to the department of now. For
more information, visit www.servicenow.com.
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ServiceNow, Knowledge and the ServiceNow logo are registered
trademarks of ServiceNow. All other brand and product names are
trademarks or registered trademarks of their respective holders.