Q4 2014 complete financial tables (download PDF)
SANTA CLARA, Calif. – Jan. 28, 2015 – ServiceNow® (NYSE: NOW), the
enterprise cloud company, today announced the financial results for
its fourth quarter and fiscal year 2014.
Fourth quarter 2014 results:
Revenues of $198.0 million, an increase of 58% compared to the
fourth quarter of 2013 and an increase of 11% from the third
quarter of 2014.
GAAP net loss of $44.7 million, or a loss of $0.30 per basic and
diluted share, compared to a GAAP net loss of $24.2 million, or a
loss of $0.17 per basic and diluted share, in the fourth quarter
Non‑GAAP net income of $4.9 million, or income of $0.03 per basic
and diluted share, compared to a non‑GAAP net loss of $2.5
million, or a loss of $0.02 per basic and diluted share, in the
fourth 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 measures).
Billings were $269.4 million, a 62% increase over the $166.2
million in the same period last year, and a 34% increase over the
$200.7 million reported in the previous quarter (see the table
entitled “Non‑GAAP Billings Reconciliation” for a reconciliation
of non‑GAAP billings to GAAP revenues).
Deferred revenue of $422.2 million, a 20% increase over the
$350.8 million reported at the end of the prior quarter.
Added 211 net new customers, bringing the total to
The customer renewal rate for the quarter was 97% and upsells
represented 38% of the annualized contract value booked in the
Fiscal Year 2014 Results:
Revenues of $682.6 million, an increase of 61% compared to the
A GAAP net loss of $179.4 million, or a loss of $1.23 per basic
and diluted share, compared to a GAAP net loss of $73.7 million,
or a loss of $0.54 per basic and diluted share, in the prior
A non‑GAAP net loss of $10.1 million, or a loss of $0.07 per
basic and diluted share, compared to non‑GAAP net loss of $9.6
million, or a loss of $0.07 per basic and diluted share, in the
prior year (see the table entitled "Results of Operations
GAAP to Non‑GAAP Reconciliation” for a reconciliation of these
GAAP and non‑GAAP financial measures).
Signed $1.2 billion in total contract value, a 64% increase over
the prior year.
Billings were $838.1 million, a 61% increase over the $521.0
million reported in the prior year (see the table entitled
“Non‑GAAP Billings Reconciliation” for a reconciliation of
non‑GAAP billings to GAAP revenues).
Combined backlog and deferred revenue at the end of the year
totaled $1.4 billion, growing 57% year‑over‑year, compared to 59%
year‑over‑year growth in 2013. Backlog represents future amounts
to be invoiced under our agreements and is not included in
“We finished 2014 with strong metrics across the board, maintaining
consistently high year‑over‑year growth rates,” said Frank Slootman,
president and chief executive officer, ServiceNow. “In addition to a
growing list of new customers that now includes more than 25% of the
Global 2000, we continue to see existing customers expand their
relationship with us, resulting in the highest quarterly upsell rate
since our IPO.”
“The total number of customers paying more than $1 million in
annualized contract value has increased 93% year‑over‑year,” said
Michael Scarpelli, chief financial officer, ServiceNow. “Within the
Global 2000, annualized contract value per customer has increased 40%
year‑over‑year. These expanding contracts have helped us grow our
combined backlog and deferred revenue 57% year‑over‑year.”
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). Negative numbers are shown in
parentheses. For the first quarter of 2015, we expect:
Total revenues between $207 and $212 million, representing
year‑over‑year growth between 49% and 52%. Our total first quarter
revenue estimate consists of subscription revenues between $176
and $180 million and professional services and other revenues
between $31 and $32 million.
Billings between $260 and $265 million, representing
year‑over‑year growth between 44% and 47%.
Subscription gross margin of approximately 79%, professional
services and other gross margin of approximately 12% and overall
gross margin of approximately 69%.
Approximately breakeven operating margin.
For the full year 2015, we expect total revenues to be in the range
of $960 million to $1 billion, representing year‑over‑year growth
between 41% and 47%. Our total annual revenue estimate consists of
subscription revenues between $810 and $840 million and professional
services and other revenues between $150 and $160 million.
Updates since our last earnings release
ServiceNow opened four data centers in Asia and South America,
bringing the total to 16 data centers around the globe, organized
in eight mirrored pairs.
ServiceNow launched its Express offering, a highly standardized
product for organizations of all sizes to adopt service management
The ServiceNow Community grew
65% in 2014, reaching a total of 30,000 registered
ServiceNow signed a lease for two new buildings in Santa Clara,
Calif., that will become the company’s new headquarters offices in
the second half of 2015.
Conference Call Details
The conference call will begin at 2 p.m. Pacific Time (21:00 GMT) on
Wednesday, Jan. 28, 2015. Interested parties may listen to the call by
dialing 877.415.3178 (passcode: 75348159), or if outside North
America, by dialing 857.244.7321 (passcode: 75348159). 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:
17421718), or if outside North America, by dialing 617.801.6888
Statement regarding use of non‑GAAP financial measures
The company reports non‑GAAP financial measures, including 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 the 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 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 as presented on the balance sheet. 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 and third‑party data
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‑K that
will be filed for the fiscal year ended December 31, 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.
The Global 2000 is an annual ranking of the top 2,000 public
companies in the world published by Forbes Magazine. The ranking is
based on a mix of four metrics: sales, profit, assets and market value.
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
provides 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,
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