ServiceNow Reports Financial Results for Fourth Quarter and Fiscal Year 2016
Fourth Quarter 2016 GAAP Results:
-
Subscription revenues of
$344.6 million , representing 41% year-over-year growth. -
Professional services and other revenues of
$41.1 million , representing 0% year-over-year growth. -
Total revenues of
$385.7 million , representing 35% year-over-year growth. -
Subscription gross profit of
$279.9 million , representing 81% of subscription revenues. -
Professional services and other gross profit of
$0.8 million , representing 2% of professional services and other revenues. -
Total gross profit of
$280.7 million , representing 73% of total revenues. -
Loss from operations of
$23.6 million , representing negative 6% of total revenues. -
Net loss of
$32.6 million , or loss of$0.20 per basic and diluted share. -
Net cash provided by operating activities of
$132.7 million , representing 34% of total revenues.
Fourth Quarter 2016 Non-GAAP Results:
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. For the following non-GAAP results, see the section entitled “Statement Regarding Use of Non-GAAP Financial Measures” for an explanation of non-GAAP measures and the corresponding growth rates, and the table entitled “GAAP to Non-GAAP Reconciliation” for a reconciliation of non-GAAP to GAAP measures and corresponding growth rates.
-
Subscription revenues of
$350.3 million , representing 43% year-over-year growth adjusted for constant currency. -
Professional services and other revenues of
$41.4 million , representing 1% year-over-year growth adjusted for constant currency. -
Total revenues of
$391.7 million , representing 37% year-over-year growth adjusted for constant currency. -
Subscription billings of
$483.9 million , representing 52% year-over-year growth (or$457.0 million , representing 44% year-over-year growth adjusted for constant currency and constant weighted average billings duration). -
Professional services and other billings of
$50.9 million , representing 6% year-over-year growth (or$51.2 million , representing 7% year-over-year growth adjusted for constant currency). -
Total billings of
$534.8 million , representing 46% year-over-year growth (or$508.2 million , representing 39% year-over-year growth adjusted for constant currency and constant weighted average billings duration). -
Subscription gross profit of
$291.0 million , representing 84% of subscription revenues. -
Professional services and other gross profit of
$7.2 million , representing 18% of professional services and other revenues. -
Total gross profit of
$298.2 million , representing 77% of total revenues. -
Income from operations of
$63.8 million , representing 17% of total revenues. -
Net income of
$42.4 million , or earnings of$0.25 per basic share and$0.24 per diluted share. -
Free cash flow of
$111.2 million , representing 29% of total revenues.
Fiscal Year 2016 GAAP Results:
-
Subscription revenues of
$1,221.6 million , representing 44% year-over-year growth. -
Professional services and other revenues of
$168.9 million , representing 7% year-over-year growth. -
Total revenues of
$1,390.5 million , representing 38% year-over-year growth. -
Subscription gross profit of
$986.2 million , representing 81% of subscription revenues. -
Professional services and other gross profit of
$5.6 million , representing 3% of professional services and other revenues. -
Total gross profit of
$991.8 million , representing 71% of total revenues. -
Loss from operations of
$422.8 million , representing negative 30% of total revenues. -
Net loss of
$451.8 million , or loss of$2.75 per basic and diluted share. -
Net cash provided by operating activities of
$159.9 million , representing 12% of total revenues.
Fiscal Year 2016 Non-GAAP Results:
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. For the following non-GAAP results, see the section entitled “Statement Regarding Use of Non-GAAP Financial Measures” for an explanation of non-GAAP measures and the corresponding growth rates, and the table entitled “GAAP to Non-GAAP Reconciliation” for a reconciliation of non-GAAP to GAAP measures and corresponding growth rates.
-
Subscription revenues of
$1,227.9 million , representing 45% year-over-year growth adjusted for constant currency. -
Professional services and other revenues of
$169.1 million , representing 8% year-over-year growth adjusted for constant currency. -
Total revenues of
$1,397.0 million , representing 39% year-over-year growth adjusted for constant currency. -
Subscription billings of
$1,510.7 million , representing 46% year-over-year growth (or$1,494.3 million , representing 44% year-over-year growth adjusted for constant currency and constant weighted average billings duration). -
Professional services and other billings of
$180.0 million , representing 10% year-over-year growth (or$180.2 million , representing 10% year-over-year growth adjusted for constant currency). -
Total billings of
$1,690.7 million , representing 41% year-over-year growth (or$1,674.5 million , representing 39% year-over-year growth adjusted for constant currency and constant weighted average billings duration). -
Subscription gross profit of
$1,027.3 million , representing 84% of subscription revenues. -
Professional services and other gross profit of
$32.0 million , representing 19% of professional services and other revenues. -
Total gross profit of
$1,059.3 million , representing 76% of total revenues. -
Income from operations of
$180.9 million , representing 13% of total revenues. -
Net income of
$121.9 million , or earnings of$0.74 per basic share and$0.70 per diluted share. -
Free cash flow of
$321.9 million , representing 23% of total revenues.
“We finished 2016 with strong momentum and our business is firing on all
cylinders,” said Frank Slootman, chairman and chief executive officer,
ServiceNow. “Total revenues in 2016 grew 38% making
“Total backlog and deferred revenue at the end of 2016 was
Financial Outlook
The forward-looking financial guidance discussed below is on a non-GAAP
basis. See the section entitled “Statement Regarding Use of Non-GAAP
Financial Measures” for an explanation of non-GAAP measures and the
corresponding growth rates, and the table entitled “Reconciliation of
Non-GAAP Financial Guidance” for a reconciliation of non-GAAP to GAAP
metrics and corresponding growth rates. Our guidance is based on foreign
exchange rates as of
For the first quarter of 2017, we expect:
-
Subscription revenues between
$366 and $370 million , representing 37% to 38% year-over-year growth (or between$375 and $379 million , representing 40% to 42% year-over-year growth adjusted for constant currency). -
Professional services and other revenues between
$40 and $41 million , representing 4% to 7% year-over-year growth (or between$41 and $42 million , representing 7% to 9% year-over-year growth adjusted for constant currency). -
Total revenues between
$406 and $411 million , representing 33% to 34% year-over-year growth (or between$416 and $421 million , representing 36% to 38% year-over-year growth adjusted for constant currency). -
Subscription billings between
$443 and $447 million , representing 34% to 35% year-over-year growth (or between$450 and $454 million , representing 36% to 37% year-over-year growth adjusted for constant currency and constant weighted average billings duration). -
Professional services and other billings between
$47 and $48 million , representing 4% to 6% year-over-year growth (or between$48 and $49 million , representing 6% to 8% year-over-year growth adjusted for constant currency). -
Total billings between
$490 and $495 million , representing 30% to 31% year-over-year growth (or between$498 and $503 million , representing 32% to 34% year-over-year growth adjusted for constant currency and constant weighted average billings duration). - Operating margin of 11%.
- Weighted average shares used to compute diluted net income per share of approximately 177 million shares.
For the full year 2017, we expect:
-
Subscription revenues between
$1,635 and $1,655 million , representing 34% to 35% year-over-year growth (or between$1,670 and $1,690 million , representing 37% to 38% year-over-year growth adjusted for constant currency). -
Professional services and other revenues between
$185 and $195 million , representing 10% to 15% year-over-year growth (or between$190 and $200 million , representing 13% to 18% year-over-year growth adjusted for constant currency). -
Total revenues between
$1,820 and $1,850 million , representing 31% to 33% year-over-year growth (or between$1,860 and $1,890 million , representing 34% to 36% year-over-year growth adjusted for constant currency). -
Subscription billings between
$1,970 and $1,990 million , representing 30% to 32% year-over-year growth (or between$2,058 and $2,078 million , representing 36% to 38% year-over-year growth adjusted for constant currency and constant weighted average billings duration). -
Professional services and other billings between
$195 and $205 million , representing 8% to 14% year-over-year growth (or between$200 and $210 million , representing 11% to 17% year-over-year growth adjusted for constant currency). -
Total billings between
$2,165 and $2,195 million , representing 28% to 30% year-over-year growth (or between$2,258 and $2,288 million , representing 34% to 35% year-over-year growth adjusted for constant currency and constant weighted average billings duration). - Subscription gross margin of 84%.
- Professional services and other gross margin of 20%.
- Total gross margin of 77%.
- Operating margin of 16%.
- Free cash flow margin of 24%.
- Weighted average shares used to compute diluted net income per share of approximately 179 million shares.
Conference Call Details
The conference call will begin at
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
Investor Presentation Details
An investor presentation providing additional information and analysis can be found at http://investors.servicenow.com.
Statement Regarding Use of Non-GAAP Financial Measures
We report non-GAAP financial measures in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP.
We present revenues adjusted for constant currency and corresponding growth rates to provide a framework for assessing how our business performed excluding the effect of foreign currency rate fluctuations. To present this information, current period results for entities reporting in currencies other than U.S. Dollars are converted into U.S. Dollars at the exchange rates in effect during the prior period presented, rather than the actual exchange rates in effect during the current period. We believe the presentation of revenues adjusted for constant currency facilitates the comparison of revenues year-over-year.
We believe billings is a useful leading indicator regarding the performance of our business. We present subscription billings, professional services and other billings, and total billings, and corresponding growth rates, as the applicable revenue plus the applicable change in deferred revenue as presented or derived from the statement of cash flows. While we typically bill customers annually for our subscription services, customers sometimes request, and we accommodate, billings durations that differ from the typical twelve month term. Accordingly, to facilitate greater comparability in our billings information, we further present billings adjusted for constant weighted average billings duration, in addition to adjusting for constant currency. To present this information, we adjust subscription billings and total billings for constant currency as described above, and apply the weighted average billings duration in effect during the prior period presented rather than the actual weighted average billings duration in effect during the current period. Weighted average billings duration refers to the weighted average billings duration for all our customer contracts commencing during the period. We also present professional services and other billings and corresponding growth rates adjusted for constant currency as described above.
Our non-GAAP presentation of gross profit, income from operations and net income measures exclude stock-based compensation expense, the amortization of debt discount and issuance costs related to the convertible senior notes, amortization of purchased intangibles, legal settlements, business combination and other related costs, and the related income tax effect of these adjustments. We believe the presentation of operating results that exclude these non-cash or non-recurring items provides useful supplemental information to investors and facilitates the analysis of our operating results and comparison of operating results across reporting periods.
Free cash flow, which is a non-GAAP financial measure, is calculated as net cash provided by operating activities plus cash paid for legal settlements, reduced by purchases of property and equipment. Free cash flow margin is calculated as free cash flow as a percentage of 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. However, our calculation of free cash flow and free cash flow margin may not be comparable to similar measures used by other companies.
The company encourages investors to carefully consider its results under GAAP, as well as its supplemental non-GAAP information and the reconciliation between these presentations, to more fully understand its business. Please see the tables included at the end of this release for the reconciliation of GAAP and non-GAAP results.
Use of Forward-Looking Statements
This release contains “forward-looking statements” regarding our performance, including but not limited to 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 include: (i) errors, interruptions, delays, or security breaches in or of our service or web hosting, (ii) our ability to grow at our expected rate of growth, including our ability to convert deferred revenue and backlog into revenue, add and retain customers, sell additional subscriptions to existing customers and enter new geographies and markets, (iii) our ability to continue to release, and gain customer acceptance of, improved versions of our services, (iv) our ability to develop and gain customer acceptance of new products and services, including our platform, and (v) our ability to compete successfully against existing and new competitors.
Further information on these and other factors that could affect our
financial results are included in our Form 10-K for the year ended
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, Inc. | |||||||||||||||||||||
| Condensed Consolidated Statements of Operations | |||||||||||||||||||||
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(in thousands, except share and per share data) |
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(unaudited) |
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| Three Months Ended | Twelve Months Ended | ||||||||||||||||||||
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December 31, 2016 |
December 31, 2015 | December 31, 2016 | December 31, 2015 | ||||||||||||||||||
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| Revenues: | |||||||||||||||||||||
| Subscription | $ | 344,604 | $ | 244,702 | $ | 1,221,639 | $ | 848,278 | |||||||||||||
| Professional services and other | 41,062 | 40,948 | 168,874 | 157,202 | |||||||||||||||||
| Total revenues | 385,666 | 285,650 | 1,390,513 | 1,005,480 | |||||||||||||||||
| Cost of revenues (1): | |||||||||||||||||||||
| Subscription | 64,707 | 49,511 | 235,414 | 183,400 | |||||||||||||||||
| Professional services and other | 40,229 | 41,398 | 163,268 | 146,013 | |||||||||||||||||
| Total cost of revenues | 104,936 | 90,909 | 398,682 | 329,413 | |||||||||||||||||
| Gross profit | 280,730 | 194,741 | 991,831 | 676,067 | |||||||||||||||||
| Operating expenses (1): | |||||||||||||||||||||
| Sales and marketing | 188,857 | 133,909 | 700,464 | 498,439 | |||||||||||||||||
| Research and development | 73,933 | 58,443 | 285,239 | 217,389 | |||||||||||||||||
| General and administrative | 41,543 | 33,247 | 158,936 | 126,604 | |||||||||||||||||
| Legal settlements | — | — | 270,000 | — | |||||||||||||||||
| Total operating expenses | 304,333 | 225,599 | 1,414,639 | 842,432 | |||||||||||||||||
| Loss from operations | (23,603 | ) | (30,858 | ) | (422,808 | ) | (166,365 | ) | |||||||||||||
| Loss before provision for income taxes | (30,845 | ) | (35,654 | ) | (450,051 | ) | (193,012 | ) | |||||||||||||
| Provision for income taxes | 1,744 | 1,724 | 1,753 | 5,414 | |||||||||||||||||
| Net loss | $ | (32,589 | ) | $ | (37,378 | ) | $ | (451,804 | ) | $ | (198,426 | ) | |||||||||
|
Net loss per share - Basic and Diluted |
$ | (0.20 | ) | $ | (0.23 | ) | $ | (2.75 | ) | $ | (1.27 | ) | |||||||||
|
Weighted-average shares used to compute net loss per share - Basic and Diluted |
166,816,643 | 159,718,874 | 164,533,823 | 155,706,643 | |||||||||||||||||
| (1) Includes total stock-based compensation expense for stock-based awards as follows: | |||||||||||||||||||||
| Three Months Ended | Twelve Months Ended | ||||||||||||||||||||
| December 31, 2016 | December 31, 2015 | December 31, 2016 | December 31, 2015 | ||||||||||||||||||
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| Cost of revenues: |
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| Subscription | $ | 7,722 | $ | 6,233 | $ | 28,420 | $ | 23,416 | |||||||||||||
| Professional services and other | 6,397 | 6,477 | 26,442 | 23,265 | |||||||||||||||||
| Sales and marketing | 35,814 | 27,659 | 131,571 | 102,349 | |||||||||||||||||
| Research and development | 18,775 | 18,623 | 81,731 | 70,326 | |||||||||||||||||
| General and administrative | 14,412 | 9,190 | 49,416 | 38,357 | |||||||||||||||||
| Total | $ | 83,120 | $ | 68,182 | $ | 317,580 | $ | 257,713 | |||||||||||||
| ServiceNow, Inc. | |||||||||
| Condensed Consolidated Balance Sheets | |||||||||
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(in thousands) |
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(unaudited) |
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| December 31, 2016 | December 31, 2015 | ||||||||
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| ASSETS | |||||||||
| Current assets: | |||||||||
| Cash and cash equivalents | $ | 401,238 | $ | 412,305 | |||||
| Short-term investments | 498,124 | 388,945 | |||||||
| Accounts receivable, net | 322,757 | 203,333 | |||||||
| Current portion of deferred commissions | 76,780 | 51,976 | |||||||
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Prepaid expenses and other current assets |
43,636 | 29,076 | |||||||
| Total current assets | 1,342,535 | 1,085,635 | |||||||
| Deferred commissions, less current portion | 61,990 | 33,016 | |||||||
| Long-term investments | 262,658 | 422,667 | |||||||
| Property and equipment, net | 181,620 | 144,714 | |||||||
| Intangible assets, net | 65,854 | 43,005 | |||||||
| Goodwill | 82,534 | 55,669 | |||||||
| Other assets | 36,576 | 22,346 | |||||||
| Total assets | $ | 2,033,767 | $ | 1,807,052 | |||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||
| Current liabilities: | |||||||||
| Accounts payable | $ | 38,080 | $ | 37,369 | |||||
| Accrued expenses and other current liabilities | 171,636 | 101,264 | |||||||
| Current portion of deferred revenue | 864,940 | 593,003 | |||||||
| Total current liabilities | 1,074,656 | 731,636 | |||||||
| Deferred revenue, less current portion | 30,161 | 10,751 | |||||||
| Convertible senior notes, net | 507,812 | 474,534 | |||||||
| Other long-term liabilities | 34,177 | 23,317 | |||||||
| Stockholders’ equity | 386,961 | 566,814 | |||||||
| Total liabilities and stockholders’equity | $ | 2,033,767 | $ | 1,807,052 | |||||
| ServiceNow, Inc. | ||||||||||||||||||||||||||
| Condensed Consolidated Statements of Cash Flows | ||||||||||||||||||||||||||
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(in thousands) |
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(unaudited) |
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| Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||||
| December 31, 2016 | December 31, 2015 | December 31, 2016 | December 31, 2015 | |||||||||||||||||||||||
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| Cash flows from operating activities: | ||||||||||||||||||||||||||
| Net loss | $ | (32,589 | ) | $ | (37,378 | ) | $ | (451,804 | ) | $ | (198,426 | ) | ||||||||||||||
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||||||||||||||||||||
| Depreciation and amortization | 23,366 | 16,399 | 83,082 | 60,356 | ||||||||||||||||||||||
| Amortization of premiums on investments | 980 | 1,684 | 4,725 | 7,064 | ||||||||||||||||||||||
| Amortization of deferred commissions | 23,475 | 17,486 | 81,217 | 65,541 | ||||||||||||||||||||||
| Amortization of debt discount and issuance costs | 8,532 | 7,973 | 33,278 | 31,097 | ||||||||||||||||||||||
| Stock-based compensation | 83,120 | 68,182 | 317,580 | 257,713 | ||||||||||||||||||||||
| Deferred income tax | 1,671 | (1,282 | ) | (3,424 | ) | (1,282 | ) | |||||||||||||||||||
| Other | (105 | ) | (830 | ) | (962 | ) | (6,223 | ) | ||||||||||||||||||
| Changes in operating assets and liabilities, net of effect of business combinations: | ||||||||||||||||||||||||||
| Accounts receivable | (109,345 | ) | (45,552 | ) | (125,106 | ) | (50,855 | ) | ||||||||||||||||||
| Deferred commissions | (57,269 | ) | (25,974 | ) | (136,459 | ) | (80,142 | ) | ||||||||||||||||||
| Prepaid expenses and other assets | (9,767 | ) | (2,046 | ) | (21,500 | ) | (10,961 | ) | ||||||||||||||||||
| Accounts payable | 5,071 | 6,473 | (3,554 | ) | 14,785 | |||||||||||||||||||||
| Deferred revenue | 149,148 | 80,088 | 300,167 | 195,900 | ||||||||||||||||||||||
| Accrued expenses and other liabilities | 46,399 | 21,331 | 82,681 | 33,187 | ||||||||||||||||||||||
| Net cash provided by operating activities(1) | 132,687 | 106,554 | 159,921 | 317,754 | ||||||||||||||||||||||
| Cash flows from investing activities: | ||||||||||||||||||||||||||
| Purchases of property and equipment | (21,450 | ) | (24,893 | ) | (105,562 | ) | (87,481 | ) | ||||||||||||||||||
| Business combinations, net of cash acquired | — | — | (34,297 | ) | (1,100 | ) | ||||||||||||||||||||
| Purchases of other intangibles | (8,000 | ) | (1,750 | ) | (22,850 | ) | (1,750 | ) | ||||||||||||||||||
| Purchases of investments | (84,267 | ) | (169,615 | ) | (518,664 | ) | (712,782 | ) | ||||||||||||||||||
| Purchases of strategic investments | (500 | ) | (500 | ) | (500 | ) | (10,500 | ) | ||||||||||||||||||
| Sale of investments | 31,710 | 34,414 | 297,998 | 277,045 | ||||||||||||||||||||||
| Maturities of investments | 53,085 | 101,415 | 271,537 | 305,047 | ||||||||||||||||||||||
| Restricted cash | 112 | 186 | (210 | ) | (222 | ) | ||||||||||||||||||||
| Net cash used in investing activities | (29,310 | ) | (60,743 | ) | (112,548 | ) | (231,743 | ) | ||||||||||||||||||
| Cash flows from financing activities: | ||||||||||||||||||||||||||
| Proceeds related to deferred payments on purchase of other intangibles | — | — | 4,100 | — | ||||||||||||||||||||||
| Payments related to deferred payments on purchase of other intangibles | (750 | ) | — | (1,775 | ) | — | ||||||||||||||||||||
| Proceeds from employee stock plans | 11,315 | 20,001 | 66,378 | 93,348 | ||||||||||||||||||||||
| Taxes paid related to net share settlement of equity awards | (31,340 | ) | (192 | ) | (119,907 | ) | (12,795 | ) | ||||||||||||||||||
| Payments on financing obligation | (112 | ) | (111 | ) | (448 | ) | (223 | ) | ||||||||||||||||||
| Net cash (used in) provided by financing activities(1) | (20,887 | ) | 19,698 | (51,652 | ) | 80,330 | ||||||||||||||||||||
| Foreign currency effect on cash and cash equivalents | (6,319 | ) | (2,277 | ) | (6,788 | ) | (6,491 | ) | ||||||||||||||||||
| Net increase (decrease) in cash and cash equivalents | 76,171 | 63,232 | (11,067 | ) | 159,850 | |||||||||||||||||||||
| Cash and cash equivalents at beginning of period | 325,067 | 349,073 | 412,305 | 252,455 | ||||||||||||||||||||||
| Cash and cash equivalents at end of period | $ | 401,238 | $ | 412,305 | $ | 401,238 | $ | 412,305 | ||||||||||||||||||
| (1) During the twelve months ended December 31, 2016, we early adopted Accounting Standards Update 2016-09, "Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting," which addresses among other items, updates to the presentation and treatment of excess tax benefits related to stock-based compensation. We have adopted changes to the condensed consolidated statements of cash flows on a retrospective basis. This resulted in a $1.5 million increase in net cash provided by operating activities and a corresponding $1.5 million decrease in net cash provided by financing activities for the three months ended December 31, 2015, and a $2.7 million increase in net cash provided by operating activities and a corresponding $2.7 million decrease in net cash provided by financing activities for the twelve months ended December 31, 2015. |
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ServiceNow, Inc. |
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GAAP to Non-GAAP Reconciliation |
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(in thousands, except share and per share data) |
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(unaudited) |
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| Three Months Ended | Twelve Months Ended | ||||||||||||||||||||||
| December 31, 2016 |
December 31, 2015 |
Growth Rates | December 31, 2016 | December 31, 2015 | Growth Rates | ||||||||||||||||||
| Subscription revenues: | |||||||||||||||||||||||
| GAAP subscription revenues |
$ |
344,604 |
$ | 244,702 | 41% | $ | 1,221,639 | $ | 848,278 | 44% | |||||||||||||
| Effects of foreign currency rate fluctuations | 5,703 | - | 6,261 | - | |||||||||||||||||||
| Non-GAAP adjusted subscription revenues (1) | $ | 350,307 | $ | 244,702 | 43% | $ | 1,227,900 | $ | 848,278 | 45% | |||||||||||||
| Subscription billings: | |||||||||||||||||||||||
| GAAP subscription revenues | $ | 344,604 | $ | 244,702 | 41% | $ | 1,221,639 | $ | 848,278 | 44% | |||||||||||||
| Increase in subscription deferred revenue | 139,303 | 73,226 | 289,053 | 189,981 | |||||||||||||||||||
| Non-GAAP subscription billings | 483,907 | 317,928 | 52% | 1,510,692 | 1,038,259 | 46% | |||||||||||||||||
| Effects of foreign currency rate fluctuations | 6,461 | - | 8,178 | - | |||||||||||||||||||
| Effects of fluctuations in billings duration | (33,399) | - | (24,589) | - | |||||||||||||||||||
| Non-GAAP adjusted subscription billings (2) | $ | 456,969 | $ | 317,928 | 44% | $ | 1,494,281 | $ | 1,038,259 | 44% | |||||||||||||
| Professional services and other revenues: | |||||||||||||||||||||||
| GAAP professional services and other revenues | $ | 41,062 | $ | 40,948 | 0% | $ | 168,874 | $ | 157,202 | 7% | |||||||||||||
| Effects of foreign currency rate fluctuations | 315 | - | 204 | - | |||||||||||||||||||
|
Non-GAAP adjusted professional services and other revenues (1) |
$ | 41,377 | $ | 40,948 | 1% | $ | 169,078 | $ | 157,202 | 8% | |||||||||||||
| Professional services and other billings: | |||||||||||||||||||||||
| GAAP professional services and other revenues | $ | 41,062 | $ | 40,948 | 0% | $ | 168,874 | $ | 157,202 | 7% | |||||||||||||
| Increase in professional services and other deferred revenue | 9,845 | 6,862 | 11,114 | 5,919 | |||||||||||||||||||
| Non-GAAP professional services and other billings | 50,907 | 47,810 | 6% | 179,988 | 163,121 | 10% | |||||||||||||||||
| Effects of foreign currency rate fluctuations | 315 | - | 204 | - | |||||||||||||||||||
| Non-GAAP adjusted professional services and other billings (2) | $ | 51,222 | $ | 47,810 | 7% | $ | 180,192 | $ | 163,121 | 10% | |||||||||||||
| Total revenues: | |||||||||||||||||||||||
| GAAP total revenues | $ | 385,666 | $ | 285,650 | 35% | $ | 1,390,513 | $ | 1,005,480 | 38% | |||||||||||||
| Effects of foreign currency rate fluctuations | 6,018 | - | 6,465 | - | |||||||||||||||||||
| Non-GAAP adjusted total revenues (1) | $ | 391,684 | $ | 285,650 | 37% | $ | 1,396,978 | $ | 1,005,480 | 39% | |||||||||||||
| Total billings: | |||||||||||||||||||||||
| GAAP total revenues | $ | 385,666 | $ | 285,650 | 35% | $ | 1,390,513 | $ | 1,005,480 | 38% | |||||||||||||
| Increase in total deferred revenue from consolidated statements of cash flows | 149,148 | 80,088 | 300,167 | 195,900 | |||||||||||||||||||
| Non-GAAP total billings | 534,814 | 365,738 | 46% | 1,690,680 | 1,201,380 | 41% | |||||||||||||||||
| Effects of foreign currency rate fluctuations | 6,776 | - | 8,382 | - | |||||||||||||||||||
| Effects of fluctuations in billings duration | (33,399) | - | (24,589) | - | |||||||||||||||||||
| Non-GAAP adjusted total billings (2) | $ | 508,191 | $ | 365,738 | 39% | $ | 1,674,473 | $ | 1,201,380 | 39% | |||||||||||||
| Cost of revenues: | |||||||||||||||||||||||
| GAAP subscription cost of revenues | $ | 64,707 | $ | 49,511 | $ | 235,414 | $ | 183,400 | |||||||||||||||
| Stock-based compensation | (7,722) | (6,233) | (28,420) | (23,416) | |||||||||||||||||||
| Amortization of purchased intangibles | (3,334) | (2,762) | (12,633) | (11,087) | |||||||||||||||||||
| Non-GAAP subscription cost of revenues | $ | 53,651 | $ | 40,516 | $ | 194,361 | $ | 148,897 | |||||||||||||||
| GAAP professional services and other cost of revenues | $ | 40,229 | $ | 41,398 | $ | 163,268 | $ | 146,013 | |||||||||||||||
| Stock-based compensation | (6,397) | (6,477) | (26,442) | (23,265) | |||||||||||||||||||
| Non-GAAP professional services and other cost of revenues | $ | 33,832 | $ | 34,921 | $ | 136,826 | $ | 122,748 | |||||||||||||||
| Gross profit (loss): | |||||||||||||||||||||||
| GAAP subscription gross profit | $ | 279,897 | $ | 195,191 | $ | 986,225 | $ | 664,878 | |||||||||||||||
| Stock-based compensation | 7,722 | 6,233 | 28,420 | 23,416 | |||||||||||||||||||
| Amortization of purchased intangibles | 3,334 | 2,762 | 12,633 | 11,087 | |||||||||||||||||||
| Non-GAAP subscription gross profit | $ | 290,953 | $ | 204,186 | $ | 1,027,278 | $ | 699,381 | |||||||||||||||
| GAAP professional services and other gross profit (loss) | $ | 833 | $ | (450) | $ | 5,606 | $ | 11,189 | |||||||||||||||
| Stock-based compensation | 6,397 | 6,477 | 26,442 | 23,265 | |||||||||||||||||||
| Non-GAAP professional services and other gross profit | $ | 7,230 | $ | 6,027 | $ | 32,048 | $ | 34,454 | |||||||||||||||
| GAAP gross profit | $ | 280,730 | $ | 194,741 | $ | 991,831 | $ | 676,067 | |||||||||||||||
| Stock-based compensation | 14,119 | 12,710 | 54,862 | 46,681 | |||||||||||||||||||
| Amortization of purchased intangibles | 3,334 | 2,762 | 12,633 | 11,087 | |||||||||||||||||||
| Non-GAAP gross profit | $ | 298,183 | $ | 210,213 | $ | 1,059,326 | $ | 733,835 | |||||||||||||||
| Gross margin: | |||||||||||||||||||||||
| GAAP subscription gross margin | 81% | 80% | 81% | 78% | |||||||||||||||||||
| Stock-based compensation as % of subscription revenues | 2% | 2% | 2% | 3% | |||||||||||||||||||
| Amortization of purchased intangibles as % of subscription revenues | 1% | 1% | 1% | 1% | |||||||||||||||||||
| Non-GAAP subscription gross margin | 84% | 83% | 84% | 82% | |||||||||||||||||||
| GAAP professional services and other gross margin | 2% | (1%) | 3% | 7% | |||||||||||||||||||
| Stock-based compensation as % of professional services and other revenues | 16% | 16% | 16% | 15% | |||||||||||||||||||
| Non-GAAP professional services and other gross margin | 18% | 15% | 19% | 22% | |||||||||||||||||||
| GAAP gross margin | 73% | 68% | 71% | 67% | |||||||||||||||||||
| Stock-based compensation as % of total revenues | 3% | 5% | 4% | 5% | |||||||||||||||||||
| Amortization of purchased intangibles as % of total revenues | 1% | 1% | 1% | 1% | |||||||||||||||||||
| Non-GAAP gross margin | 77% | 74% | 76% | 73% | |||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| GAAP sales and marketing expenses | $ | 188,857 | $ | 133,909 | $ | 700,464 | $ | 498,439 | |||||||||||||||
| Stock-based compensation | (35,814) | (27,659) | (131,571) | (102,349) | |||||||||||||||||||
| Amortization of purchased intangibles | (117) | (145) | (312) | (581) | |||||||||||||||||||
| Non-GAAP sales and marketing expenses | $ | 152,926 | $ | 106,105 | $ | 568,581 | $ | 395,509 | |||||||||||||||
| GAAP research and development expenses | $ | 73,933 | $ | 58,443 | $ | 285,239 | $ | 217,389 | |||||||||||||||
| Stock-based compensation | (18,775) | (18,623) | (81,731) | (70,326) | |||||||||||||||||||
| Amortization of purchased intangibles | (455) | - | (1,213) | - | |||||||||||||||||||
| Non-GAAP research and development expenses | $ | 54,703 | $ | 39,820 | $ | 202,295 | $ | 147,063 | |||||||||||||||
| GAAP general and administrative expenses | $ | 41,543 | $ | 33,247 | $ | 158,936 | $ | 126,604 | |||||||||||||||
| Stock-based compensation | (14,412) | (9,190) | (49,416) | (38,357) | |||||||||||||||||||
| Amortization of purchased intangibles | (314) | (23) | (960) | (93) | |||||||||||||||||||
| Business combination and other related costs | (27) | - | (989) | - | |||||||||||||||||||
| Non-GAAP general and administrative expenses | $ | 26,790 | $ | 24,034 | $ | 107,571 | $ | 88,154 | |||||||||||||||
| GAAP legal settlements | $ | - | $ | - | $ | 270,000 | $ | - | |||||||||||||||
| Legal settlements | - | - | (270,000) | - | |||||||||||||||||||
| Non-GAAP legal settlements | $ | - | $ | - | $ | - | $ | - | |||||||||||||||
| Income (loss) from operations: | |||||||||||||||||||||||
| GAAP loss from operations | (23,603) | (30,858) | (422,808) | (166,365) | |||||||||||||||||||
| Stock-based compensation | 83,120 | 68,182 | 317,580 | 257,713 | |||||||||||||||||||
| Amortization of purchased intangibles | 4,220 | 2,930 | 15,118 | 11,761 | |||||||||||||||||||
| Business combination and other related costs | 27 | - | 989 | - | |||||||||||||||||||
| Legal settlements | - | - | 270,000 | - | |||||||||||||||||||
| Non-GAAP income from operations | $ | 63,764 | $ | 40,254 | $ | 180,879 | $ | 103,109 | |||||||||||||||
| Operating margin: | |||||||||||||||||||||||
| GAAP operating margin | (6%) | (11%) | (30%) | (17%) | |||||||||||||||||||
| Stock-based compensation as % of total revenues | 22% | 24% | 23% | 26% | |||||||||||||||||||
| Amortization of purchased intangibles as % of total revenues | 1% | 1% | 1% | 1% | |||||||||||||||||||
| Business combination and other related costs as % of total revenues | 0% | 0% | 0% | 0% | |||||||||||||||||||
| Legal settlements as % of total revenues | 0% | 0% | 19% | 0% | |||||||||||||||||||
| Non-GAAP operating margin | 17% | 14% | 13% | 10% | |||||||||||||||||||
| Net income (loss): | |||||||||||||||||||||||
| GAAP net loss | (32,589) | (37,378) | (451,804) | (198,426) | |||||||||||||||||||
| Stock-based compensation | 83,120 | 68,182 | 317,580 | 257,713 | |||||||||||||||||||
| Amortization of purchased intangibles | 4,220 | 2,930 | 15,118 | 11,761 | |||||||||||||||||||
| Business combination and other related costs | 27 | - | 989 | - | |||||||||||||||||||
| Legal settlements | - | - | 270,000 | - | |||||||||||||||||||
| Amortization of debt discount and issuance costs for the convertible senior notes | 8,532 | 7,973 | 33,278 | 31,097 | |||||||||||||||||||
| Income tax expense effects related to the above adjustments | (20,954) | (9,108) | (63,216) | (34,750) | |||||||||||||||||||
| Non-GAAP net income | $ | 42,356 | $ | 32,599 | $ | 121,945 | $ | 67,395 | |||||||||||||||
| Net income (loss) per share - basic and diluted: | |||||||||||||||||||||||
| GAAP net loss per share - basic and diluted | $ | (0.20) | $ | (0.23) | $ | (2.75) | $ | (1.27) | |||||||||||||||
| Non-GAAP net income per share - basic | $ | 0.25 | $ | 0.20 | $ | 0.74 | $ | 0.43 | |||||||||||||||
| Non-GAAP net income per share - diluted | $ | 0.24 | $ | 0.19 | $ | 0.70 | $ | 0.40 | |||||||||||||||
| Weighted-average shares used to compute net income (loss) per share - basic | 166,816,643 | 159,718,874 | 164,533,823 | 155,706,643 | |||||||||||||||||||
| GAAP weighted-average shares used to compute net loss per share - diluted | 166,816,643 | 159,718,874 | 164,533,823 | 155,706,643 | |||||||||||||||||||
| Effect of dilutive securities (stock options, restricted stock units and common stock subject to repurchase) | 8,780,764 | 11,047,627 | 9,257,608 | 13,056,123 | |||||||||||||||||||
| Non-GAAP weighted-average shares used to compute net income per share - diluted | 175,597,407 | 170,766,501 | 173,791,431 | 168,762,766 | |||||||||||||||||||
| Free cash flow: | |||||||||||||||||||||||
| GAAP net cash provided by operating activities(3) | $ | 132,687 | $ | 106,554 | $ | 159,921 | $ | 317,754 | |||||||||||||||
| Purchases of property and equipment | (21,450) | (24,893) | (105,562) | (87,481) | |||||||||||||||||||
| Cash paid for legal settlements | - | - | 267,500 | - | |||||||||||||||||||
| Non-GAAP free cash flow | $ | 111,237 | $ | 81,661 | $ | 321,859 | $ | 230,273 | |||||||||||||||
| Free cash flow margin: | |||||||||||||||||||||||
| GAAP net cash provided by operating activities as % of total revenues(3) | 34% | 37% | 12% | 32% | |||||||||||||||||||
| Purchases of property and equipment as % of total revenues | (5%) | (8%) | (8%) | (9%) | |||||||||||||||||||
| Cash paid for legal settlements as % of total revenues | 0% | 0% | 19% | 0% | |||||||||||||||||||
| Non-GAAP free cash flow margin | 29% | 29% | 23% | 23% | |||||||||||||||||||
| (1) |
Adjusted revenues and the corresponding growth rates are derived by applying the exchange rates in effect during the comparison period rather than the actual exchange rates in effect during the current period. |
|
| (2) | Adjusted billings and the corresponding growth rates are derived by applying the exchange rate and weighted average billings duration in effect during the comparison period rather than the actual exchange rates and weighted average billings duration in effect during the current period. | |
| (3) | During the twelve months ended December 31, 2016, we early adopted Accounting Standards Update 2016-09, "Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting," which addresses among other items, updates to the presentation and treatment of excess tax benefits related to stock-based compensation. We have adopted changes to the condensed consolidated statements of cash flows on a retrospective basis. This resulted in a $1.5 million increase in net cash provided by operating activities and a corresponding $1.5 million decrease in net cash provided by financing activities for the three months ended December 31, 2015, and a $2.7 million increase in net cash provided by operating activities and a corresponding $2.7 million decrease in net cash provided by financing activities for the twelve months ended December 31, 2015. | |
| ServiceNow, Inc. | |||||||||||||||
| Reconciliation of Non-GAAP Financial Guidance | |||||||||||||||
|
The financial guidance provided below is an estimate based on information available as of December 31, 2016. 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 Annual Report on Form 10-K filed on February 25, 2016, the company’s Form 10-Q for the quarter ended September 30, 2016 filed on November 4, 2016 and the company’s Form 10-K for the year ended December 31, 2016 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 | Three Months Ended | Growth rates | |||||||||||||
| March 31, 2017 | March 31, 2016 | ||||||||||||||
| GAAP subscription revenues | $366 - $370 million | $267 million | 37% - 38% | ||||||||||||
| Effects of foreign currency rate fluctuations | 9 million | - | |||||||||||||
| Non-GAAP adjusted subscription revenues (1) | $375 - $379 million | $267 million | 40% - 42% | ||||||||||||
| GAAP subscription revenues | $366 - $370 million | $267 million | 37% - 38% | ||||||||||||
| Increase in subscription deferred revenue | 77 million | 64 million | |||||||||||||
| Non-GAAP subscription billings | $443 - $447 million | $331 million | 34% - 35% | ||||||||||||
| Effects of foreign currency rate fluctuations | 11 million | - | |||||||||||||
| Effects of fluctuations in billings duration | (4) million | - | |||||||||||||
| Non-GAAP adjusted subscription billings (2) | $450 - $454 million | $331 million | 36% - 37% | ||||||||||||
| GAAP professional services and other revenues | $40 - $41 million | $38 million | 4% - 7% | ||||||||||||
| Effects of foreign currency rate fluctuations | 1 million | - | |||||||||||||
| Non-GAAP adjusted professional services and other revenues (1) | $41 - $42 million | $38 million | 7% - 9% | ||||||||||||
| GAAP professional services and other revenues | $40 - $41 million | $38 million | 4% - 7% | ||||||||||||
| Increase in professional services and other deferred revenue | 7 million | 7 million | |||||||||||||
| Non-GAAP professional services and other billings | $47 - $48 million | $45 million | 4% - 6% | ||||||||||||
| Effects of foreign currency rate fluctuations | 1 million | - | |||||||||||||
| Non-GAAP adjusted professional services and other billings (2) | $48 - $49 million | $45 million | 6% - 8% | ||||||||||||
| GAAP total revenues | $406 - $411 million | $306 million | 33% - 34% | ||||||||||||
| Effects of foreign currency rate fluctuations | 10 million | - | |||||||||||||
| Non-GAAP adjusted total revenues (1) | $416 - $421 million | $306 million | 36% - 38% | ||||||||||||
| GAAP total revenues | $406 - $411 million | $306 million | 33% - 34% | ||||||||||||
| Increase in total deferred revenue from consolidated statements of cash flows | 84 million | 71 million | |||||||||||||
| Non-GAAP total billings | $490 - $495 million | $377 million | 30% - 31% | ||||||||||||
| Effects of foreign currency rate fluctuations | 12 million | - | |||||||||||||
| Effects of fluctuations in billings duration | (4) million | - | |||||||||||||
| Non-GAAP adjusted total billings (2) | $498 - $503 million | $377 million | 32% - 34% | ||||||||||||
| GAAP operating margin | (11%) | ||||||||||||||
| Stock-based compensation expense | 21% | ||||||||||||||
| Amortization of purchased intangibles | 1% | ||||||||||||||
| Non-GAAP operating margin | 11% | ||||||||||||||
| GAAP weighted-average shares used to compute net loss per share - diluted | 169 million | ||||||||||||||
| Effect of dilutive securities (stock options, restricted stock units) | 8 million | ||||||||||||||
| Non-GAAP weighted-average shares used to compute net income per share - diluted | 177 million | ||||||||||||||
| Twelve Months Ended | Twelve Months Ended | Growth rates | |||||||||||||
| December 31, 2017 | December 31, 2016 | ||||||||||||||
| GAAP subscription revenues | $1,635 - $1,655 million | $1,222 million | 34% - 35% | ||||||||||||
| Effects of foreign currency rate fluctuations | 35 million | - | |||||||||||||
| Non-GAAP adjusted subscription revenues (1) | $1,670 - $1,690 million | $1,222 million | 37% - 38% | ||||||||||||
| GAAP subscription revenues | $1,635 - $1,655 million | $1,222 million | 34% - 35% | ||||||||||||
| Increase in subscription deferred revenue | 335 million | 289 million | |||||||||||||
| Non-GAAP subscription billings | $1,970 - $1,990 million | $1,511 million | 30% - 32% | ||||||||||||
| Effects of foreign currency rate fluctuations | 43 million | - | |||||||||||||
| Effects of fluctuations in billings duration | 45 million | - | |||||||||||||
| Non-GAAP adjusted subscription billings (2) | $2,058 - $2,078 million | $1,511 million | 36% - 38% | ||||||||||||
| GAAP professional services and other revenues | $185 - $195 million | $169 million | 10% - 15% | ||||||||||||
| Effects of foreign currency rate fluctuations | 5 million | - | |||||||||||||
| Non-GAAP adjusted professional services and other revenues (1) | $190 - $200 million | $169 million | 13% - 18% | ||||||||||||
| GAAP professional services and other revenues | $185 - $195 million | $169 million | 10% - 15% | ||||||||||||
| Increase in professional services and other deferred revenue | 10 million | 11 million | |||||||||||||
| Non-GAAP professional services and other billings | $195 - $205 million | $180 million | 8% - 14% | ||||||||||||
| Effects of foreign currency rate fluctuations | 5 million | - | |||||||||||||
| Non-GAAP adjusted professional services and other billings (2) | $200 - $210 million | $180 million | 11% - 17% | ||||||||||||
| GAAP total revenues | $1,820 - $1,850 million | $1,391 million | 31% - 33% | ||||||||||||
| Effects of foreign currency rate fluctuations | 40 million | - | |||||||||||||
| Non-GAAP adjusted total revenues (1) | $1,860 - $1,890 million | $1,391 million | 34% - 36% | ||||||||||||
| GAAP total revenues | $1,820 - $1,850 million | $1,391 million | 31% - 33% | ||||||||||||
| Increase in total deferred revenue from consolidated statements of cash flows | 345 million | 300 million | |||||||||||||
| Non-GAAP total billings | $2,165 - $2,195 million | $1,691 million | 28% - 30% | ||||||||||||
| Effects of foreign currency rate fluctuations | 48 million | - | |||||||||||||
| Effects of fluctuations in billings duration | 45 million | - | |||||||||||||
| Non-GAAP adjusted total billings (2) | $2,258 - $2,288 million | $1,691 million | 34% - 35% | ||||||||||||
| GAAP subscription gross margin | 81% | ||||||||||||||
| Stock-based compensation expense | 2% | ||||||||||||||
| Amortization of purchased intangibles | 1% | ||||||||||||||
| Non-GAAP subscription gross margin | 84% | ||||||||||||||
| GAAP professional services and other gross margin | 4% | ||||||||||||||
| Stock-based compensation expense | 16% | ||||||||||||||
| Non-GAAP professional services and other gross margin | 20% | ||||||||||||||
| GAAP total gross margin | 73% | ||||||||||||||
| Stock-based compensation expense | 3% | ||||||||||||||
| Amortization of purchased intangibles | 1% | ||||||||||||||
| Non-GAAP total gross margin | 77% | ||||||||||||||
| GAAP operating margin | (5%) | ||||||||||||||
| Stock-based compensation expense | 20% | ||||||||||||||
| Amortization of purchased intangibles | 1% | ||||||||||||||
| Non-GAAP operating margin | 16% | ||||||||||||||
| GAAP net cash provided by operating activities as % of total revenues | 31% | ||||||||||||||
| Purchases of property and equipment as % of total revenues | (7%) | ||||||||||||||
| Non-GAAP free cash flow margin | 24% | ||||||||||||||
| GAAP weighted-average shares used to compute net loss per share - diluted | 170 million | ||||||||||||||
| Effect of dilutive securities (stock options, restricted stock units) | 9 million | ||||||||||||||
| Non-GAAP weighted-average shares used to compute net income per share - diluted | 179 million | ||||||||||||||
| (1) |
Adjusted revenues and the corresponding growth rates are derived by applying the exchange rates in effect during the comparison period rather than the forecasted exchange rates for the guidance period. |
|
| (2) | Adjusted billings and the corresponding growth rates are derived by applying the exchange rates and weighted average billings duration in effect during the comparison period rather than the forecasted exchange rates and weighted average billings duration for the guidance period. |
View source version on businesswire.com: http://www.businesswire.com/news/home/20170125006141/en/
Source:
ServiceNow
Media Contact:
Joanne Blum, 310-489-7278
press@servicenow.com
or
Investor
Contact:
ir@servicenow.com