ServiceNow Q3 2012 complete
financial tables (download PDF)
SAN DIEGO – October 24, 2012 ‑ ServiceNow, Inc. (NYSE: NOW), a
leading provider of cloud‑based services to automate enterprise IT
operations, today announced its financial results for its third
quarter of 2012.
Third quarter 2012 results:
Revenues of $64.3 million, an increase of 88% compared to the
third quarter of 2011, and an increase of 13% from the second
quarter of 2012.
A GAAP net loss for the quarter of $13.1 million, or a loss of
$0.11 per basic and diluted share, compared to GAAP net income of
$0.1 million, or net income of $0.00 per diluted share, in the
third quarter of 2011.
A non‑GAAP net loss for the quarter of $7.1 million, or a net
loss of $ 0.06 per basic and diluted share, compared to non‑GAAP
net income of $1.7 million, or net income of $0.05 per diluted
share, in the third quarter of 2011 (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 $147.9 million, a 13% increase over the
$131.1 million reported at the end of the prior quarter.
Billings were $81.2 million, a 13% increase over the $72.1
million reported in the previous quarter and a 96% increase over
the $41.4 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's third quarter results were highlighted by
continued growth across our key financial metrics and we exceeded our
previously stated outlook on revenue and non‑GAAP EPS," said
Frank Slootman, president and chief executive officer of ServiceNow.
"In our first full quarter as a public company, we added over 145
customers, bringing our cumulative customer count to 1,346 worldwide,
and we achieved a customer renewal rate of 96%."
"We continued to show strong revenue execution during the third
quarter and nearly doubled our billings over the same period last
year," added Michael Scarpelli, chief financial officer of
ServiceNow. "Deferred revenue grew sequentially by 13%, marking
the fourth consecutive quarter of double‑digit sequential growth, and
we generated approximately $9.1 million in operating cash flow for the quarter."
The non‑GAAP financial guidance discussed below excludes stock based
compensation expense and the related income tax impact (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 2012, we now expect:
Total revenues between $69 and $71 million, representing
year‑over‑year growth between 76% and 81%. Our total fourth
quarter revenues estimate consists of subscription revenues
between $60 and $61 million and professional services and other
revenues between $9 and $10 million.
Subscription gross margin between 68% and 69%, professional
services and other gross margin between (1%) and (5%), and overall
gross margin between 58% and 59%.
Operating margin between (5%) and (7%).
A loss per basic and diluted share between $0.05 and $0.06 with
weighted‑average shares outstanding of approximately 123.5
For the full year 2012 we expect revenues to be in the range of
$237.5 to $239.5 million, representing year‑over‑year growth between
85% and 87%. Our total annual revenues estimate consists of
subscription revenues between $201.6 and $202.6 million and
professional services and other revenues between $35.9 and $36.9 million.
Third quarter highlights
In October, ServiceNow announced a new release of its cloud‑based
IT service automation software. With the new IT Asset Management
application embedded in the product, ServiceNow enables companies
to more efficiently utilize software and can help achieve
compliance with license terms and requirements. At the same time,
companies can avoid over‑purchasing software licenses and
maintenance or support contracts. The release also includes new
capabilities for agile software development to improve user
In August, ServiceNow announced it added end‑to‑end lifecycle
automation for managing VMware virtual machines (VMs) from
creation to retirement. The new capabilities can help prevent
inefficient or wasteful use of VMs, saving administrative time and
reducing cost. The new VMware lifecycle automation capabilities
can also substantially reduce the amount of time and effort
required to initially provision a VM, transforming a process that
might take up to several weeks to one completed in only
Conference Call Details
ServiceNow will host a conference call to discuss its financial
results for the third quarter of 2012 to begin today at 2 p.m. PDT
(21:00 GMT). Interested parties may listen to the call by dialing
800.299.7098 (passcode: 41658837), or if outside North America, by
dialing 617.801.9715 (passcode: 41658837). Individuals may also 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 will also be available two
hours after the call and be available for seven days. To hear the
replay interested parties may dial 888.286.8010 (passcode: 68782712),
or if outside North America, by dialing 617.801.6888 (passcode: 68782712).
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 excluding 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 that 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 that billings offers investors useful
supplemental information regarding the performance of our business and
will help investors better understand sales volumes.
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. 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)
possible fluctuations in our financial and operating results, (ii) our
ability to grow at our expected rate of growth and anticipated revenue
run rate, including our ability to convert deferred revenue and
unbilled deferred revenue into revenue, successfully deploy new
customers, and continue to release, and gain customer acceptance of,
new and improved versions of our service, and (iii) errors,
interruptions, delays, or security breaches of our service or web hosting.
Further information on these and other factors that could affect our
financial results are included in our Form 10‑Q for the quarter ended
June 30, 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, 2012.
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 a leading provider of cloud‑based services that
automate enterprise IT operations. 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 http://www.servicenow.com.
Any unreleased services, features or functions referenced in this
document, our website or other press releases or public statements
that are not currently available are subject to change at the
discretion of ServiceNow and may not be delivered as planned or at
all. Customers who purchase ServiceNow services should make their
purchase decisions based upon services, features and functions that
are currently available.
ServiceNow and the ServiceNow logo are trademarks of ServiceNow. All
other brand and product names are trademarks or registered trademarks
of their respective holders.
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