ServiceNow Reports Third Quarter 2024 Financial Results
ServiceNow (NOW) reported strong Q3 2024 financial results, with subscription revenues reaching $2,715 million, up 23% year-over-year. Total revenues grew 22% to $2,797 million. Current remaining performance obligations reached $9.36 billion, up 26% year-over-year. The company completed 15 transactions over $5 million in net new ACV, a 50% increase year-over-year. ServiceNow now has 2,020 customers with more than $1 million in annual contract value, representing 14% growth. Based on strong Q3 performance, the company raised its full-year 2024 subscription revenues guidance.
ServiceNow (NOW) ha riportato risultati finanziari solidi per il terzo trimestre del 2024, con ricavi da abbonamento che hanno raggiunto 2.715 milioni di dollari, in aumento del 23% rispetto all'anno precedente. I ricavi totali sono cresciuti del 22% a 2.797 milioni di dollari. Gli obblighi di performance rimanenti attuali hanno raggiunto 9,36 miliardi di dollari, con un aumento del 26% rispetto all'anno precedente. L'azienda ha completato 15 transazioni superiori a 5 milioni di dollari in ACV netto nuovo, un aumento del 50% rispetto all'anno precedente. ServiceNow conta ora 2.020 clienti con oltre 1 milione di dollari di valore contrattuale annuale, rappresentando una crescita del 14%. Sulla base delle solide performance del terzo trimestre, l'azienda ha aumentato le previsioni sui ricavi da abbonamento per l'intero anno 2024.
ServiceNow (NOW) reportó resultados financieros sólidos para el tercer trimestre de 2024, con ingresos por suscripción alcanzando 2,715 millones de dólares, un aumento del 23% en comparación con el año anterior. Los ingresos totales crecieron un 22% hasta 2,797 millones de dólares. Las obligaciones de rendimiento pendientes actuales alcanzaron 9.36 mil millones de dólares, un aumento del 26% con respecto al año pasado. La compañía completó 15 transacciones de más de 5 millones de dólares en ACV neto nuevo, un incremento del 50% en comparación con el año anterior. Ahora, ServiceNow tiene 2,020 clientes con más de 1 millón de dólares en valor de contrato anual, lo que representa un crecimiento del 14%. Basándose en un sólido rendimiento del tercer trimestre, la compañía ha elevado su guía de ingresos por suscripción para todo el año 2024.
ServiceNow (NOW)는 2024년 3분기 재무 성과가 강력하다고 보고했으며, 구독 수익이 27억 1,500만 달러에 도달하여 전년 대비 23% 증가했습니다. 총 수익은 22% 증가하여 27억 9,700만 달러에 달했습니다. 현재 잔여 성과 의무는 93억 6,000만 달러에 도달하여 전년 대비 26% 증가했습니다. 회사는 500만 달러 이상의 순 신규 ACV에 대해 15건의 거래를 완료했으며, 이는 전년 대비 50% 증가한 수치입니다. ServiceNow는 이제 연간 계약 가치가 100만 달러 이상인 고객이 2,020명으로, 14%의 성장을 나타냅니다. 3분기 실적이 강력한 것을 바탕으로 회사는 2024년 전체 연도 구독 수익 가이드를 상향 조정했습니다.
ServiceNow (NOW) a annoncé des résultats financiers solides pour le troisième trimestre de 2024, avec des revenus d'abonnement atteignant 2,715 millions de dollars, en hausse de 23 % par rapport à l'année précédente. Les revenus totaux ont augmenté de 22 % pour atteindre 2,797 millions de dollars. Les obligations de performance restantes actuelles ont atteint 9,36 milliards de dollars, soit une augmentation de 26 % par rapport à l'année précédente. L'entreprise a conclu 15 transactions de plus de 5 millions de dollars en ACV net, soit une augmentation de 50 % par rapport à l'année précédente. ServiceNow compte désormais 2 020 clients avec plus d'un million de dollars de valeur de contrat annuel, représentant une croissance de 14 %. Sur la base des solides performances du troisième trimestre, l'entreprise a relevé ses prévisions de revenus d'abonnement pour l'ensemble de l'année 2024.
ServiceNow (NOW) berichtete über starke Finanzresultate im 3. Quartal 2024, wobei die Abonnement-Einnahmen 2.715 Millionen Dollar erreichten, was einem Anstieg von 23% im Jahresvergleich entspricht. Die Gesamterträge wuchsen um 22% auf 2.797 Millionen Dollar. Die derzeit verbleibenden Leistungsansprüche belaufen sich auf 9,36 Milliarden Dollar, was einem Anstieg von 26% im Vergleich zum Vorjahr entspricht. Das Unternehmen hat 15 Transaktionen mit einem Nettoneuen ACV von über 5 Millionen Dollar abgeschlossen, was einer Steigerung von 50% im Jahresvergleich entspricht. ServiceNow hat nun 2.020 Kunden mit einem jährlichen Vertragswert von über 1 Million Dollar, was einem Wachstum von 14% entspricht. Basierend auf den starken Ergebnissen des 3. Quartals hat das Unternehmen seine Prognose für die Abonnement-Einnahmen für das Gesamtjahr 2024 angehoben.
- Subscription revenues grew 23% YoY to $2,715 million
- Current remaining performance obligations increased 26% YoY to $9.36 billion
- 50% YoY growth in large transactions (over $5 million)
- 14% YoY growth in million-dollar customers to 2,020
- Company raised full-year 2024 subscription revenues guidance
- Professional services segment reported gross loss of $6 million with -7% margin
Insights
ServiceNow delivered exceptional Q3 results with subscription revenues reaching
The company's financial health is reflected in their strong margins, with non-GAAP subscription gross profit margin at
ServiceNow's strategic focus on AI integration through the Xanadu release represents a significant competitive advantage. The introduction of Workflow Data Fabric and partnerships with NVIDIA for AI Agents development positions them strongly in the enterprise AI market. The expansion of their platform capabilities, particularly in GenAI solutions for specific industries, demonstrates their evolution from a pure-play ITSM provider to a comprehensive enterprise automation platform.
The appointment of Amit Zavery as CPO/COO brings valuable enterprise software expertise from Google Cloud and Oracle, potentially accelerating their product innovation and market expansion. Their investments in global infrastructure and skills development programs indicate a well-planned growth strategy.
- ServiceNow exceeds guidance across all Q3 2024 topline growth and profitability metrics; raises 2024 subscription revenues guidance
-
Subscription revenues of
in Q3 2024, representing$2,715 million 23% year-over-year growth,22.5% in constant currency -
Total revenues of
in Q3 2024, representing$2,797 million 22% year-over-year growth,22% in constant currency -
Current remaining performance obligations of
as of Q3 2024, representing$9.36 billion 26% year-over-year growth,23.5% in constant currency -
Remaining performance obligations of
as of Q3 2024, representing$19.5 billion 36% year-over-year growth,33% in constant currency -
15 transactions over
in net new ACV in Q3 2024, up$5 million 50% year-over-year
“ServiceNow raised our full year topline guidance on the strength of our Q3 results, once again going beyond expectations,” said ServiceNow Chairman and CEO Bill McDermott. “This remarkable momentum stems from both existing and new customers doubling down on their investments in ServiceNow as the AI platform for business transformation. The mandate to put AI to work for people represents a generational technology shift. We have never been more confident in ServiceNow’s team, our platform, and our position as the ultimate growth company in enterprise software.”
As of September 30, 2024, current remaining performance obligations (“cRPO”), contract revenue that will be recognized as revenue in the next 12 months, was
“Q3 was another spectacular quarter driven by robust demand for the Now Platform and exceptional team execution,” said ServiceNow CFO Gina Mastantuono. “With Now Assist already delivering fantastic results, our latest Xanadu release marks our most comprehensive set of new AI innovations yet, further fueling our durable topline growth and margin expansion.”
ServiceNow also named enterprise software industry veteran Amit Zavery as president, chief product officer (CPO), and chief operating officer (COO) to lead product and engineering, effective October 28, 2024. With more than three decades in enterprise technology and previous leadership roles at Google Cloud and Oracle, Zavery is a visionary leader who brings extensive experience in enterprise innovation, transformation, and scale. Zavery’s responsibilities will include ServiceNow’s platform, products, engineering, cloud infrastructure, user experience, and enterprise-wide operations, ensuring all solutions meet the real-world business needs of ServiceNow customers.
Recent Business Highlights
Innovation
- ServiceNow is putting AI to work for customers. In Q3, the Now Platform Xanadu release, ServiceNow’s largest AI release to date, introduced hundreds of additional, new AI capabilities including Now Assist Skill Kit and purpose-built GenAI industry solutions for telecom, media, and technology; financial services; the public sector; and more.
- Alongside Xanadu, the company announced its plans to integrate Agentic AI into the ServiceNow platform and unlock 24/7 productivity at massive scale. With advanced reasoning and grounded in cross‑enterprise data through the Now Platform, ServiceNow AI Agents evolve from the more familiar prompt‑based activity to deep contextual comprehension, keeping people in the loop for robust oversight and governance. First use cases will be available in November for Customer Service Management (CSM) and IT Service Management (ITSM).
- Today, the company announced ServiceNow Workflow Data Fabric, an integrated data layer that unifies business and technology data across the enterprise, powering all workflows and AI agents with real-time, secure access to data from any source. Powered by Automation Engine and RaptorDB Pro high-performance database, Workflow Data Fabric unlocks value with orchestration and automation at ultra-speed and scale.
- At the United Nations General Assembly last month, ServiceNow demonstrated its commitment to building a better world through greater access to technology, knowledge, and opportunity. Through efforts such as ServiceNow.org and others, ServiceNow has set a bold ambition to partner with nonprofits and customers to accelerate impact and reach 1 billion people. This includes the company’s ambition to positively reach 20 million people through its philanthropy efforts.
Partnerships
- Today, the company made several partnership announcements designed to expand the ServiceNow ecosystem and accelerate business transformation. ServiceNow and NVIDIA will co-develop native AI Agents using NVIDIA NIM Agent Blueprints within the ServiceNow platform, creating use cases fueled by business knowledge that customers can simply choose to turn on; ServiceNow and Siemens announced a collaboration designed to bolster industrial cybersecurity and integrate GenAI into shop floor operations; ServiceNow and Rimini Street announced a partnership to help enable organizations to unlock value in legacy ERP systems; and ServiceNow and Pearson announced plans to supercharge workforce development and employee experiences in the age of AI.
- Earlier in October, ServiceNow and Zoom announced an expanded strategic alliance to integrate the companies’ GenAI technologies – ServiceNow Now Assist and Zoom AI Companion – to offer organizations advanced workflow automation for tasks and activities.
Global Expansion
- Continuing efforts to expand AI and technology skills, during the quarter, ServiceNow announced a new National Academic Partnership with Singapore’s Republic Polytechnic to provide hundreds of early-in-career and lifelong learners access to emerging AI and cloud computing roles in support of the government's Smart Nation agenda.
-
Later this month, the company plans to launch a new data center pair located in
Milan andRome in response to growing demand for data center infrastructure in the region. The data center pair will help enhance customer agility, boost productivity, and promote innovation. -
In October, ServiceNow announced plans to invest
cumulatively in its$1.5 billion UK business over the next five years. This includes plans to increase headcount, office space, and AI skills programs.
Investment
-
ServiceNow repurchased approximately 272,000 shares of its common stock for
as part of its share repurchase program, with the primary objective of managing the impact of dilution. Of the original authorized amount, approximately$225 million remains available for future share repurchases under the existing program.$562 million
Recognition
- As a testament to ServiceNow’s workplace culture, ServiceNow was awarded 10th place on the Fortune Best Workplaces in Technology list1, in addition to placing on the TIME World's Best Companies, PEOPLE Companies that Care, Fast Company 100 Best Workplaces for Innovators, and more.
(1) |
©2024 Fortune Media IP Limited All rights reserved. Used under license. Fortune and Fortune Media IP Limited are not affiliated with, and do not endorse products or services of, ServiceNow. |
Third Quarter 2024 GAAP and Non-GAAP Results:
The following table summarizes our financial results for the third quarter 2024:
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Third Quarter 2024 GAAP Results |
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Third Quarter 2024 Non-GAAP
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Amount
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Year/Year
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Amount
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Year/Year
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Subscription revenues |
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Professional services and other revenues |
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Total revenues |
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Amount
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Year/Year
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Amount
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Year/Year
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cRPO |
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RPO |
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Amount
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Margin (%) |
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Amount
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Margin (%)(2) |
Subscription gross profit |
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Professional services and other gross (loss) profit |
( |
( |
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Total gross profit |
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Income from operations |
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Net cash provided by operating activities |
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Free cash flow |
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Amount
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Earnings per
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Amount
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Earnings per
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Net income |
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(1) | 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. See the section entitled “Statement Regarding Use of Non-GAAP Financial Measures” for an explanation of non-GAAP measures. |
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(2) | Refer to the table entitled “GAAP to Non-GAAP Reconciliation” for a reconciliation of GAAP to non-GAAP measures. |
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(3) | Non-GAAP subscription revenues and total revenues are adjusted for constant currency by excluding effects of foreign currency rate fluctuations and any gains or losses from foreign currency hedge contracts. Professional services and other revenues, cRPO, and RPO are adjusted only for constant currency. See the section entitled “Statement Regarding Use of Non-GAAP Financial Measures” for an explanation of non-GAAP measures. |
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Note: Numbers rounded for presentation purposes and may not foot. |
Financial Outlook
Our guidance includes GAAP and non-GAAP financial measures. The non-GAAP growth rates for subscription revenues are adjusted for constant currency by excluding effects of foreign currency rate fluctuations and any gains or losses from foreign currency hedge contracts, and cRPO are adjusted only for constant currency to provide better visibility into the underlying business trends.
The following table summarizes our guidance for the fourth quarter 2024:
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Fourth Quarter 2024
|
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Fourth Quarter 2024
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Amount
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Year/Year
|
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Constant Currency
|
Subscription revenues |
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cRPO |
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Margin (%)(2) |
Income from operations |
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Amount
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Weighted-average shares used to compute diluted net income per share |
|
209 |
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|
(1) | 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. See the section entitled “Statement Regarding Use of Non-GAAP Financial Measures” for an explanation of non-GAAP measures. |
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(2) | Refer to the table entitled “Reconciliation of Non-GAAP Financial Guidance” for a reconciliation of GAAP to non-GAAP measures. |
|
(3) |
Guidance for GAAP subscription revenues and GAAP subscription revenues and cRPO growth rates are based on the 30-day average of foreign exchange rates for September 2024 for entities reporting in currencies other than |
The following table summarizes our guidance for the full-year 2024:
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Full-Year 2024
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Full-Year 2024
|
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Amount
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Year/Year
|
|
Constant Currency
|
Subscription revenues |
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|
Margin (%)(2) |
Subscription gross profit |
|
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Income from operations |
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Free cash flow |
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Amount
|
|
|
Weighted-average shares used to compute diluted net income per share |
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208 |
|
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(1) | 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. See the section entitled “Statement Regarding Use of Non-GAAP Financial Measures” for an explanation of non-GAAP measures. |
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(2) | Refer to the table entitled “Reconciliation of Non-GAAP Financial Guidance” for a reconciliation of GAAP to non-GAAP measures. |
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(3) |
GAAP subscription revenues and related growth rate for the future quarter included in our full-year 2024 guidance are based on the 30-day average of foreign exchange rates for September 2024 for entities reporting in currencies other than |
|
Note: Numbers are rounded for presentation purposes and may not foot. |
Conference Call Details
The conference call will begin at 2 p.m. Pacific Time (“PT”) (21:00 GMT) on October 23, 2024. Interested parties may listen to the call by dialing (888) 330‑2455 (Passcode: 8135305), or if outside
https://events.q4inc.com/attendee/941960692
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 (800) 770‑2030 (Passcode: 8135305), or if outside
Investor Presentation Details
An investor presentation providing additional information, including forward-looking guidance, and analysis can be found at https://investors.servicenow.com.
Upcoming Investor Conferences
ServiceNow today announced that it will attend and have executives present at four upcoming investor conferences.
These include:
- ServiceNow Global Executive Committee Member Nick Tzitzon will participate in a fireside chat at the RBC Capital Markets 2024 Global TIMT Conference on Wednesday, November 20, 2024 at 10:20am PT.
- ServiceNow Chief Financial Officer Gina Mastantuono will participate in a keynote presentation at the UBS Global Technology Conference on Tuesday, December 3, 2024 at 9:15am PT.
- ServiceNow Chief Financial Officer Gina Mastantuono will participate in a keynote presentation at the Wells Fargo TMT Summit on Wednesday, December 4, 2024 at 12:00pm PT.
- ServiceNow Chief Financial Officer Gina Mastantuono will participate in a keynote presentation at the Barclays Global Technology Conference on Wednesday, December 11, 2024 at 12:10pm PT.
The live webcast will be accessible on the investor relations section of the ServiceNow website at https://investors.servicenow.com and archived on the ServiceNow site for a period of 30 days.
Statement Regarding Use of Non-GAAP Financial Measures
We use the following non-GAAP financial measures in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP.
-
Revenues. We adjust revenues and related growth rates for constant currency to provide a framework for assessing how our business performed excluding the effect of foreign currency rate fluctuations and any gains or losses from foreign currency hedge contracts that are reported in the current and comparative period. To exclude the effect of foreign currency rate fluctuations, current period results for entities reporting in currencies other than
U.S. Dollars (“USD”) are converted into USD at the average exchange rates in effect during the comparison period (for Q3 2023, the average exchange rates in effect for our major currencies were1 USD to0.92 Euros and1 USD to0.79 British Pound Sterling (“GBP”)), rather than the actual average exchange rates in effect during the current period (for Q3 2024, the average exchange rates in effect for our major currencies were1 USD to0.91 Euros and1 USD to0.77 GBP ). Guidance for related growth rates is derived by applying the average exchange rates in effect during the comparison period, rather than the exchange rates for the guidance period, adjusted for any foreign currency hedging effects. We believe the presentation of revenues and related growth rates adjusted for constant currency facilitates the comparison of revenues year-over-year. -
Remaining performance obligations and current remaining performance obligations. We adjust cRPO and remaining performance obligations (“RPO”) and related growth rates for constant currency to provide a framework for assessing how our business performed. To present this information, current period results for entities reporting in currencies other than USD are converted into USD at the exchange rates in effect at the end of the comparison period (for Q3 2023, the end of the period exchange rates in effect for our major currencies were
1 USD to0.95 Euros and1 USD to0.82 GBP ), rather than the actual end of the period exchange rates in effect during the current period (for Q3 2024, the end of the period exchange rates in effect for our major currencies were1 USD to0.90 Euros and1 USD to0.75 GBP ). Guidance for the related growth rate is derived by applying the end of period exchange rates in effect during the comparison period rather than the exchange rates in effect during the guidance period. We believe the presentation of cRPO and RPO and related growth rates adjusted for constant currency facilitates the comparison of cRPO and RPO year-over-year, respectively. - Gross profit, Income from operations, Net income and Net income per share - diluted. Our non-GAAP presentation of gross profit, income from operations, and net income measures exclude certain non-cash or non-recurring items, including stock-based compensation expense, amortization of debt discount and issuance costs related to our convertible senior notes, loss on early note conversions, amortization of purchased intangibles, legal settlements, business combination and other related costs, income tax effects and adjustments, and the income tax benefit from the release of a valuation allowance on deferred tax assets. The non-GAAP weighted-average shares used to compute our non-GAAP net income per share - diluted excludes the dilutive effect of the in-the-money portion of convertible senior notes as they are covered by our note hedges, and includes the dilutive effect of time-based stock awards, the dilutive effect of warrants and the potentially dilutive effect of our stock awards with performance conditions not yet satisfied at forecasted attainment levels to the extent we believe it is probable that the performance condition will be met. We believe these adjustments provide useful supplemental information to investors and facilitates the analysis of our operating results and comparison of operating results across reporting periods.
- Free cash flow. Free cash flow is defined as net cash provided by operating activities plus cash outflows for legal settlements, repayments of convertible senior notes attributable to debt discount and business combination and other related costs including compensation expense, reduced by purchases of property and equipment. Free cash flow margin is calculated as free cash flow as a percentage of total revenues. We believe information regarding free cash flow and free cash flow margin provides useful information to investors because it is an indicator of the strength and performance of our business operations.
Our presentation of non-GAAP financial measures may not be comparable to similar measures used by other companies. We encourage investors to carefully consider our results under GAAP, as well as our supplemental non-GAAP information and the reconciliation between these presentations, to more fully understand our business. Please see the tables included at the end of this release for the reconciliation of GAAP and non-GAAP results for gross profit, income from operations, net income, net income per share, and free cash flow.
Use of Forward-Looking Statements
This release contains “forward-looking statements” regarding our performance, including but not limited to statements in the section entitled “Financial Outlook” and statements regarding the expected benefits of our announced partnerships. 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.
Factors that may cause actual results to differ materially from those in any forward-looking statements include, among others, experiencing an actual or perceived cyber-security event or weakness; our ability to comply with evolving privacy laws, data transfer restrictions, and other foreign and domestic standards related to data and the Internet; errors, interruptions, delays or security breaches in or of our service or data centers; our ability to maintain and attract key employees and manage workplace culture; alleged violations of laws and regulations, including those relating to anti-bribery and anti-corruption and those relating to public sector contracting requirements; our ability to compete successfully against existing and new competitors; our ability to predict, prepare for and respond promptly to rapidly evolving technological, market and customer developments; our ability to grow our business, including converting remaining performance obligations into revenue, adding and retaining customers, selling additional subscriptions to existing customers, selling to larger enterprises, government and regulated organizations with complex sales cycles and certification processes, and entering new geographies and markets; our ability to develop and gain customer demand for and acceptance of existing, new and improved products and services; our ability to expand and maintain our partnerships and partner programs, including expected market opportunity from such relationships, and realize the anticipated benefits thereof; global economic conditions; fluctuations in the value of foreign currencies relative to the
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, 2023, and in other filings we make with the Securities and Exchange Commission from time to time.
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.
About ServiceNow
ServiceNow (NYSE: NOW) is putting AI to work for people. We move with the pace of innovation to help customers transform organizations across every industry while upholding a trustworthy, human centered approach to deploying our products and services at scale. Our AI platform for business transformation connects people, processes, data, and devices to increase productivity and maximize business outcomes. For more information, visit: www.servicenow.com.
© 2024 ServiceNow, Inc. All rights reserved. ServiceNow, the ServiceNow logo, Now, and other ServiceNow marks are trademarks and/or registered trademarks of ServiceNow, Inc. in
ServiceNow, Inc. Condensed Consolidated Statements of Operations (in millions, except per share data) (unaudited) |
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|
Three Months Ended |
|
Nine Months Ended |
||||||||||||
|
September 30,
|
|
September 30,
|
|
September 30,
|
|
September 30,
|
||||||||
Revenues: |
|
|
|
|
|
|
|
||||||||
Subscription |
$ |
2,715 |
|
|
$ |
2,216 |
|
|
$ |
7,780 |
|
|
$ |
6,315 |
|
Professional services and other |
|
82 |
|
|
|
72 |
|
|
|
247 |
|
|
|
219 |
|
Total revenues |
|
2,797 |
|
|
|
2,288 |
|
|
|
8,027 |
|
|
|
6,534 |
|
Cost of revenues (1): |
|
|
|
|
|
|
|
||||||||
Subscription |
|
496 |
|
|
|
420 |
|
|
|
1,406 |
|
|
|
1,163 |
|
Professional services and other |
|
88 |
|
|
|
76 |
|
|
|
250 |
|
|
|
242 |
|
Total cost of revenues |
|
584 |
|
|
|
496 |
|
|
|
1,656 |
|
|
|
1,405 |
|
Gross profit |
|
2,213 |
|
|
|
1,792 |
|
|
|
6,371 |
|
|
|
5,129 |
|
Operating expenses (1): |
|
|
|
|
|
|
|
||||||||
Sales and marketing |
|
944 |
|
|
|
799 |
|
|
|
2,827 |
|
|
|
2,454 |
|
Research and development |
|
626 |
|
|
|
549 |
|
|
|
1,875 |
|
|
|
1,562 |
|
General and administrative |
|
225 |
|
|
|
213 |
|
|
|
679 |
|
|
|
621 |
|
Total operating expenses |
|
1,795 |
|
|
|
1,561 |
|
|
|
5,381 |
|
|
|
4,637 |
|
Income from operations |
|
418 |
|
|
|
231 |
|
|
|
990 |
|
|
|
492 |
|
Interest income |
|
108 |
|
|
|
82 |
|
|
|
313 |
|
|
|
216 |
|
Other expense, net |
|
(10 |
) |
|
|
(14 |
) |
|
|
(28 |
) |
|
|
(47 |
) |
Income before income taxes |
|
516 |
|
|
|
299 |
|
|
|
1,275 |
|
|
|
661 |
|
Provision for (benefit from) income taxes |
|
84 |
|
|
|
57 |
|
|
|
234 |
|
|
|
(775 |
) |
Net income |
$ |
432 |
|
|
$ |
242 |
|
|
$ |
1,041 |
|
|
$ |
1,436 |
|
Net income per share - basic |
$ |
2.09 |
|
|
$ |
1.18 |
|
|
$ |
5.06 |
|
|
$ |
7.04 |
|
Net income per share - diluted |
$ |
2.07 |
|
|
$ |
1.17 |
|
|
$ |
5.00 |
|
|
$ |
7.00 |
|
Weighted-average shares used to compute net income per share - basic |
|
206 |
|
|
|
204 |
|
|
|
206 |
|
|
|
204 |
|
Weighted-average shares used to compute net income per share - diluted |
|
209 |
|
|
|
206 |
|
|
|
208 |
|
|
|
205 |
|
(1) | Includes stock-based compensation as follows: |
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||
|
September 30,
|
|
September 30,
|
|
September 30,
|
|
September 30,
|
||||||||
Cost of revenues: |
|
|
|
|
|
|
|
||||||||
Subscription |
$ |
64 |
|
|
$ |
52 |
|
|
$ |
184 |
|
|
$ |
148 |
|
Professional services and other |
|
11 |
|
|
11 |
|
|
35 |
|
|
40 |
||||
Operating expenses: |
|
|
|
|
|
|
|
||||||||
Sales and marketing |
|
144 |
|
|
|
132 |
|
|
|
419 |
|
|
|
378 |
|
Research and development |
|
150 |
|
|
|
150 |
|
|
|
479 |
|
|
|
430 |
|
General and administrative |
|
57 |
|
|
|
68 |
|
|
|
175 |
|
|
|
195 |
|
ServiceNow, Inc. Condensed Consolidated Balance Sheets (in millions) |
|||||
|
September 30, 2024 |
|
December 31, 2023 |
||
|
(unaudited) |
|
|
||
Assets |
|
|
|
||
Current assets: |
|
|
|
||
Cash and cash equivalents |
$ |
1,885 |
|
$ |
1,897 |
Short-term investments |
|
3,410 |
|
|
2,980 |
Accounts receivable, net |
|
1,308 |
|
|
2,036 |
Current portion of deferred commissions |
|
502 |
|
|
461 |
Prepaid expenses and other current assets |
|
591 |
|
|
403 |
Total current assets |
|
7,696 |
|
|
7,777 |
Deferred commissions, less current portion |
|
946 |
|
|
919 |
Long-term investments |
|
3,829 |
|
|
3,203 |
Property and equipment, net |
|
1,718 |
|
|
1,358 |
Operating lease right-of-use assets |
|
661 |
|
|
715 |
Intangible assets, net |
|
214 |
|
|
224 |
Goodwill |
|
1,291 |
|
|
1,231 |
Deferred tax assets |
|
1,444 |
|
|
1,508 |
Other assets |
|
635 |
|
|
452 |
Total assets |
$ |
18,434 |
|
$ |
17,387 |
Liabilities and Stockholders’ Equity |
|
|
|
||
Current liabilities: |
|
|
|
||
Accounts payable |
$ |
165 |
|
$ |
126 |
Accrued expenses and other current liabilities |
|
1,058 |
|
|
1,365 |
Current portion of deferred revenue |
|
5,457 |
|
|
5,785 |
Current portion of operating lease liabilities |
|
106 |
|
|
89 |
Total current liabilities |
|
6,786 |
|
|
7,365 |
Deferred revenue, less current portion |
|
77 |
|
|
81 |
Operating lease liabilities, less current portion |
|
650 |
|
|
707 |
Long-term debt, net |
|
1,489 |
|
|
1,488 |
Other long-term liabilities |
|
142 |
|
|
118 |
Stockholders’ equity |
|
9,290 |
|
|
7,628 |
Total liabilities and stockholders’ equity |
$ |
18,434 |
|
$ |
17,387 |
ServiceNow, Inc. Condensed Consolidated Statements of Cash Flows (in millions) (unaudited) |
|||||||||||||||
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||
|
September 30,
|
|
September 30,
|
|
September 30,
|
|
September 30,
|
||||||||
Cash flows from operating activities: |
|
|
|
|
|
|
|
||||||||
Net income |
$ |
432 |
|
|
$ |
242 |
|
|
$ |
1,041 |
|
|
$ |
1,436 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
|
||||||||
Depreciation and amortization |
|
144 |
|
|
|
146 |
|
|
|
410 |
|
|
|
408 |
|
Amortization of deferred commissions |
|
140 |
|
|
|
115 |
|
|
|
403 |
|
|
|
333 |
|
Stock-based compensation |
|
426 |
|
|
|
413 |
|
|
|
1,292 |
|
|
|
1,191 |
|
Deferred income taxes |
|
(5 |
) |
|
|
30 |
|
|
|
47 |
|
|
|
(874 |
) |
Other |
|
(6 |
) |
|
|
(11 |
) |
|
|
(31 |
) |
|
|
(13 |
) |
Changes in operating assets and liabilities, net of effect of business combinations: |
|
|
|
|
|
|
|
||||||||
Accounts receivable |
|
228 |
|
|
|
(83 |
) |
|
|
727 |
|
|
|
552 |
|
Deferred commissions |
|
(155 |
) |
|
|
(173 |
) |
|
|
(461 |
) |
|
|
(453 |
) |
Prepaid expenses and other assets |
|
(15 |
) |
|
|
(47 |
) |
|
|
(267 |
) |
|
|
(183 |
) |
Accounts payable |
|
(130 |
) |
|
|
(98 |
) |
|
|
42 |
|
|
|
(188 |
) |
Deferred revenue |
|
(263 |
) |
|
|
(128 |
) |
|
|
(355 |
) |
|
|
(217 |
) |
Accrued expenses and other liabilities |
|
(125 |
) |
|
|
(95 |
) |
|
|
(216 |
) |
|
|
(199 |
) |
Net cash provided by operating activities |
|
671 |
|
|
|
311 |
|
|
|
2,632 |
|
|
|
1,793 |
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
||||||||
Purchases of property and equipment |
|
(202 |
) |
|
|
(136 |
) |
|
|
(599 |
) |
|
|
(433 |
) |
Business combinations, net of cash acquired(1) |
|
(41 |
) |
|
|
(279 |
) |
|
|
(82 |
) |
|
|
(279 |
) |
Purchases of other intangibles |
|
— |
|
|
|
(3 |
) |
|
|
(30 |
) |
|
|
(3 |
) |
Purchases of investments |
|
(1,292 |
) |
|
|
(984 |
) |
|
|
(3,952 |
) |
|
|
(3,805 |
) |
Purchases of non-marketable investments |
|
(61 |
) |
|
|
(10 |
) |
|
|
(149 |
) |
|
|
(56 |
) |
Sales and maturities of investments |
|
911 |
|
|
|
915 |
|
|
|
3,024 |
|
|
|
2,868 |
|
Other |
|
27 |
|
|
|
(28 |
) |
|
|
25 |
|
|
|
(15 |
) |
Net cash used in investing activities |
|
(658 |
) |
|
|
(525 |
) |
|
|
(1,763 |
) |
|
|
(1,723 |
) |
Cash flows from financing activities: |
|
|
|
|
|
|
|
||||||||
Proceeds from employee stock plans |
|
106 |
|
|
|
76 |
|
|
|
237 |
|
|
|
193 |
|
Repurchases of common stock |
|
(225 |
) |
|
|
(282 |
) |
|
|
(400 |
) |
|
|
(282 |
) |
Taxes paid related to net share settlement of equity awards |
|
(173 |
) |
|
|
(127 |
) |
|
|
(525 |
) |
|
|
(333 |
) |
Business combination (1) |
|
— |
|
|
|
— |
|
|
|
(184 |
) |
|
|
— |
|
Net cash used in financing activities |
|
(292 |
) |
|
|
(333 |
) |
|
|
(872 |
) |
|
|
(422 |
) |
Foreign currency effect on cash, cash equivalents and restricted cash |
|
5 |
|
|
|
(4 |
) |
|
|
(8 |
) |
|
|
(4 |
) |
Net change in cash, cash equivalents and restricted cash |
|
(274 |
) |
|
|
(551 |
) |
|
|
(11 |
) |
|
|
(356 |
) |
Cash, cash equivalents and restricted cash at beginning of period |
|
2,167 |
|
|
|
1,670 |
|
|
|
1,904 |
|
|
|
1,475 |
|
Cash, cash equivalents and restricted cash at end of period |
$ |
1,893 |
|
|
$ |
1,119 |
|
|
$ |
1,893 |
|
|
$ |
1,119 |
|
(1) |
The nine-months period ended September 30, 2024 reflects a reclassification of |
ServiceNow, Inc. GAAP to Non-GAAP Reconciliation (in millions, except per share data) (unaudited) |
|||||||||||||||
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||
|
September 30,
|
|
September 30,
|
|
September 30,
|
|
September 30,
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Gross profit: |
|
|
|
|
|
|
|
||||||||
GAAP subscription gross profit |
$ |
2,219 |
|
|
$ |
1,796 |
|
|
$ |
6,374 |
|
|
$ |
5,152 |
|
Stock-based compensation |
|
64 |
|
|
|
52 |
|
|
|
184 |
|
|
|
148 |
|
Amortization of purchased intangibles |
|
22 |
|
|
|
20 |
|
|
|
64 |
|
|
|
57 |
|
Non-GAAP subscription gross profit |
$ |
2,305 |
|
|
$ |
1,868 |
|
|
$ |
6,622 |
|
|
$ |
5,357 |
|
|
|
|
|
|
|
|
|
||||||||
GAAP professional services and other gross loss |
$ |
(6 |
) |
|
$ |
(4 |
) |
|
$ |
(3 |
) |
|
$ |
(23 |
) |
Stock-based compensation |
|
11 |
|
|
|
11 |
|
|
|
35 |
|
|
|
40 |
|
Non-GAAP professional services and other gross profit |
$ |
5 |
|
|
$ |
7 |
|
|
$ |
32 |
|
|
$ |
17 |
|
|
|
|
|
|
|
|
|
||||||||
GAAP gross profit |
$ |
2,213 |
|
|
$ |
1,792 |
|
|
$ |
6,371 |
|
|
$ |
5,129 |
|
Stock-based compensation |
|
75 |
|
|
|
63 |
|
|
|
219 |
|
|
|
188 |
|
Amortization of purchased intangibles |
|
22 |
|
|
|
20 |
|
|
|
64 |
|
|
|
57 |
|
Non-GAAP gross profit |
$ |
2,310 |
|
|
$ |
1,875 |
|
|
$ |
6,654 |
|
|
$ |
5,374 |
|
|
|
|
|
|
|
|
|
||||||||
Gross margin: |
|
|
|
|
|
|
|
||||||||
GAAP subscription gross margin |
|
82 |
% |
|
|
81 |
% |
|
|
82 |
% |
|
|
82 |
% |
Stock-based compensation as % of subscription revenues |
|
2 |
% |
|
|
2 |
% |
|
|
2 |
% |
|
|
2 |
% |
Amortization of purchased intangibles as % of subscription revenues |
|
1 |
% |
|
|
1 |
% |
|
|
1 |
% |
|
|
1 |
% |
Non-GAAP subscription gross margin |
|
85 |
% |
|
|
84 |
% |
|
|
85 |
% |
|
|
85 |
% |
|
|
|
|
|
|
|
|
||||||||
GAAP professional services and other gross margin |
|
(7 |
%) |
|
|
(6 |
%) |
|
|
(1 |
%) |
|
|
(11 |
%) |
Stock-based compensation as % of professional services and other revenues |
|
13 |
% |
|
|
15 |
% |
|
|
14 |
% |
|
|
18 |
% |
Non-GAAP professional services and other gross margin |
|
7 |
% |
|
|
10 |
% |
|
|
13 |
% |
|
|
8 |
% |
|
|
|
|
|
|
||||||||||
GAAP gross margin |
|
79 |
% |
|
|
78 |
% |
|
|
79 |
% |
|
|
79 |
% |
Stock-based compensation as % of total revenues |
|
3 |
% |
|
|
3 |
% |
|
|
3 |
% |
|
|
3 |
% |
Amortization of purchased intangibles as % of total revenues |
|
1 |
% |
|
|
1 |
% |
|
|
1 |
% |
|
|
1 |
% |
Non-GAAP gross margin |
|
83 |
% |
|
|
82 |
% |
|
|
83 |
% |
|
|
82 |
% |
|
|
|
|
|
|
|
|
||||||||
Income from operations: |
|
|
|
|
|
|
|
||||||||
GAAP income from operations |
$ |
418 |
|
|
$ |
231 |
|
|
$ |
990 |
|
|
$ |
492 |
|
Stock-based compensation |
|
426 |
|
|
|
413 |
|
|
|
1,292 |
|
|
|
1,191 |
|
Amortization of purchased intangibles |
|
23 |
|
|
|
21 |
|
|
|
71 |
|
|
|
63 |
|
Business combination and other related costs |
|
4 |
|
|
|
11 |
|
|
|
29 |
|
|
|
26 |
|
Non-GAAP income from operations |
$ |
872 |
|
|
$ |
676 |
|
|
$ |
2,383 |
|
|
$ |
1,772 |
|
|
|
|
|
|
|
|
|
||||||||
Operating margin: |
|
|
|
|
|
|
|
||||||||
GAAP operating margin |
|
15 |
% |
|
|
10 |
% |
|
|
12 |
% |
|
|
8 |
% |
Stock-based compensation as % of total revenues |
|
15 |
% |
|
|
18 |
% |
|
|
16 |
% |
|
|
18 |
% |
Amortization of purchased intangibles as % of total revenues |
|
1 |
% |
|
|
1 |
% |
|
|
1 |
% |
|
|
1 |
% |
Business combination and other related costs as % of total revenues |
|
— |
% |
|
|
— |
% |
|
|
— |
% |
|
|
— |
% |
Non-GAAP operating margin |
|
31 |
% |
|
|
30 |
% |
|
|
30 |
% |
|
|
27 |
% |
|
|
|
|
|
|
|
|
||||||||
Net income: |
|
|
|
|
|
|
|
||||||||
GAAP net income |
$ |
432 |
|
|
$ |
242 |
|
|
$ |
1,041 |
|
|
$ |
1,436 |
|
Stock-based compensation |
|
426 |
|
|
|
413 |
|
|
|
1,292 |
|
|
|
1,191 |
|
Amortization of purchased intangibles |
|
23 |
|
|
|
21 |
|
|
|
71 |
|
|
|
63 |
|
Business combination and other related costs |
|
4 |
|
|
|
11 |
|
|
|
29 |
|
|
|
26 |
|
Income tax effects and adjustments(1) |
|
(110 |
) |
|
|
(64 |
) |
|
|
(300 |
) |
|
|
(159 |
) |
Release of a valuation allowance on deferred tax assets |
|
— |
|
|
|
(20 |
) |
|
|
— |
|
|
|
(985 |
) |
Non-GAAP net income |
$ |
775 |
|
|
$ |
603 |
|
|
$ |
2,133 |
|
|
$ |
1,572 |
|
|
|
|
|
|
|
|
|
||||||||
Net income per share - basic and diluted: |
|
|
|
|
|
|
|
||||||||
GAAP net income per share - basic |
$ |
2.09 |
|
|
$ |
1.18 |
|
|
$ |
5.06 |
|
|
$ |
7.04 |
|
GAAP net income per share - diluted |
$ |
2.07 |
|
|
$ |
1.17 |
|
|
$ |
5.00 |
|
|
$ |
7.00 |
|
Non-GAAP net income per share - basic |
$ |
3.76 |
|
|
$ |
2.95 |
|
|
$ |
10.37 |
|
|
$ |
7.71 |
|
Non-GAAP net income per share - diluted |
$ |
3.72 |
|
|
$ |
2.92 |
|
|
$ |
10.26 |
|
|
$ |
7.66 |
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average shares used to compute net income per share - basic |
|
206 |
|
|
|
204 |
|
|
|
206 |
|
|
|
204 |
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average shares used to compute net income per share - diluted |
|
209 |
|
|
|
206 |
|
|
|
208 |
|
|
|
205 |
|
|
|
|
|
|
|
|
|
||||||||
Free cash flow: |
|
|
|
|
|
|
|
||||||||
GAAP net cash provided by operating activities |
$ |
671 |
|
|
$ |
311 |
|
|
$ |
2,632 |
|
|
$ |
1,793 |
|
Purchases of property and equipment |
|
(202 |
) |
|
|
(136 |
) |
|
|
(599 |
) |
|
|
(433 |
) |
Business combination and other related costs |
|
2 |
|
|
|
21 |
|
|
|
22 |
|
|
|
24 |
|
Non-GAAP free cash flow |
$ |
471 |
|
|
$ |
196 |
|
|
$ |
2,055 |
|
|
$ |
1,384 |
|
|
|
|
|
|
|
|
|
||||||||
Free cash flow margin: |
|
|
|
|
|
|
|
||||||||
GAAP net cash provided by operating activities as % of total revenues |
|
24 |
% |
|
|
14 |
% |
|
|
33 |
% |
|
|
27 |
% |
Purchases of property and equipment as % of total revenues |
|
(7 |
%) |
|
|
(6 |
%) |
|
|
(7 |
%) |
|
|
(7 |
%) |
Business combination and other related costs as % of total revenues |
|
— |
% |
|
|
1 |
% |
|
|
— |
% |
|
|
— |
% |
Non-GAAP free cash flow margin |
|
17 |
% |
|
|
9 |
% |
|
|
26 |
% |
|
|
21 |
% |
(1) |
We use a non-GAAP effective tax rate for evaluating our operating results to provide consistency across reporting periods. Based on our long-term projections, we are using a non-GAAP tax rate of |
|
Note: Numbers are rounded for presentation purposes and may not foot. |
ServiceNow, Inc. Reconciliation of Non-GAAP Financial Guidance |
|
|
Three Months Ending |
|
December 31, 2024 |
|
|
|
|
GAAP operating margin |
|
|
|
Stock-based compensation expense as % of total revenues |
|
|
|
Amortization of purchased intangibles as % of total revenues |
|
|
|
Business combination and other related costs as % of total revenues |
—% |
|
|
Non-GAAP operating margin |
|
|
Twelve Months Ending |
|
December 31, 2024 |
|
|
|
|
GAAP subscription gross margin |
|
|
|
Stock-based compensation expense as % of subscription revenues |
|
|
|
Amortization of purchased intangibles as % of subscription revenues |
|
|
|
Non-GAAP subscription margin |
|
|
|
GAAP operating margin |
|
|
|
Stock-based compensation expense as % of total revenues |
|
|
|
Amortization of purchased intangibles as % of total revenues |
|
|
|
Business combination and other related costs as % of total revenues |
—% |
|
|
Non-GAAP operating margin |
|
|
|
GAAP net cash provided by operating activities as % of total revenues |
|
|
|
Purchases of property and equipment as % of total revenues |
( |
|
|
Business combination and other related costs as % of total revenues |
—% |
|
|
Non-GAAP free cash flow margin |
|
Note: Numbers are rounded for presentation purposes and may not foot. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20241023215869/en/
Media Contact:
Johnna Hoff
(408) 250-8644
press@servicenow.com
Investor Contact:
Darren Yip
(925) 388-7205
ir@servicenow.com
Source: ServiceNow
FAQ
What were ServiceNow's (NOW) Q3 2024 subscription revenues?
How many customers does ServiceNow (NOW) have with over $1 million in annual contract value?