Q4 2013 complete financial tables (download PDF)
SANTA CLARA, Calif. – January 29, 2014 – ServiceNow® (NYSE: NOW),
the enterprise IT cloud company, today announced its financial results
for its fourth quarter and fiscal year 2013.
Fourth quarter 2013 results:
Revenues of $125.2 million, an increase of 67% compared to the
fourth quarter of 2012, and an increase of 13% from the third
quarter of 2013.
GAAP net loss of $24.2 million, or a loss of $0.17 per basic and
diluted share, compared to a GAAP net loss of $9.9 million, or a
loss of $0.08 per basic and diluted share, in the fourth quarter
Non‑GAAP net loss of $3.0 million, or loss of $0.02 per basic and
diluted share, compared to a non‑GAAP net loss of $0.6 million, or
$0.00 per basic and diluted share, in the fourth quarter of 2012
(see the table entitled "Results of Operations GAAP to
Non‑GAAP Reconciliation” for a reconciliation of these GAAP and
non‑GAAP financial measures).
Deferred revenue of $266.7 million, an 18% increase over the
$225.8 million reported at the end of the prior quarter.
Billings were $166.2 million, a 70% increase over the $97.6
million in the same period last year, and a 31% increase over the
$127.0 million reported in the previous quarter (see the table
entitled “Non‑GAAP Billings Reconciliation” for a reconciliation
of non‑GAAP billings to GAAP revenues).
Backlog of $608.4 million, a 61% increase over the $379.0 million
reported at the end of 2012. Backlog represents future amounts to
be invoiced under our agreements and is not included in deferred
revenue. Backlog and deferred revenue combined totaled $875.1
Fiscal 2013 results:
Revenues of $424.7 million, an increase of 74% compared to the
A GAAP net loss of $73.7 million, or a loss of $0.54 per basic
and diluted share, compared to a GAAP net loss of $37.3 million,
or a loss of $0.51 per basic and diluted share, in the prior
A non‑GAAP net loss of $11.0 million, or a loss of $0.08 per
basic and diluted share, compared to non‑GAAP net loss of $9.7
million, or a loss of $0.14 per basic and diluted share, in the
prior year (see the table entitled "Results of Operations
GAAP to Non‑GAAP Reconciliation" for a reconciliation of
these GAAP and non‑GAAP financial measures).
Billings were $521.0 million, a 68% increase over the $309.4
million reported in the prior year (see the table entitled
“Non‑GAAP Billings Reconciliation” for a reconciliation of
non‑GAAP billings to GAAP revenues).
“ServiceNow grew revenues 67% year‑over‑year in the fourth quarter,
a strong finish to a year in which we grew revenues by 74% and added
549 customers, bringing our cumulative customer count to over 2,060
worldwide,” said Frank Slootman, president and chief executive
officer, ServiceNow. “During the quarter we also achieved a 96%
customer renewal rate, continued to penetrate our installed base with
upsells comprising 36% of our total annual contract value signed
during the quarter and announced several important product additions.”
“In the fourth quarter we set a company record for billings of $166
million and exited the year with a combined deferred revenue and
backlog balance of $875 million, up 59% over the prior year,” added
Michael Scarpelli, chief financial officer, ServiceNow. “We also
generated $20 million in free cash flows and raised net proceeds of
$512 million from our convertible debt offering at a 0% coupon, ending
2013 with $890 million in cash and investments.”
The non‑GAAP financial guidance discussed below excludes stock‑based
compensation expense and the related income tax effect of these
adjustments (see table which reconciles these non‑GAAP financial
measures to the related GAAP measures). Negative numbers are shown in parentheses.
For the first quarter of 2014, we expect:
Total revenues between $133 and $135 million, representing
year‑over‑year growth between 55% and 57%. Our total first quarter
revenue estimate consists of subscription revenues between $112
and $113 million and professional services and other revenues
between $21 and $22 million.
Subscription gross margin of approximately 76%, professional
services and other gross margin of approximately 6% and overall
gross margin of approximately 64%.
Operating margin of approximately (9%).
For the full year 2014, we expect total revenues to be in the range
of $640 to $645 million, representing year‑over‑year growth between
51% and 52%. Our total annual revenues estimate consists of
subscription revenues between $533 and $535 million and professional
services and other revenues between $107 and $110 million.
Updates since our last earnings release
ServiceNow issued $575 million aggregate principal amount of 0%
convertible senior notes due 2018. The offering generated proceeds
of $512 million, net of offering costs, costs of the related bond
hedge and proceeds from warrants.
Charles Giancarlo joined the board of directors as a ninth member
in an additional seat the company has added.
ServiceNow HR Service Management was introduced as a new
application that makes it easier for organizations to automate HR
ServiceNow Configuration Automation was introduced as a new
orchestration application that controls automated configuration of
data center infrastructure based on the ServiceNow Configuration
Management Database (CMDB).
ServiceNow and customer‑created applications are made instantly
mobile on devices such as iPhones, iPads and Android smartphones
and tablets with the latest ServiceNow release.
ServiceNow Vendor Performance Management was introduced as a new
application to help users derive more value from vendors and
suppliers by evaluating performance relative to commitments and
comparing vendors to each other across common criteria.
ServiceNow Resource Management was introduced as a new
application to help forecast all IT work and resources reliably
through a real‑time, single system of record for efficient,
accurate resource utilization.
ServiceNow Automated Password Reset was introduced as a new
application providing end users with the ability to reset
passwords through self‑service and automation and reduce what
industry analysts consider to be at least 20% of IT service
ServiceNow was awarded “SaaS Product of the Year” from
Conference Call Details
The conference call will begin at 2:00 p.m. Pacific Time (22:00 GMT)
on Wednesday, January 29, 2014. Interested parties may listen to the
call by dialing 866.700.6067 (passcode: 75988250), or if outside
North America, by dialing 617.213.8834 (passcode: 75988250).
Individuals may access the live teleconference from the investor
relations section of the ServiceNow website at http://investors.servicenow.com.
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: 48173227), or if outside North America, by dialing
617.801.6888 (passcode: 48173227).
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, 2012 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 fiscal year ended December 31, 2013.
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 and the ServiceNow logo are registered trademarks of
ServiceNow. All other brand and product names are trademarks or
registered trademarks of their respective holders.