SANTA CLARA, Calif. – Oct. 21, 2015 – ServiceNow® (NYSE: NOW),
the enterprise cloud company, today announced the financial results
for its third quarter 2015.
Third Quarter 2015 Results:
- Revenues of $261.2 million, an increase of 46% year‑over‑year
and 55% in constant currency.
- GAAP net loss of $41.0
million, or a loss of $0.26 per basic and diluted share, compared to
a GAAP net loss of $41.1 million, or a loss of $0.28 per basic and
diluted share, in the third quarter of 2014.
- Non‑GAAP net
income of $25.0 million, or income of $0.16 per basic share and
$0.15 per diluted share, compared to a non‑GAAP net income of $5.7
million, or income of $0.04 per basic share and $0.03 diluted share,
in the third quarter of 2014.
- Billings were $286.4 million,
an increase of 38% year‑over‑year and 46% in constant currency.
- Free cash flow was $42.3 million, an increase of 512%
For a reconciliation of these GAAP and non‑GAAP financial measures,
please see the table entitled "Results of Operations GAAP to
Non‑GAAP Reconciliation” included at the end of this release.
“We now count more than 30% of the Global 2000 as customers, an
increase of 39 from the prior quarter,” said Frank Slootman, president
and chief executive officer, ServiceNow. “Additionally, we now have
206 customers with annualized contract value in excess of $1 million,
an increase of 62% year‑over‑year.”
“We continue to see customers increase their initial annualized
contract value by greater than 50% on average every year,” said
Michael Scarpelli, chief financial officer, ServiceNow. “In addition,
we’re demonstrating more leverage in our business model as free cash
flow exceeded third quarter guidance, and we expect our full year 2015
free cash flow to be north of $200 million.”
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. Please see the tables included at the end of this release
for a reconciliation of these non‑GAAP financial measures to the
related GAAP financial measures. For the fourth quarter of 2015, we expect:
- Total revenues between $277 and $282 million, representing
year‑over‑year growth between 40% and 42%, and between 44% and 47%
in constant currency. Our total fourth quarter revenue estimate
consists of subscription revenues between $239 and $243 million, and
professional services and other revenues between $38 and $39
- Billings between $370 and $375 million, representing
year‑over‑year growth between 35% and 37%, and between 39% and 41%
in constant currency.
- Subscription gross margin of
approximately 82%, professional services and other gross margin of
approximately 15%, and overall gross margin of approximately
- Operating margin of approximately 9%.
- Free cash
flow of approximately $60 million.
For the full year 2015, we expect:
- Total revenues of approximately $1 billion, representing
year‑over‑year growth of approximately 47%, and approximately 55% in
- Billings of approximately $1.2 billion,
representing year‑over‑year growth of approximately 41%, and
approximately 49% in constant currency.
- Operating margin of
- Free cash flow of approximately $207
Conference Call Details
The conference call will begin at 2 p.m. Pacific Time (21:00 GMT)
on Wednesday, Oct. 21, 2015. Interested parties may listen to the call
by dialing 877.703.6105 (passcode: 79125980), or if outside North
America, by dialing +1.857.244.7304 (passcode: 79125980). 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 three 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: 81146319), or if outside North America, by dialing
+1.617.801.6888 (passcode: 81146319).
Statement regarding use of non‑GAAP financial measures
We report non‑GAAP financial measures in addition to, and not as a
substitute for, or superior to, financial measures calculated in
accordance with GAAP.
Our financial measures under GAAP include foreign currency impact,
stock‑based compensation expense, the amortization of debt discount
and issuance costs related to the convertible senior notes,
amortization of purchased intangibles and acquisition‑related
expenses, and the related income tax effect of these adjustments. We
believe the presentation of operating results that exclude these items
provides useful supplemental information to investors and facilitates
the analysis of our core operating results and comparison of operating
results across reporting periods.
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. We believe 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 as presented on the statement of cash flows. We believe
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.
We present constant currency information to provide a framework for
assessing how our underlying business performed excluding the effect
of foreign currency rate fluctuations. To present this information,
current period results for entities reporting in currencies other than
U.S. Dollars are converted into U.S. Dollars at the exchange rates in
effect during the prior period presented, rather than the actual
exchange rates in effect during the current period.
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. Please see the tables included at the end of this
release for the reconciliation of GAAP and non‑GAAP results.
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, sell additional
subscriptions to existing 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, 2014 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 September 30, 2015.
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 changing the way people work. With a
service‑orientation toward the activities, tasks and processes that
make up day‑to‑day work life, we help the modern enterprise operate
faster and be more scalable than ever before. Customers use our
service model to define, structure and automate the flow of work,
removing dependencies on email and spreadsheets to transform the
delivery and management of services for the enterprise. ServiceNow
enables service management for every department in the enterprise
including IT, human resources, facilities, field service and more. We
deliver a ‘lights‑out, light‑speed’ experience through our enterprise
cloud – built to manage everything as a service. To find out how,
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.
ServiceNow Q3 2015 complete financial tables