Q2 2014 complete financial tables (download PDF)
SANTA CLARA, Calif. – July 30, 2014 – ServiceNow® (NYSE:
NOW),the enterprise IT cloud company, today announced the financial
results for its second quarter of 2014.
Second quarter 2014 results:
Revenues of $166.8 million, an increase of 63% compared to the
second quarter of 2013, and an increase of 20% from the first
quarter of 2014.
A GAAP net loss for the quarter of $50.4 million, or a $0.35 loss
per basic and diluted share, compared with a GAAP net loss of
$21.4 million, or a $0.16 loss per basic and diluted share, in the
second quarter of 2013.
A non‑GAAP net loss for the quarter of $9.8 million, or a $0.07
loss per basic and diluted share, compared with a non‑GAAP net
loss of $7.8 million, or a $0.06 loss per basic and diluted share,
in the second 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 $328.9 million, a 7% increase compared to the
$308.5 million reported at the end of the prior quarter.
Billings of $187.1 million, a 3% increase compared to the $180.8
million reported in the previous quarter and a 59% increase
compared to the $117.5 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 continued our momentum in the second quarter, generating greater
than expected revenue and adding 169 new customers, bringing our total
to 2,364,” said Frank Slootman, president and chief executive officer,
ServiceNow. “Our renewal rate remains strong at 98 percent, with
upsells representing 33 percent of the total annual contract value
booked in the quarter. ”
“Our average revenue per customer grew 21 percent in the quarter
compared to last year,” added Michael Scarpelli, chief financial
officer, ServiceNow. “We also raised our full‑year 2014 total revenue
guidance by $16 million this quarter, our largest guidance raise ever.”
The financial guidance discussed below is on a non‑GAAP basis,
except for revenues, and excludes stock‑based compensation expense,
amortization of purchased intangibles, and acquisition related
expenses (see table which reconciles these non‑GAAP financial measures
to the related GAAP measures). We completed the acquisition of Neebula
Systems on July 11, 2014 and incorporated the expected revenues and
operating expenses associated with the acquisition in our guidance.
Negative numbers are shown in parentheses.
For the third quarter of 2014, we expect:
Total revenues between $173 and $175 million, representing
year‑over‑year growth between 55% and 57%. Our total third quarter
revenue estimate consists of subscription revenues between $147
and $148 million and professional services and other revenues
between $26 and $27 million.
Billings between $190 and $193 million, representing
year‑over‑year growth between 50% and 52%.
Subscription gross margin of approximately 77%, professional
services and other gross margin of approximately 8%, and overall
gross margin of approximately 66%.
Operating margin of approximately 1%.
For the full year 2014, we expect revenues to be in the range of
$668 to $673 million, representing year‑over‑year growth of 58%. Our
total annual revenues estimate consists of subscription revenues
between $558 and $560 million and professional services and other
revenues between $110 and $113 million.
Updates since our last earnings release:
In April, ServiceNow hosted Knowledge14™, its annual global IT
conference, in San Francisco, with a record‑setting more than
6,500 attendees, including more than 100 CIOs from global
enterprises. Knowledge is the largest gathering of IT
professionals using cloud services to transform service delivery
across the enterprise.
In June, the company announced the availability of new products
and features built on the extensible ServiceNow platform that
leverage the common data model shared by the entire ServiceNow
application portfolio. The new release offers customers:
Enhancements to the Custom Application Creation Experience with
Service Creator and Form Designer.
New Service Automation Products including Facilities Service
Management that routes requests to the appropriate facilities
specialists and displays incidents on floor plan visualizations;
as well as Visual Task Boards to better organize services and
Executive Management and Visualization Tools such as Demand
Management to consolidate requests to IT and automate the steps in
the investment decision process; in addition to the CIO Roadmap
that provides a visualization of prioritized investment decisions
on a timeline.
New IT Operations Management Applications including Event
Management to collect and transform infrastructure events into
meaningful alerts that trigger service workflows and Configuration
Automation that controls and governs infrastructure configuration
In July, ServiceNow announced the acquisition of Neebula Systems.
The new ServiceNow ServiceWatch automates the discovery, mapping
and monitoring of IT‑enabled enterprise services and augments
other ServiceNow IT Operations Management products such as Event
Management, Orchestration and Discovery. ServiceWatch will become
an integral part of the ServiceNow platform.
Conference Call Details
ServiceNow will host a conference call to discuss its financial
results for the second quarter of 2014 to begin today at 2 p.m. PDT
(21:00 GMT). Interested parties may listen to the call by dialing
877.703.6107 (passcode: 22163419), or if outside North America, by
dialing 857.244.7306 (passcode: 22163419). 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:
43860752), 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 convertible senior notes, amortization of purchased
intangibles, and acquisition related expenses and the related income
tax effect of these adjustments. Management believes the presentation
of operating results that excludes one or more of 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
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 June 30, 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.