ServiceNow Q3 2013
complete financial tables (download PDF)
SANTA CLARA, Calif. – October 23, 2013 – ServiceNow® (NYSE:
NOW), the enterprise IT cloud company, today announced its financial
results for its third quarter of 2013.
Third quarter 2013 results:
Revenues of $111.3 million, an increase of 73% compared to the
third quarter of 2012, and an increase of 9% from the second
quarter of 2013.
GAAP net loss of $14.7 million, or a loss of $0.11 per basic and
diluted share, compared to a GAAP net loss of $13.1 million, or a
loss of $0.11 per basic and diluted share, in the third quarter of
Non‑GAAP net income of $1.6 million, or earnings of $0.01 per
basic and diluted share, compared to a non‑GAAP net loss of $5.0
million, or a loss of $0.04 per basic and diluted share, in the
third 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 $225.8 million, an 8% increase over the
$210.0 million reported at the end of the prior quarter.
Billings were $127.0 million, an 8% increase over the $117.5
million reported in the previous quarter and a 56% increase over
the $81.2 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).
"ServiceNow delivered 73% year‑over‑year revenue growth and
billed a record $127 million in the third quarter," said Frank
Slootman, president and chief executive officer, ServiceNow. "We
grew our total customer count to 1,900, including the addition of 22
net new enterprises from the Forbes Global 2000 list. We also achieved
a renewal rate of 97% and upsells comprised more than 29% of our total
annual contract value signed during the quarter."
"We continued to show growth across our key financial metrics
and exceeded our previously stated outlook on revenue and non‑GAAP
EPS," added Michael Scarpelli, chief financial officer,
ServiceNow. "We were profitable on a non‑GAAP basis for the first
time in two years, and we generated $20.7 million in operating cash flow."
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). Negative numbers are shown in parentheses.
For the fourth quarter of 2013, we expect:
Total revenues between $119.0 and $121.0 million, representing
year‑over‑year growth between 58% and 61%. Our total fourth
quarter revenue estimate consists of subscription revenues between
$100.0 and $101.0 million and professional services and other
revenues between $19.0 and $20.0 million.
Subscription gross margin of approximately 76%, professional
services and other gross margin of approximately 8%, and overall
gross margin of approximately 65%.
Approximately break‑even operating margin.
A net loss per basic and diluted share of approximately ($0.02)
with weighted‑average shares outstanding of approximately 140.0
For the full year 2013, we expect total revenues to be in the range
of $418.4 to $420.4 million, representing year‑over‑year growth
between 72% and 73%. Our total annual revenues estimate consists of
subscription revenues between $344.9 and $345.9 million and
professional services and other revenues between $73.5 and $74.5 million.
Conference Call Details
The conference call will begin at 2:00 p.m. Pacific Time (21:00 GMT)
on Wednesday, October 23, 2013. Interested parties may listen to the
call by dialing 866.383.8009 (passcode: 18726358), or if outside
North America, by dialing 617.597.5342 (passcode: 18726358).
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:
85963111), 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. Management believes the presentation of
operating results that excludes stock‑based compensation expense
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, 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 third quarter ended September 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 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.
# # #
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.