SANTA CLARA, Calif. ‑ Oct. 23, 2019 ‑ ServiceNow (NYSE: NOW), the leading digital workflow company making work, work better for people, today announced financial results for its third quarter ended September 30, 2019, with subscription revenues of $835 million in Q3 2019, representing 33% year‑over‑year growth, 35% adjusted for foreign currency exchange rates.
During the quarter, ServiceNow closed 46 transactions with more than $1 million in net new annual contract value (ACV), representing 84% year‑over‑year growth. The company now has 809 total customers with more than $1 million in ACV, representing 32% year‑over‑year growth in customers.
“We delivered another strong quarter, continuing our focus on driving customer success and expanding our footprint across 75% of the Fortune 500,” said John Donahoe, ServiceNow president and CEO. “We are pleased that companies are turning to ServiceNow to be their strategic partner for digital transformation when they want to unlock productivity and create leverage with their technology investments.”
Today’s results follow yesterday’s announcement of ServiceNow’s preliminary third quarter 2019 financial results, along with the news that Bill McDermott will succeed John Donahoe as President and CEO of ServiceNow by year‑end 2019.
Third Quarter 2019 GAAP and Non‑GAAP Results:
The following table summarizes our financial results for the third quarter 2019:
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Third Quarter 2019 |
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Third Quarter 2019 Non‑GAAP Results(1) |
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Amount |
Year/Year |
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Amount |
Year/Year |
Adjusted |
Adjusted |
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Subscription revenues |
$834.9 |
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33% |
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$847.6 |
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35% |
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Professional services and other revenues |
$50.9 |
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9% |
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$51.7 |
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11% |
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Total revenues |
$885.8 |
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32% |
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$899.2 |
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34% |
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Subscription billings |
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$864.0 |
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28% |
$869.1 |
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29% |
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Professional services and other billings |
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$51.2 |
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10% |
$51.9 |
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12% |
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Total billings |
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$915.2 |
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27% |
$921.0 |
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28% |
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Amount |
Margin (%) |
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Amount |
Margin (%) |
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Subscription gross profit |
$695.6 |
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83% |
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$720.7 |
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86% |
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Professional services and other gross profit (loss) |
($10.5) |
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(21%) |
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$0.3 |
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1% |
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Total gross profit |
$685.0 |
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77% |
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$721.1 |
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81% |
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Income from operations |
$56.3 |
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6% |
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$228.2 |
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26% |
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Net cash provided by operating activities |
$210.2 |
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24% |
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Free cash flow |
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$121.3 |
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14% |
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Amount |
Earnings per |
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Amount |
Earnings per |
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Net income |
$40.6 |
$0.22 / $0.21 |
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$192.9 |
$1.03 / $0.99 |
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Financial Outlook
Our guidance includes GAAP and non‑GAAP financial measures.
The following table summarizes our guidance for the fourth quarter 2019:
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Fourth Quarter 2019 |
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Fourth Quarter 2019 Non‑GAAP Guidance(1) |
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Amount |
Year/Year |
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Amount |
Year/Year |
Adjusted |
Adjusted |
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Subscription revenues |
$884 ‑ $889 |
33% |
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$897 ‑ $902 |
35% |
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Subscription billings |
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$1,249 ‑ $1,254 |
31% ‑ 32% |
$1,270 ‑ $1,275 |
33% ‑ 34% |
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Margin (%) |
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Income from operations |
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21% |
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Amount |
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Weighted‑average shares used to compute diluted net income per share |
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195 |
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The following table summarizes our updated guidance for full‑year 2019:
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Full‑Year 2019 |
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Full‑Year 2019 Non‑GAAP Guidance(1) |
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Amount |
Year/Year |
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Amount |
Year/Year |
Adjusted |
Adjusted |
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Subscription revenues |
$3,240 ‑ $3,245 |
34% |
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$3,302 ‑ $3,307 |
36% ‑ 37% |
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Subscription billings |
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$3,740 ‑ $3,745 |
30% |
$3,817 ‑ $3,822 |
32% ‑ 33% |
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Margin (%) |
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Subscription gross profit |
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86% |
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Income from operations |
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21% |
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Free cash flow |
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28% |
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Amount |
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Weighted‑average shares used to compute diluted net income per share |
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194 |
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The following table compares our updated full‑year 2019 guidance against our previously issued full‑year 2019 guidance dated July 24, 2019:
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Comparison of Updated Full‑Year 2019 Guidance to Previously Issued Guidance(1) |
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Previous Guidance Midpoint(2) |
Currency Impact(3) |
Duration Impact(4) |
Guidance Change |
Current Guidance Midpoint(5) |
GAAP subscription revenues |
$3,250 |
($18) |
$0 |
$11 |
$3,243 |
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Non‑GAAP subscription billings(6) |
$3,745 |
($23) |
$10 |
$11 |
$3,743 |
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Conference Call Details
The conference call will begin at 2 p.m. Pacific Time (22:00 BST) on October 23, 2019. Interested parties may listen to the call by dialing (877) 824‑2843 (passcode: 9197834), or if outside North America, by dialing (647) 689‑5665 (passcode: 9197834). Individuals may access the live teleconference from this webcast link:
https://event.on24.com/wcc/r/2078426/17C64C4B1449180887A4708BC36CB6E7
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) 585‑8367 (passcode: 9197834), or if outside North America, by dialing (416) 621‑4642 (passcode: 9197834).
Investor Presentation Details
An investor presentation providing additional information and analysis can be found at https://investors.servicenow.com.
Statement Regarding Use of Non‑GAAP Financial Measures
We report 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.
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 and guidance.
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.” 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: (i) errors, interruptions, delays, or security breaches in or of our service or datacenters, (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, sell to very large and regulated organizations with complex sales cycles, 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 those acquired through strategic transactions, (v) our ability to compete successfully against existing and new competitors, and (vi) material changes in the value of foreign currencies relative to the U.S. Dollar.
Further information on these and other factors that could affect our financial results are included in our Form 10‑Q that will be filed for the quarter ended September 30, 2019 and in other filings we make with the Securities and Exchange Commission from time to time, including our Form 10‑K filed for the year ended December 31, 2018.
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 making the world of work, work better for people. Our cloud‑based platform and solutions deliver digital workflows that create great experiences and unlock productivity for employees and the enterprise. For more information, visit: www.servicenow.com.
© 2019 ServiceNow, Inc. All rights reserved. ServiceNow, the ServiceNow logo, Now, Now Platform, and other ServiceNow marks are trademarks and/or registered trademarks of ServiceNow, Inc. in the United States and/or other countries. Other company names, product names, and logos may be trademarks of the respective companies with which they are associated.
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ServiceNow Q3 2019 complete financial tables (download PDF)
Media Contact:
Sara Day
650.336.3123
Investor Contact:
Kendall Toyne
408.831.6040