ServiceNow Q2 2013 complete financial
tables (download PDF)
SAN DIEGO – July 31, 2013 – ServiceNow® (NYSE: NOW), the
enterprise IT cloud company, today announced its financial results for
its second quarter of 2013.
Second quarter 2013 results:
Revenues of $102.2 million, an increase of 80% compared to the
second quarter of 2012, and an increase of 19% from the first
quarter of 2013.
A GAAP net loss for the quarter of $21.4 million, or a loss of
$0.16 per basic and diluted share, compared to a GAAP net loss of
$8.7 million, or a loss of $0.32 per basic and diluted share, in
the second quarter of 2012.
A non‑GAAP net loss for the quarter of $7.8 million, or a loss of
$0.06 per basic and diluted share, compared to a non‑GAAP net loss
of $1.6 million, or a loss of $0.06 per basic and diluted share,
in the second 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
Deferred revenue of $210.0 million, an 8% increase over the
$194.8 million reported at the end of the prior quarter.
Billings were $117.5 million, a 6% increase over the $110.3
million reported in the previous quarter and a 63% increase over
the $72.1 million in the same period last year (see the table
entitled "Non‑GAAP Billings Reconciliation" for a
reconciliation of non‑GAAP billings to GAAP revenues).
"In the second quarter we added 138 new customers, bringing our
cumulative customer count to 1,778 worldwide, achieved a customer
renewal rate of 94.2%, and continued to penetrate our installed base
with upsells comprising 25% of our total annual contract value signed
during the quarter," said Frank Slootman, president and chief
executive officer, ServiceNow. "We also hosted nearly 4,000
attendees at our annual user conference, Knowledge, and announced
several key product innovations."
crossed the $100 million revenue mark for the first time with $102.2
million in total revenue in the quarter, and billed $117.5 million,
our second consecutive quarter in excess of $100 million," added
Michael Scarpelli, chief financial officer, ServiceNow. "In
addition, we generated $9.7 million in operating cash flow in the quarter."
The non‑GAAP financial guidance discussed below excludes stock‑based
compensation expense and the related income tax effect (see table
which reconciles these non‑GAAP financial measures to the related GAAP
measures). We completed the acquisition of Mirror42 on July 1, 2013
and incorporated the expected revenues and operating expenses
associated with the acquisition in our guidance. The accounting
treatment for the acquisition is pending completion and therefore we
have excluded the related amortization of acquired intangible assets,
acquisition‑related expenses, and income tax expense from our guidance
for the third quarter. In the future, we will include these
acquisition related expenses in our non‑GAAP results. Negative numbers
are shown in parentheses.
For the third quarter of
2013, we expect:
Total revenues between $104 and $106 million, representing
year‑over‑year growth between 62% and 65%. Our total third quarter
revenue estimate consists of subscription revenues between $88 and
$89 million and professional services and other revenues between
$16 and $17 million.
Subscription gross margin of approximately 75%, professional
services and other gross margin between 7% and 9%, and overall
gross margin of approximately 65%.
Operating margin between (3%) and (2%).
A net loss per basic and diluted share between ($0.03) and
($0.02) with weighted‑average shares outstanding of approximately
For the full year 2013, we expect revenues to be in the range of
$406 to $410 million, representing year‑over‑year growth between 67%
and 68%. Our total annual revenues estimate consists of subscription
revenues between $337 and $339 million and professional services and
other revenues between $69 and $71 million.
Updates since our last earnings release:
In May, ServiceNow hosted Knowledge13™, our annual global user
conference, in Las Vegas. With nearly 4,000 attendees, doubling
last year's attendance, Knowledge is the largest gathering of IT
professionals using cloud services to transform service delivery
across the enterprise.
In May, ServiceNow announced:
- ServiceNow App Creator enabling 'citizen developers' to
easily create intuitive enterprise applications on the
ServiceNow Service Automation Platform.
- ServiceNow for
iPad which provides IT with the ability to view and interact
with their work anytime, anywhere.
- ServiceNow Cloud
Provisioning, a new orchestration application that enables IT to
automate the entire cloud management lifecycle.
- ServiceNow CMDB data certification, a new capability in the
ServiceNow CMDB (Configuration Management Database) that ensures
data remains accurate, current and relevant.
In July, ServiceNow announced the acquisition of Mirror42. The
new ServiceNow Performance Analytics product provides users with
Key Performance Indicator (KPI) ‑ driven dashboards and scorecards
that work transparently with all ServiceNow applications.
Conference Call Details
The conference call will begin at 2:00 p.m. Pacific Time (21:00 GMT)
on Wednesday, July 31, 2013. Interested parties may listen to the call
by dialing 866.270.6057 (passcode: 37292950), or if outside North
America, by dialing 617.213.8891 (passcode: 37292950). Individuals may
access the live teleconference from the investor relations section of
the ServiceNow website 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:
11018243), 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 and adjustments for capitalized software.
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‑Q that
will be filed for the second quarter ended June 30, 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 focus on
transforming enterprise IT by automating and standardizing business
processes and consolidating IT across the global enterprise.
Organizations deploy our service to create a single system of record
for enterprise IT, lower operational costs and enhance efficiency.
Additionally, our customers use our extensible platform to build
custom applications for automating activities unique to their business
requirements. For more information, visit www.servicenow.com.
ServiceNow and the ServiceNow logo are trademarks of ServiceNow. All
other brand and product names are trademarks or registered trademarks
of their respective holders.