ServiceNow Reports Financial Results for Second Quarter 2017

ServiceNow Reports Financial Results for Second Quarter 2017
John Donahoe, President and CEO ServiceNow.

Santa Clara – ServiceNow today announced the financial results for its second quarter 2017. “ServiceNow reported another strong quarter today, demonstrating steady growth of new customers and maintaining our high renewal rate,” said John Donahoe, president and chief executive officer, ServiceNow.

Press Release from ServiceNow

Second Quarter 2017 GAAP Results:

  • Subscription revenues of $411.0 million, representing 41% year-over-year growth.
  • Professional services and other revenues of $60.7 million, representing 20% year-over-year growth.
  • Total revenues of $471.7 million, representing 38% year-over-year growth.
  • Subscription gross profit of $335.2 million, representing 82% of subscription revenues.
  • Professional services and other gross profit of $14.8 million, representing 24% of professional services and other revenues.
  • Total gross profit of $350.0 million, representing 74% of total revenues.
  • Loss from operations of $38.7 million, representing negative 8% of total revenues.
  • Net loss of $56.5 million, or loss of $0.33 per basic and diluted share.
  • Net cash provided by operating activities of $128.7 million, representing 27% of total revenues.

Second Quarter 2017 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 GAAP to non-GAAP measures and corresponding growth rates.

  • Subscription revenues of $417.0 million, representing 43% year-over-year growth adjusted for constant currency.
  • Professional services and other revenues of $61.5 million, representing 21% year-over-year growth adjusted for constant currency.
  • Total revenues of $478.5 million, representing 40% year-over-year growth adjusted for constant currency.
  • Subscription billings of $456.6 million, representing 37% year-over-year growth (or $468.0 million, representing 41% year-over-year growth adjusted for constant currency and constant billings duration).
  • Professional services and other billings of $48.3 million, representing 15% year-over-year growth (or $49.1 million, representing 16% year-over-year growth adjusted for constant currency).
  • Total billings of $504.9 million, representing 35% year-over-year growth (or $517.1 million, representing 38% year-over-year growth adjusted for constant currency and constant billings duration).
  • Subscription gross profit of $347.9 million, representing 85% of subscription revenues.
  • Professional services and other gross profit of $22.4 million, representing 37% of professional services and other revenues.
  • Total gross profit of $370.3 million, representing 78% of total revenues.
  • Income from operations of $65.3 million, representing 14% of total revenues.
  • Net income of $39.9 million, or earnings of $0.23 per basic share and $0.22 per diluted share.
  • Free cash flow of $92.8 million, representing 20% of total revenues.

“ServiceNow reported another strong quarter today, demonstrating steady growth of new customers and maintaining our high renewal rate,” said John Donahoe, president and chief executive officer, ServiceNow. “Our growth through upsells represents deeper enterprise integration and expansion of our capabilities. We are solving real challenges for enterprises today, while also enabling their transformation to a digital future.”

“We now count 403 customers with an annual contract value of greater than $1 million, a 44% year-over-year increase,” said Michael Scarpelli, chief financial officer, ServiceNow. “We ended the quarter with nearly 800 customers from the Global 2000, adding 29 new logos.”

Financial Outlook
Our guidance is based on foreign exchange rates as of June 30, 2017 and includes GAAP and non-GAAP financial measures. 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 GAAP to non-GAAP metrics and corresponding growth rates.

For the third quarter of 2017, we expect:

  • GAAP subscription revenues between $442 and $446 million, representing 39% to 40% year-over-year growth (or non-GAAP subscription revenues between $440 and $444 million, representing 38% to 39% year-over-year growth adjusted for constant currency).
  • GAAP professional services and other revenues between $46 and $47 million, representing 19% to 21% year-over-year growth (or non-GAAP professional services and other revenues between $45 and $46 million, representing 16% to 19% year-over-year growth adjusted for constant currency).
  • GAAP total revenues between $488 and $493 million, representing 36% to 38% year-over-year growth (or non-GAAP total revenues between $485 and $490 million, representing 36% to 37% year-over-year growth adjusted for constant currency).
  • Non-GAAP subscription billings between $491 and $495 million, representing 35% to 36% year-over-year growth (or between $495 and $499 million, representing 36% to 38% year-over-year growth adjusted for constant currency and constant billings duration).
  • Non-GAAP professional services and other billings between $49 and $50 million, representing 18% to 20% year-over-year growth (or between $48 and $49 million, representing 16% to 18% year-over-year growth adjusted for constant currency).
  • Non-GAAP total billings between $540 and $545 million, representing 34% to 35% year-over-year growth (or between $543 and $548 million, representing 34% to 36% year-over-year growth adjusted for constant currency and constant billings duration).
  • Non-GAAP operating margin of 17%.
  • Non-GAAP weighted average shares used to compute diluted net income per share of approximately 181 million shares.

For the full year 2017, we expect:

  • GAAP subscription revenues between $1,708 and $1,716 million, representing 40% year-over-year growth (or non-GAAP subscription revenues between $1,710 and $1,718 million, representing 40% to 41% year-over-year growth adjusted for constant currency).
  • GAAP professional services and other revenues and non-GAAP professional services and other revenues adjusted for constant currency between $193 and $195 million, representing 14% to 15% year-over-year growth.
  • GAAP total revenues between $1,901 and $1,911 million, representing 37% year-over-year growth (or non-GAAP total revenues between $1,903 and $1,913 million, representing 37% to 38% year-over-year growth adjusted for constant currency).
  • Non-GAAP subscription billings between $2,066 and $2,074 million, representing 37% year-over-year growth (or between $2,074 and $2,082 million, representing 37% to 38% year-over-year growth adjusted for constant currency and constant billings duration).
  • Non-GAAP professional services and other billings and non-GAAP professional services and other billings adjusted for constant currency between $205 and $207 million, representing 14% to 15% year-over-year growth.
  • Non-GAAP total billings between $2,271 and $2,281 million, representing 34% to 35% year-over-year growth (or between $2,279 and $2,289 million, representing 35% year-over-year growth adjusted for constant currency and constant billings duration).
  • Non-GAAP subscription gross margin of 84%.
  • Non-GAAP professional services and other gross margin of 15%.
  • Non-GAAP total gross margin of 77%.
  • Non-GAAP operating margin of 16%.
  • Non-GAAP free cash flow margin of 25%.
  • Non-GAAP weighted average shares used to compute diluted net income per share of approximately 179 million shares.

Full version with additional details and information… (ServiceNow/mc/hfu)

About ServiceNow
Your enterprise needs to move faster, but lack of process and legacy tools hold you back. Every day, thousands of customer requests, IT incidents, and HR cases follow their own paths—moving back and forth between people, machines and departments. Unstructured. Undocumented. Unimproved for years. With the ServiceNow® System of Action™ you can replace these unstructured work patterns of the past with intelligent workflows of the future. Now every employee, customer and machine can make requests on a single cloud platform. Every department working on these requests can assign and prioritize, collaborate, get down to root cause issues, gain real-time insights and drive to action. Your employees are energized. Your service levels improve. And you realize game-changing economics. Work at Lightspeed™. To find out how, visit www.servicenow.com.

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