EX-99.1 2 d386798dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

ServiceNow Reports Financial Results for Second Quarter 2012

93% Year-over-Year and 20% Quarter-over-Quarter Revenue Growth

SAN DIEGO – August 1, 2012 - ServiceNow, Inc. (NYSE: NOW), a leading provider of cloud-based services to automate enterprise IT operations, today announced its financial results for its second quarter of 2012.

Second quarter 2012 results:

 

   

Revenues of $56.8 million, an increase of 93% compared to the second quarter of 2011, and an increase of 20% from the first quarter of 2012.

 

   

A GAAP net loss for the quarter of $8.7 million, or a loss of $0.32 per basic and diluted share, compared to GAAP net income of $2.0 million, or net income of $0.02 per diluted share, in the second quarter of 2011.

 

   

A Non-GAAP net loss for the quarter of $3.1 million, or a net loss of $0.12 per basic and diluted share, compared to non-GAAP net income of $2.9 million, or net income of $0.05 per diluted share, in the second 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 measures).

 

   

Deferred Revenue of $131.1 million, a 13% increase over the $115.8 million reported at the end of the prior quarter.

 

   

Billings were $72.1 million, a 23% increase over the $58.5 million reported in the previous quarter and a 98% increase over the $36.5 million in the same period last year.

“ServiceNow’s second quarter results were highlighted by record revenues,” said Frank Slootman, chief executive officer of ServiceNow. “We added over 120 customers during the quarter, bringing our cumulative customer count to 1,201 worldwide, including many of the largest and most recognized companies in the world. We also achieved a customer renewal rate of 95%, a testament to the value the ServiceNow platform provides to our customers. Continued strong operational performance, coupled with the milestone of our initial public offering, have us well-positioned to execute on our growth strategy and our vision to transform IT.”


“We continued to show strong revenue execution during the second quarter, continuing to build out key elements of our infrastructure to position us for future growth,” added Michael Scarpelli, chief financial officer of ServiceNow. “We added 154 net new employees, bringing total headcount to 882, and we generated approximately $6.9 million in operating cash flow for the quarter.”

Financial Outlook

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).

For the third quarter of 2012, we expect:

 

   

Total revenues between $61 and $63 million, representing year-over-year growth between 78% and 84%. Our total third quarter revenues estimate consists of subscription revenues between $53 and $54 million and professional services and other revenues between $8 million and $9 million.

 

   

Subscription gross margin between 66% and 67%, professional services and other gross margin between (14%) and (19%), and overall gross margin between 55% and 56%.

 

   

Operating margin between (17%) and (19%).

 

   

A loss per basic and diluted share between $0.10 and $0.11 with weighted-average shares outstanding of approximately 121 million.

For the full year 2012 we expect revenues to fall within the range of $233 to $237 million, representing year-over-year growth between 82% and 85%. Our total annual revenues estimate consists of subscription revenues between $198 and $200 million and professional services and other revenues between $35 and $37 million.

Second quarter highlights

 

   

In June, ServiceNow became a public company and began trading on the New York Stock Exchange. On July 5, 2012, ServiceNow closed its initial public offering, issuing 10,350,000 shares of common stock at a price to the public of $18.00 per share, which included 1,350,000 shares of common stock issued upon the exercise in full of the underwriters’ over-allotment option. The offering generated net proceeds to the company of approximately $170 million.


   

In May, ServiceNow hosted Knowledge12, its annual user conference, in New Orleans with nearly 2,000 attendees to share best practices and to discover how ServiceNow can drive additional value in their business. This record number of attendees is up from nearly 1,000 last year.

 

   

In May, ServiceNow launched the ability for customers to take advantage of advanced high availability in its standard data centers. When advanced high availability is employed, customer production data will be replicated, in near real time, to a geographically separate data center. In the event of service disruption, the customer instance can be configured to fail over to an alternate data center.

 

   

In May, ServiceNow launched new services that enhance ServiceNow’s proven professional services methodology, StartNow. The methodology is built on best practices captured from hundreds of successful customer implementations and is now integrated into the ServiceNow platform itself. New offerings include ServiceNow Best Practice Workshops that align customer processes and technology with the ServiceNow platform and QuickStart packaged implementations that consolidate legacy systems as additional applications are deployed on the ServiceNow platform.

 

   

In May, ServiceNow announced a relationship with KPMG LLP to deliver service offerings to leverage the companies’ experience in cloud services and enterprise IT. KPMG will provide implementation support services, process design, process integration, and IT organizational change consulting for ServiceNow enterprise customers.

Conference Call Details

ServiceNow will host a conference call to discuss its financial results for the second quarter of 2012 to begin today at 2 p.m. PDT (5 p.m. EDT). Interested parties may listen to the call by dialing 800.798.2796 (passcode: 30521460), or if outside North America, by dialing 617.614.6204 (passcode: 30521460). Individuals may access the live teleconference from the investor relations section of the ServiceNow web site 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 will run for seven days. To hear the replay interested parties may dial 888.286.8010 (passcode: 50733523), or if outside North America, by dialing 617.801.6888 (passcode: 50733523).

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 and adjustments for capitalized software. Management believes the presentation of operating results excluding stock-based compensation expense and adjustments for capitalized software 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 operating performance.

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 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) 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 S-1 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 second quarter ended June 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.

About ServiceNow

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 ServiceNow’s discretion 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.

Copyright © 2012. ServiceNow. All rights reserved. ServiceNow, StartNow, QuickStart and the ServiceNow logo are trademarks of ServiceNow. All other brand and product names are trademarks or registered trademarks of their respective holders.

# # #

ServiceNow media relations contacts:

Steve Schick

408-961-2349

press@servicenow.com

Kim Gengler

415.905.4045

kim.gengler@horngroup.com

ServiceNow investor relations contact:

858.345.1756

ir@servicenow.com


ServiceNow, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except share and per share data)

 

     Three Months Ended      Six Months Ended  
     June 30,
2012
    June 30,
2011
     June 30,
2012
    June 30,
2011
 
     (Unaudited)  

Revenues:

         

Subscription

   $ 46,820      $ 24,776       $ 86,361      $ 46,000   

Professional services and other

     9,954        4,709         17,844        8,697   
  

 

 

   

 

 

    

 

 

   

 

 

 

Total revenues

     56,774        29,485         104,205        54,697   
  

 

 

   

 

 

    

 

 

   

 

 

 

Cost of revenues (1):

         

Subscription

     14,239        4,764         25,251        9,215   

Professional services and other

     8,652        4,723         18,876        9,486   
  

 

 

   

 

 

    

 

 

   

 

 

 

Total cost of revenues

     22,891        9,487         44,127        18,701   
  

 

 

   

 

 

    

 

 

   

 

 

 

Gross profit

     33,883        19,998         60,078        35,996   
  

 

 

   

 

 

    

 

 

   

 

 

 

Operating expenses (1):

         

Sales and marketing

     26,909        12,086         46,216        20,395   

Research and development (2)

     9,272        2,361         15,315        4,246   

General and administrative

     6,819        3,282         13,246        5,962   
  

 

 

   

 

 

    

 

 

   

 

 

 

Total operating expenses

     43,000        17,729         74,777        30,603   
  

 

 

   

 

 

    

 

 

   

 

 

 

Income (loss) from operations

     (9,117     2,269         (14,699     5,393   

Interest and other income, net

     41        65         533        317   
  

 

 

   

 

 

    

 

 

   

 

 

 

Income (loss) before provision for income taxes

     (9,076     2,334         (14,166     5,710   

Provision for (benefit from) income taxes

     (352     298         198        683   
  

 

 

   

 

 

    

 

 

   

 

 

 

Net income (loss)

   $ (8,724   $ 2,036       $ (14,364   $ 5,027   
  

 

 

   

 

 

    

 

 

   

 

 

 

Net income (loss) per share attributable to common stockholders:

         

Basic

   $ (0.32   $ 0.02       $ (0.55   $ 0.05   
  

 

 

   

 

 

    

 

 

   

 

 

 

Diluted

   $ (0.32   $ 0.02       $ (0.55   $ 0.04   
  

 

 

   

 

 

    

 

 

   

 

 

 

Weighted-average shares used to compute net income (loss) per share attributable to common stockholders:

         

Basic

     27,788,547        19,668,851         26,452,100        19,188,210   
  

 

 

   

 

 

    

 

 

   

 

 

 

Diluted

     27,788,547        29,584,225         26,452,100        28,933,574   
  

 

 

   

 

 

    

 

 

   

 

 

 

 

(1) 

Includes total stock-based compensation expense for stock-based awards:

 

     Three Months Ended      Six Months Ended  
     June 30,
2012
     June 30,
2011
     June 30,
2012
     June 30,
2011
 

Cost of revenues:

           

Subscription

   $ 706       $ 167       $ 1,238       $ 323   

Professional services and other

     277         42         469         80   

Sales and marketing

     2,482         285         3,953         573   

Research and development

     1,541         118         2,202         261   

General and administrative

     1,451         466         2,513         596   

 

(2) 

The Company recorded an out of period adjustment during the quarter ended June 30, 2012 to reflect the correction of an immaterial error related to software development costs of $0.7 million that was improperly capitalized during the quarter ended March 31, 2012. The correction of this error had no effect on the results of operations for the six months ended June 30, 2012.


ServiceNow, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

 

     June 30, 2012     December 31, 2011  
     (unaudited)        

ASSETS

    

Current assets:

    

Cash and cash equivalents

   $ 65,482      $ 68,088   

Restricted cash

     37        45   

Short-term investments

     22,795        —     

Accounts receivable

     47,334        44,860   

Current portion of deferred commissions

     10,219        6,087   

Prepaid expenses and other current assets

     4,671        9,883   

Current portion of deferred tax assets

     1,544        1,544   
  

 

 

   

 

 

 

Total current assets

     152,082        130,507   

Deferred commissions, less current portion

     8,151        4,597   

Property and equipment, net

     35,452        20,695   

Deferred tax asset, less current portion

     174        —     

Other assets

     4,613        524   
  

 

 

   

 

 

 

Total assets

   $ 200,472      $ 156,323   
  

 

 

   

 

 

 

LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT

  

Current liabilities:

    

Accounts payable

   $ 8,550      $ 9,411   

Accrued expenses and other current liabilities

     29,658        25,608   

Current portion of deferred revenue

     113,167        91,087   

Current portion of deferred rent

     430        455   
  

 

 

   

 

 

 

Total current liabilities

     151,805        126,561   

Deferred revenue, less current portion

     17,902        13,549   

Deferred rent, less current portion

     2,902        2,935   

Other long-term liabilities

     2,510        2,532   

Convertible preferred stock

     68,481        68,172   

Stockholders’ deficit

     (43,128     (57,426
  

 

 

   

 

 

 

Total liabilities, convertible preferred stock and stockholders’ deficit

   $ 200,472      $ 156,323   
  

 

 

   

 

 

 


ServiceNow, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

 

     Three Months Ended     Six Months Ended  
     June 30,
2012
    June 30,
2011
    June 30,
2012
    June 30,
2011
 
     (Unaudited)  

Cash flows from operating activities:

        

Net income (loss)

   $ (8,724   $ 2,036      $ (14,364   $ 5,027   

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

        

Depreciation

     2,826        564        4,873        970   

Amortization of net premium on short-term investments

     98        —          98        —     

Amortization of deferred commissions

     3,001        1,276        5,344        2,381   

Stock-based compensation

     6,457        1,078        10,375        1,833   

Tax benefit from exercise of stock options

     703        22        (257     (21

Deferred income taxes

     (174     —          (174     —     

(Gain) Loss on disposal of property and equipment

     —          —          (1     60   

Changes in operating assets and liabilities:

        

Accounts receivable

     (4,781     1,371        (2,723     (7,131

Deferred commissions

     (7,823     (1,847     (13,076     (3,388

Prepaid expenses and other current assets

     1,031        (765     5,203        (2,312

Other assets

     (1,882     (5     (2,923     (220

Accounts payable

     (470     167        1,269        1,099   

Accrued expenses and other current liabilities

     920        1,237        2,646        3,869   

Deferred rent

     (7     563        (58     3,236   

Deferred revenue

     15,764        6,976        26,786        21,358   

Other long-term liabilities

     —          (2     —          (4
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by operating activities

     6,939        12,671        23,018        26,757   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash flows from investing activities:

        

Purchases of property and equipment

     (11,668     (2,850     (20,226     (6,676

Purchases of investments

     (8,575     —          (23,919     —     

Sale of investments

     1,025        —          1,025        —     

Restricted cash

     —          —          8        150   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash used in investing activities

     (19,218     (2,850     (43,112     (6,526
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash flows from financing activities:

        

Proceeds from exercise of stock options

     832        250        2,132        341   

Proceeds from early exercise of stock options

     137        212        1,025        643   

Tax benefit from exercise of stock options

     (703     (22     257        21   

Net proceeds from issuance of common stock

     —          —          17,848        —     

Purchases of common stock and restricted stock from stockholders

     (891     —          (1,960     —     

Offering costs in connection with initial public offering

     (1,164     —          (1,164     —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by (used in) financing activities

     (1,789     440        18,138        1,005   
  

 

 

   

 

 

   

 

 

   

 

 

 

Foreign currency effect on cash

     (590     (81     (650     160   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) in cash and cash equivalents

     (14,658     10,180        (2,606     21,396   

Cash and cash equivalents at beginning of period

     80,140        49,673        68,088        38,457   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 65,482      $ 59,853      $ 65,482      $ 59,853   
  

 

 

   

 

 

   

 

 

   

 

 

 

Calculation of free cash flow (a non-GAAP measure):

        

Net cash provided by operating activities

   $ 6,939      $ 12,671      $ 23,018      $ 26,757   

Purchases of property and equipment

     (11,668     (2,850     (20,226     (6,676
  

 

 

   

 

 

   

 

 

   

 

 

 

Free cash flow

   $ (4,729   $ 9,821      $ 2,792      $ 20,081   
  

 

 

   

 

 

   

 

 

   

 

 

 


ServiceNow, Inc.

Results of Operations GAAP to Non-GAAP Reconciliation

(in thousands except share and per share data)

(Unaudited)

 

     Three Months Ended  
     March 31, 2012  
     GAAP     Adjustments     Non-GAAP  

Reconciliation of gross profit:

      

Revenues:

      

Subscription

   $ 39,541      $ —        $ 39,541   

Professional services and other

     7,890        —          7,890   
  

 

 

   

 

 

   

 

 

 

Total revenues

     47,431        —          47,431   
  

 

 

   

 

 

   

 

 

 

Cost of revenues (1):

      

Subscription

     11,012        (532     10,480   

Professional services and other

     10,224        (192     10,032   
  

 

 

   

 

 

   

 

 

 

Total cost of revenues

     21,236        (724     20,512   
  

 

 

   

 

 

   

 

 

 

Gross profit:

      

Subscription

     28,529        532        29,061   

Professional services and other

     (2,334     192        (2,142
  

 

 

   

 

 

   

 

 

 

Total gross profit

   $ 26,195      $ 724      $ 26,919   
  

 

 

   

 

 

   

 

 

 

Reconciliation of operating expenses:

      

Operating expenses (1):

      

Sales and marketing

   $ 19,307      $ (1,471   $ 17,836   

Research and development (2)

     6,043        71        6,114   

General and administrative

     6,427        (1,062     5,365   
  

 

 

   

 

 

   

 

 

 

Total operating expenses

   $ 31,777      $ (2,462   $ 29,315   
  

 

 

   

 

 

   

 

 

 

Reconciliation of income loss from operations, provision for income taxes, net loss, net income loss per share, and pro forma net loss per share:

   

Loss from operations

   $ (5,582   $ 3,186      $ (2,396
  

 

 

   

 

 

   

 

 

 

Loss before provision for income taxes

   $ (5,090   $ 3,186      $ (1,904

Provision for income taxes (1), (2)

     550        608        1,158   
  

 

 

   

 

 

   

 

 

 

Net loss

   $ (5,640   $ 2,578      $ (3,062
  

 

 

   

 

 

   

 

 

 

Net loss per share attributable to common

      

Basic

   $ (0.23   $ 0.10      $ (0.13
  

 

 

   

 

 

   

 

 

 

Diluted

   $ (0.23   $ 0.10      $ (0.13
  

 

 

   

 

 

   

 

 

 

Weighted-average shares used to compute net

      

Basic

     25,123,582          25,123,582   
  

 

 

     

 

 

 

Diluted

     25,123,582          25,123,582   
  

 

 

     

 

 

 

Pro forma net loss per share attributable to common stockholders (3):

      

Basic and diluted

   $ (0.05   $ 0.02      $ (0.03
  

 

 

   

 

 

   

 

 

 

Pro forma weighted-average shares used to compute net loss per share attributable to common stockholders (3):

      

Basic and diluted

     119,176,598          119,176,598   
  

 

 

     

 

 

 
(1)

Adjustment includes stock-based compensation and the related tax effect.

(2) 

Adjustment includes $0.7 million of research and development expenses that were capitalized related to software development costs incurred during the development of the Company’s feature release for its service offering and the related tax effect.

(3) 

Pro forma adjustments include the sale of 10,350,000 shares of common stock in the Company’s initial public offering (IPO) and the conversion of all outstanding shares of its convertible preferred stock into an aggregate of 83,703,016 shares of common stock upon the closing of the IPO effective July 5, 2012.


ServiceNow, Inc.

Results of Operations GAAP to Non-GAAP Reconciliation

(in thousands except share and per share data)

(Unaudited)

 

     Three Months Ended  
     June 30, 2012     June 30, 2011  
     GAAP     Adjustments     Non-GAAP     GAAP     Adjustments     Non-GAAP  

Reconciliation of gross profit:

            

Revenues:

            

Subscription

   $ 46,820      $ —        $ 46,820      $ 24,776      $ —        $ 24,776   

Professional services and other

     9,954        —          9,954        4,709        —          4,709   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     56,774        —          56,774        29,485        —          29,485   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cost of revenues (1):

            

Subscription

     14,239        (706     13,533        4,764        (167     4,597   

Professional services and other

     8,652        (277     8,375        4,723        (42     4,681   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of revenues

     22,891        (983     21,908        9,487        (209     9,278   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit:

            

Subscription

     32,581        706        33,287        20,012        167        20,179   

Professional services and other

     1,302        277        1,579        (14     42        28   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total gross profit

   $ 33,883      $ 983      $ 34,866      $ 19,998      $ 209      $ 20,207   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Reconciliation of operating expenses:

            

Operating expenses (1):

            

Sales and marketing

   $ 26,909      $ (2,482   $ 24,427      $ 12,086      $ (285   $ 11,801   

Research and development (2)

     9,272        (2,273     6,999        2,361        (118     2,243   

General and administrative

     6,819        (1,451     5,368        3,282        (466     2,816   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

   $ 43,000      $ (6,206   $ 36,794      $ 17,729      $ (869   $ 16,860   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Reconciliation of income (loss) from operations, provision for (benefit from) income taxes, net income (loss), net income (loss) per share, and pro forma net loss per share:

   

Income (loss) from operations

   $ (9,117   $ 7,189      $ (1,928   $ 2,269      $ 1,078      $ 3,347   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before provision for (benefit from) income taxes

   $ (9,076   $ 7,189      $ (1,887   $ 2,334      $ 1,078      $ 3,412   

Provision for income taxes (1), (2)

     (352     1,574        1,222        298        197        495   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

   $ (8,724   $ 5,615      $ (3,109   $ 2,036      $ 881      $ 2,917   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) per share attributable to common stockholders:

            

Basic

   $ (0.32   $ 0.20      $ (0.12   $ 0.02      $ 0.04      $ 0.06   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ (0.32   $ 0.20      $ (0.12   $ 0.02      $ 0.03      $ 0.05   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Weighted-average shares used to compute net income (loss) per share attributable to common stockholders:

            

Basic

     27,788,547          27,788,547        19,668,851          19,668,851   
  

 

 

     

 

 

   

 

 

     

 

 

 

Diluted

     27,788,547          27,788,547        29,584,225          29,584,225   
  

 

 

     

 

 

   

 

 

     

 

 

 

Pro forma net loss per share attributable to common stockholders (3):

            

Basic and diluted

   $ (0.07   $ 0.04      $ (0.03      
  

 

 

   

 

 

   

 

 

       

Pro forma weighted-average shares used to compute net loss per share attributable to common stockholders (3):

            

Basic and diluted

     121,841,563          121,841,563         
  

 

 

     

 

 

       

 

(1)

Adjustment includes stock-based compensation and the related tax effect.

(2)

Adjustment includes $0.7 million of additional research and development expenses that were recorded during the quarter and the related tax effect for the correction of an immaterial error related to software development costs that were improperly capitalized during the quarter ended March 31, 2012.

(3)

Pro forma adjustments include the sale of 10,350,000 shares of common stock in the Company’s IPO and the conversion of all outstanding shares of its convertible preferred stock into an aggregate of 83,703,016 shares of common stock upon the closing of the IPO effective July 5, 2012.


ServiceNow, Inc.

Results of Operations GAAP to Non-GAAP Reconciliation

(in thousands except share and per share data)

(Unaudited)

 

     Six Months Ended  
     June 30, 2012     June 30, 2011  
     GAAP     Adjustments     Non-GAAP     GAAP     Adjustments     Non-GAAP  

Reconciliation of gross profit:

            

Revenues:

            

Subscription

   $ 86,361      $ —        $ 86,361      $ 46,000      $ —        $ 46,000   

Professional services and other

     17,844        —          17,844        8,697        —          8,697   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     104,205        —          104,205        54,697        —          54,697   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cost of revenues (1):

            

Subscription

     25,251        (1,238     24,013        9,215        (323     8,892   

Professional services and other

     18,876        (469     18,407        9,486        (80     9,406   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of revenues

     44,127        (1,707     42,420        18,701        (403     18,298   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit:

            

Subscription

     61,110        1,238        62,348        36,785        323        37,108   

Professional services and other

     (1,032     469        (563     (789     80        (709
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total gross profit

   $ 60,078      $ 1,707      $ 61,785      $ 35,996      $ 403      $ 36,399   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Reconciliation of operating expenses:

            

Operating expenses (1):

            

Sales and marketing

   $ 46,216      $ (3,953   $ 42,263      $ 20,395      $ (573   $ 19,822   

Research and development

     15,315        (2,202     13,113        4,246        (261     3,985   

General and administrative

     13,246        (2,513     10,733        5,962        (596     5,366   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

   $ 74,777      $ (8,668   $ 66,109      $ 30,603      $ (1,430   $ 29,173   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Reconciliation of income (loss) from operations, provision for income taxes, net income (loss), net income (loss) per share, and pro forma net loss per share:

   

Income (loss) from operations

   $ (14,699   $ 10,375      $ (4,324   $ 5,393      $ 1,833      $ 7,226   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before provision for income taxes

   $ (14,166   $ 10,375      $ (3,791   $ 5,710      $ 1,833      $ 7,543   

Provision for income taxes (1)

     198        2,131        2,329        683        277        960   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

   $ (14,364   $ 8,244      $ (6,120   $ 5,027      $ 1,556      $ 6,583   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) per share attributable to common stockholders:

            

Basic

   $ (0.55   $ 0.31      $ (0.24   $ 0.05      $ 0.08      $ 0.13   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ (0.55   $ 0.31      $ (0.24   $ 0.04      $ 0.06      $ 0.10   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Weighted-average shares used to compute net income (loss) per share attributable to common stockholders:

            

Basic

     26,452,100          26,452,100        19,188,210          19,188,210   
  

 

 

     

 

 

   

 

 

     

 

 

 

Diluted

     26,452,100          26,452,100        28,933,574          28,933,574   
  

 

 

     

 

 

   

 

 

     

 

 

 

Pro forma net loss per share attributable to common stockholders (2):

            

Basic and diluted

   $ (0.12   $ 0.07      $ (0.05      
  

 

 

   

 

 

   

 

 

       

Pro forma weighted-average shares used to compute net loss per share attributable to common stockholders (2):

            

Basic and diluted

     120,505,116          120,505,116         
  

 

 

     

 

 

       

 

(1)

Adjustment includes stock-based compensation and the related tax effect.

(2)

Pro forma adjustments include the sale of 10,350,000 shares of common stock in the Company’s IPO and the conversion of all outstanding shares of its convertible preferred stock into an aggregate of 83,703,016 shares of common stock upon the closing of the IPO effective July 5, 2012.


ServiceNow, Inc.

Non-GAAP Billings Reconciliation

(in thousands)

(Unaudited)

 

     Three Months Ended  
     June 30,
2012
     March 31,
2012
     June 30,
2011
 

Total revenues

   $ 56,774       $ 47,431       $ 29,485   

Deferred revenue, end of period

     131,069         115,757         74,646   

Less: deferred revenue, beginning of period

     115,757         104,636         67,670   
  

 

 

    

 

 

    

 

 

 

Billings

   $ 72,086       $ 58,552       $ 36,461   
  

 

 

    

 

 

    

 

 

 


ServiceNow, Inc.

Reconciliation of Non-GAAP Financial Guidance

The financial guidance provided below is an estimate based on information available as of August 1, 2012. The Company’s future performance and financial results are subject to risks and uncertainties, and actual results could differ materially from the guidance set forth below. Some of the factors that could affect the Company’s financial results are stated above in this press release. More information on potential factors that could affect the Company’s financial results is included from time to time in the Company’s public reports filed with the SEC, including the Company’s Form S-1 and the Company’s Form 10-Q for the fiscal quarter ended June 30, 2012 to be filed with the SEC. The Company assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates.

 

     Three Months Ended
September 30, 2012

Non-GAAP subscription gross margin

   66% - 67%

Stock-based compensation expense

   (2%)
  

 

GAAP subscription gross margin

   64% - 65%
  

 

Non-GAAP professional services and other gross margin

   (19%) - (14%)

Stock-based compensation expense

   (9%)
  

 

GAAP professional services and other gross margin

   (28%) - (23%)
  

 

Non-GAAP total gross margin

   55% - 56%

Stock-based compensation expense

   (3%)
  

 

GAAP total gross margin

   52% - 53%
  

 

Non-GAAP operating margin

   (19%) - (17%)

Stock-based compensation expense

   (15%)
  

 

GAAP operating margin

   (34%) - (32%)
  

 

Non-GAAP basic and diluted net loss per share

   ($0.11) - ($0.10)

Stock-based compensation expense

   ($0.08)

Incremental non-GAAP tax expense (1)

   $0.02
  

 

GAAP basic and diluted net loss per share

   ($0.17) - ($0.16)
  

 

 

(1)

Incremental non-GAAP tax expense reflects the increase to GAAP tax expense related to the non-GAAP stock-based compensation expense adjustments.