Business Wire | Jul 28, 2021 04:10PM EDT

ServiceNow Reports Second Quarter 2021 Financial Results

Jul. 28, 2021

SANTA CLARA, Calif.--(BUSINESS WIRE)--Jul. 28, 2021--ServiceNow (NYSE: NOW), the leading digital workflow company making work, work better for people, today announced financial results for its second quarter ended June 30, 2021, with subscription revenues of $1,330 million in Q2 2021, representing 31% year-over-year growth, 27% adjusted for constant currency.

As of June 30, 2021, current remaining performance obligations ("cRPO"), contract revenue that will be recognized as revenue in the next 12 months, was $4.7 billion, representing 34% year-over-year growth, 31% adjusted for constant currency. The company now has 1,201 total customers with more than $1 million in annual contract value, representing 25% year-over-year growth in customers.

"I'm so proud of our team's performance, significantly exceeding the high end of our guidance across all metrics, which is reflected in our strong full-year guidance raise," said Bill McDermott, ServiceNow president and CEO. "Business leaders worldwide are facing 'do or die' moments in a forever changed world. They are leveraging the flexibility of the Now Platform to create innovative digital solutions needed to solve the biggest challenges of our time. In partnership with our customers, we workflow a better world."

ServiceNow CFO Gina Mastantuono said, "Q2 was a tremendous quarter, showcasing the power of our business model and our ability to drive a balance of growth and profitability. The team demonstrated exceptional execution, and we saw strong demand across all regions and workflows. We are the platform for digital business, and we are well on our way to becoming a $15+ billion revenue company."

During the quarter, ServiceNow hosted Knowledge 2021, where customers, partners, and developers from 141 countries came together to address how they are using digital workflows to grow their business, become more resilient, and reshape their industries. At Knowledge 21, ServiceNow released new solutions to power the manufacturing and healthcare and life sciences industries by helping customers increase their agility, resilience, and productivity. In Q2, the company also acquired next-generation observability leader Lightstep to help customers accelerate digital transformation with insight-driven, action-oriented workflows. To support customers as they prepare for a hybrid workplace, ServiceNow recently announced an integration with Microsoft's new Windows 365 solution to let users easily access Cloud PCs directly through Microsoft Teams. The company also launched enhancements to its Workplace Service Delivery solution to give customers consumer-grade employee experiences and optimize real estate planning, enabling productivity and flexibility in the new world of work.

Second Quarter 2021 GAAP and Non-GAAP Results:

The following table summarizes our financial results for the second quarter 2021:

Second Quarter 2021 Second Quarter 2021 Non-GAAP Results^ (1) GAAP Results

Year/ Year/ Adjusted Adjusted Amount Year Amount Year Amount ($ Year/ ($ Growth ($ Growth millions) Year millions) (%) millions) (%) ^(2) Growth (%)

Subscription $1,330 31% $1,285 27%revenues

Professionalservices and other $79 41% $76 36%revenues

Total revenues $1,409 32% $1,362 27%



Subscription $1,328 30% $1,275 25%billings

Professionalservices and other $89 44% $86 39%billings

Total billings $1,417 31% $1,361 26%



Amount Year/ Adjusted Adjusted Year Amount Year/ ($ ($ Year billions) Growth billions) Growth (%) ^(2) (%)

cRPO $4.7 34% $4.6 31%

RPO $9.5 35% $9.3 32%



Amount Amount Margin Margin ($ (%) ($ (%) millions) millions)

Subscription gross $1,082 81% $1,129 85% profit

Professionalservices and other ($2) (3%) $13 17% gross profit (loss)

Total gross profit $1,080 77% $1,142 81%

Income from $51 4% $353 25% operations

Net cash provided by $300 21% operating activities

Free cash flow $268 19%



Earnings Earnings Amount per Amount per Basic/ Basic/ ($ Diluted ($ Diluted millions) Share millions) Share ($) ($)

Net income $59 $0.30/ $287 $1.45/ $0.29 $1.42

(1)

We report non-GAAP financial measures in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. See the section entitled "Statement Regarding Use of Non-GAAP Financial Measures" for an explanation of non-GAAP measures, and the table entitled "GAAP to Non-GAAP Reconciliation" for a reconciliation of GAAP to non-GAAP measures.

(2)

Non-GAAP adjusted subscription revenues, professional services and other revenues, total revenues and professional services and other billings, cRPO and RPO are adjusted for constant currency. Non-GAAP adjusted subscription billings and total billings are adjusted for constant currency and constant billings duration. See the section entitled "Statement Regarding Use of Non-GAAP Financial Measures" for an explanation of non-GAAP measures, and the table entitled "GAAP to Non-GAAP Reconciliation" for a reconciliation of GAAP to non-GAAP measures.

Note: Numbers rounded for presentation purposes.

Financial Outlook

Our guidance includes GAAP and non-GAAP financial measures.

The following table summarizes our guidance for the third quarter 2021:

We report non-GAAP financial measures in addition to, and not as a substitute for, or superior to, financial measures calculated in(1) accordance with GAAP. See the section entitled "Statement Regarding Use of Non-GAAP Financial Measures" for an explanation of non-GAAP measures, and the table entitled "GAAP to Non-GAAP Reconciliation" for a reconciliation of GAAP to non-GAAP measures.

Non-GAAP adjusted subscription revenues, professional services and other revenues, total revenues and professional services and other billings, cRPO and RPO are adjusted for constant currency. Non-GAAP adjusted(2) subscription billings and total billings are adjusted for constant currency and constant billings duration. See the section entitled "Statement Regarding Use of Non-GAAP Financial Measures" for an explanation of non-GAAP measures, and the table entitled "GAAP to Non-GAAP Reconciliation" for a reconciliation of GAAP to non-GAAP measures.

Note: Numbers rounded for presentation purposes.

Financial Outlook

Our guidance includes GAAP and non-GAAP financial measures.

The following table summarizes our guidance for the third quarter 2021:

Third Quarter Third Quarter 2021 2021 Non-GAAP Guidance^ (1) GAAP Guidance

Amount Year/ Amount Year/ ($ Year ($ Year millions) millions)^ ^(2) Growth (2) Growth (%) (%)

Subscription revenues $1,400 - 28% $1,405 -29%

Note: Includes foreign currency benefit of $15 million

Subscription billings $1,320 - 22% - $1,325 23%

Note: Includes foreign currency benefit of $14 million

Includes negative impact of billingsduration of $7 million



cRPO 30%

Margin (%)

Income from operations 23.0%



Amount (millions)

Weighted-average shares used to compute 202 diluted net income per share

(1)

We report non-GAAP financial measures in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. See the section entitled "Statement Regarding Use of Non-GAAP Financial Measures" for an explanation of non-GAAP measures, and the table entitled "Reconciliation of Non-GAAP Financial Guidance" for a reconciliation of GAAP to non-GAAP measures.

(2)

Guidance for GAAP subscription revenues and non-GAAP subscription billings is based on foreign exchange rates as of June 30, 2021 for entities reporting in currencies other than U.S. Dollars.

The following table summarizes our guidance for the full-year 2021:

We report non-GAAP financial measures in addition to, and not as a substitute for, or superior to, financial measures calculated in(1) accordance with GAAP. See the section entitled "Statement Regarding Use of Non-GAAP Financial Measures" for an explanation of non-GAAP measures, and the table entitled "Reconciliation of Non-GAAP Financial Guidance" for a reconciliation of GAAP to non-GAAP measures.

Guidance for GAAP subscription revenues and non-GAAP subscription billings(2) is based on foreign exchange rates as of June 30, 2021 for entities reporting in currencies other than U.S. Dollars.

The following table summarizes our guidance for the full-year 2021:

Full-Year 2021 Full-Year 2021 Non-GAAP GAAP Guidance Guidance^(1)

Amount Year/ Amount Year/ ($ Year ($ Year millions)^ millions)^ (2) Growth (2) Growth (%) (%)

Subscription revenues $5,530 - 29% $5,540

Note: Includes foreign currency benefit of $101 million

Subscription billings $6,315 - 27% $6,325

Note: Includes foreign currency benefitof $104 million

Includes positive impact of billingsduration of $6 million

Margin (%)

Subscription gross profit 85%

Income from operations 24.5%

Free cash flow 31.0%



Amount (millions)

Weighted-average shares used to compute 202 diluted net income per share

(1)

We report non-GAAP financial measures in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. See the section entitled "Statement Regarding Use of Non-GAAP Financial Measures" for an explanation of non-GAAP measures, and the table entitled "Reconciliation of Non-GAAP Financial Guidance" for a reconciliation of GAAP to non-GAAP measures.

(2)

GAAP subscription revenues and non-GAAP subscription billings for the future quarters included in our full-year 2021 guidance are based on foreign exchange rates as of June 30, 2021 for entities reporting in currencies other than U.S. Dollars

Conference Call Details

The conference call will begin at 2 p.m. Pacific Time (21:00 GMT) on July 28, 2021. Interested parties may listen to the call by dialing (833) 513?0567 (Passcode: 5090338), or if outside North America, by dialing (236) 714?2186 (Passcode: 5090338). Individuals may access the live teleconference from this webcast.

https://event.on24.com/wcc/r/3196497/03FA90BAD600EF511EBFF97AB725E07C

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: 5090338), or if outside North America, by dialing (416) 621?4642 (Passcode: 5090338).

Investor Presentation Details

An investor presentation providing additional information, including forward-looking guidance, and analysis can be found at http://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.

* Adjusted revenues. We present revenues adjusted for constant currency 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 ("USD") are converted into USD at the average exchange rates in effect during the comparison period (for Q2 2020, the average exchange rates in effect for our major currencies were 1 USD to 1.10 Euros and 1 USD to 1.24 British Pound Sterling ("GBP"), rather than the actual average exchange rates in effect during the current period (for Q2 2021, the average exchange rates in effect for our major currencies were 1 USD to 1.20 Euros and 1 USD to 1.40 GBP). We believe the presentation of revenues adjusted for constant currency facilitates the comparison of revenues year-over-year. * Billings and Adjusted billings. We define subscription billings, professional services and other billings, and total billings as the applicable revenue plus the applicable change in deferred revenue, unbilled receivables and customer deposits as presented or derived from the statement of cash flows. We adjust billings for constant currency, as described above, and for constant duration by replacing the portion of multi-year billings in excess of twelve months during the current period with the portion of multi-year billings in excess of twelve months during the comparison period. We believe these adjustments facilitate greater comparability in our billings information year-over-year. We believe billings is one indicator of the performance of our business. * Adjusted remaining performance obligations and current remaining performance obligations. We present cRPO and remaining performance obligations ("RPO") and related growth rates adjusted for constant currency, as described above, to provide a framework for assessing how our business performed. We believe the presentation of cRPO and RPO and related growth rates adjusted for constant currency facilitates the comparison of cRPO and RPO year-over-year, respectively. * Gross profit, Income from operations, Net income and Net income per share - diluted. Our non-GAAP presentation of gross profit, income from operations, and net income measures exclude certain non-cash or non-recurring items, including stock-based compensation expense, amortization of debt discount and issuance costs related to our convertible senior notes, loss on early note conversions, amortization of purchased intangibles, legal settlements, business combination and other related costs, and the related income tax effect of these adjustments. The non-GAAP weighted-average shares used to compute our non-GAAP net income per share - diluted excludes the dilutive effect of the in-the-money portion of convertible senior notes as they are covered by our note hedges, and includes the dilutive effect of time-based stock awards, the dilutive effect of warrants and the potentially dilutive effect of our stock awards with performance conditions not yet satisfied at forecasted attainment levels to the extent we believe it is probable that the performance condition will be met. We believe these adjustments provide useful supplemental information to investors and facilitates the analysis of our operating results and comparison of operating results across reporting periods. * Free cash flow. Free cash flow is defined as net cash provided by (used in) operating activities plus cash paid for legal settlements, repayments of convertible senior notes attributable to debt discount and business combination and other related costs including compensation expense, reduced by purchases of property and equipment. Free cash flow margin is calculated as free cash flow as a percentage of total revenues. We believe information regarding free cash flow and free cash flow margin provides useful information to investors because it is an indicator of the strength and performance of our business operations.

Our presentation of non-GAAP financial measures may not be comparable to similar measures used by other companies. We encourage investors to carefully consider our results under GAAP, as well as our supplemental non-GAAP information and the reconciliation between these presentations, to more fully understand our business. Please see the tables included at the end of this release for the reconciliation of GAAP and non-GAAP results.

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) the continued impact and duration of COVID-19 on our business, future financial performance and global economic conditions including the effectiveness, extent and duration of mitigation efforts such as "shelter in place", availability of vaccinations and similar directives; (ii) our ability to compete successfully against existing and new competitors, (iii) our ability to comply with evolving privacy laws, data transfer restrictions, and other foreign and domestic standards related to data and the Internet, (iv) our ability to predict, prepare for and respond promptly to rapidly evolving technological, market and customer developments, (v) errors, interruptions, delays, or security breaches in or of our service or data centers, (vi) our ability to grow our business, including converting remaining performance obligations into revenue, adding and retaining customers, selling additional subscriptions to existing customers, selling to larger enterprises, government and regulated organizations with complex sales cycles and certification processes, and entering new geographies and markets, (vii) our ability to develop and gain customer acceptance of new and improved products and services, including those acquired through strategic transactions, and (viii) material changes in the value of foreign currencies relative to the U.S. Dollar. Additionally, these forward-looking statements involve risk, uncertainties and assumptions, including those related to the continued impacts of COVID-19 on our business, future financial performance and global economic conditions. Many of these assumptions relate to matters that are beyond our control and changing rapidly, including, but not limited to, the timeframes for and severity of social distancing and other mitigation requirements, the timing of headwinds from COVID-19, the continued impact of COVID-19 on new or existing customers' purchasing decisions and the length of our sales cycles, renewal timing or billings terms, particularly for customers in certain industries highly affected by COVID-19. Significant variation from the assumptions underlying our forward-looking statements could cause our actual results to vary, and the impact could be significant.

Further information on these and other factors that could affect our financial results are included in our Form 10-K filed for the year ended December 31, 2020, our Form 10-Q that will be filed for the quarter ended June 30, 2021 and in other filings we make with the Securities and Exchange Commission from time to time.

We undertake no obligation, and do not intend, to update these forward-looking statements, to review or confirm analysts' expectations, or to provide interim reports or updates on the progress of the current financial quarter.

About ServiceNow

ServiceNow (NYSE: NOW) is 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.

(c) 2021 ServiceNow, Inc. All rights reserved. ServiceNow, the ServiceNow logo, Now, 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.

We report non-GAAP financial measures in addition to, and not as a substitute for, or superior to, financial measures calculated in(1) accordance with GAAP. See the section entitled "Statement Regarding Use of Non-GAAP Financial Measures" for an explanation of non-GAAP measures, and the table entitled "Reconciliation of Non-GAAP Financial Guidance" for a reconciliation of GAAP to non-GAAP measures.

GAAP subscription revenues and non-GAAP subscription billings for the(2) future quarters included in our full-year 2021 guidance are based on foreign exchange rates as of June 30, 2021 for entities reporting in currencies other than U.S. Dollars

Conference Call Details

The conference call will begin at 2 p.m. Pacific Time (21:00 GMT) on July 28, 2021. Interested parties may listen to the call by dialing (833) 513?0567 (Passcode: 5090338), or if outside North America, by dialing (236) 714?2186 (Passcode: 5090338). Individuals may access the live teleconference from this webcast.

https://event.on24.com/wcc/r/3196497/03FA90BAD600EF511EBFF97AB725E07C

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: 5090338), or if outside North America, by dialing (416) 621?4642 (Passcode: 5090338).

Investor Presentation Details

An investor presentation providing additional information, including forward-looking guidance, and analysis can be found at http://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.

* Adjusted revenues. We present revenues adjusted for constant currency 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 ("USD") are converted into USD at the average exchange rates in effect during the comparison period (for Q2 2020, the average exchange rates in effect for our major currencies were 1 USD to 1.10 Euros and 1 USD to 1.24 British Pound Sterling ("GBP"), rather than the actual average exchange rates in effect during the current period (for Q2 2021, the average exchange rates in effect for our major currencies were 1 USD to 1.20 Euros and 1 USD to 1.40 GBP). We believe the presentation of revenues adjusted for constant currency facilitates the comparison of revenues year-over-year. * Billings and Adjusted billings. We define subscription billings, professional services and other billings, and total billings as the applicable revenue plus the applicable change in deferred revenue, unbilled receivables and customer deposits as presented or derived from the statement of cash flows. We adjust billings for constant currency, as described above, and for constant duration by replacing the portion of multi-year billings in excess of twelve months during the current period with the portion of multi-year billings in excess of twelve months during the comparison period. We believe these adjustments facilitate greater comparability in our billings information year-over-year. We believe billings is one indicator of the performance of our business. * Adjusted remaining performance obligations and current remaining performance obligations. We present cRPO and remaining performance obligations ("RPO") and related growth rates adjusted for constant currency, as described above, to provide a framework for assessing how our business performed. We believe the presentation of cRPO and RPO and related growth rates adjusted for constant currency facilitates the comparison of cRPO and RPO year-over-year, respectively. * Gross profit, Income from operations, Net income and Net income per share - diluted. Our non-GAAP presentation of gross profit, income from operations, and net income measures exclude certain non-cash or non-recurring items, including stock-based compensation expense, amortization of debt discount and issuance costs related to our convertible senior notes, loss on early note conversions, amortization of purchased intangibles, legal settlements, business combination and other related costs, and the related income tax effect of these adjustments. The non-GAAP weighted-average shares used to compute our non-GAAP net income per share - diluted excludes the dilutive effect of the in-the-money portion of convertible senior notes as they are covered by our note hedges, and includes the dilutive effect of time-based stock awards, the dilutive effect of warrants and the potentially dilutive effect of our stock awards with performance conditions not yet satisfied at forecasted attainment levels to the extent we believe it is probable that the performance condition will be met. We believe these adjustments provide useful supplemental information to investors and facilitates the analysis of our operating results and comparison of operating results across reporting periods. * Free cash flow. Free cash flow is defined as net cash provided by (used in) operating activities plus cash paid for legal settlements, repayments of convertible senior notes attributable to debt discount and business combination and other related costs including compensation expense, reduced by purchases of property and equipment. Free cash flow margin is calculated as free cash flow as a percentage of total revenues. We believe information regarding free cash flow and free cash flow margin provides useful information to investors because it is an indicator of the strength and performance of our business operations.

Our presentation of non-GAAP financial measures may not be comparable to similar measures used by other companies. We encourage investors to carefully consider our results under GAAP, as well as our supplemental non-GAAP information and the reconciliation between these presentations, to more fully understand our business. Please see the tables included at the end of this release for the reconciliation of GAAP and non-GAAP results.

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) the continued impact and duration of COVID-19 on our business, future financial performance and global economic conditions including the effectiveness, extent and duration of mitigation efforts such as "shelter in place", availability of vaccinations and similar directives; (ii) our ability to compete successfully against existing and new competitors, (iii) our ability to comply with evolving privacy laws, data transfer restrictions, and other foreign and domestic standards related to data and the Internet, (iv) our ability to predict, prepare for and respond promptly to rapidly evolving technological, market and customer developments, (v) errors, interruptions, delays, or security breaches in or of our service or data centers, (vi) our ability to grow our business, including converting remaining performance obligations into revenue, adding and retaining customers, selling additional subscriptions to existing customers, selling to larger enterprises, government and regulated organizations with complex sales cycles and certification processes, and entering new geographies and markets, (vii) our ability to develop and gain customer acceptance of new and improved products and services, including those acquired through strategic transactions, and (viii) material changes in the value of foreign currencies relative to the U.S. Dollar. Additionally, these forward-looking statements involve risk, uncertainties and assumptions, including those related to the continued impacts of COVID-19 on our business, future financial performance and global economic conditions. Many of these assumptions relate to matters that are beyond our control and changing rapidly, including, but not limited to, the timeframes for and severity of social distancing and other mitigation requirements, the timing of headwinds from COVID-19, the continued impact of COVID-19 on new or existing customers' purchasing decisions and the length of our sales cycles, renewal timing or billings terms, particularly for customers in certain industries highly affected by COVID-19. Significant variation from the assumptions underlying our forward-looking statements could cause our actual results to vary, and the impact could be significant.

Further information on these and other factors that could affect our financial results are included in our Form 10-K filed for the year ended December 31, 2020, our Form 10-Q that will be filed for the quarter ended June 30, 2021 and in other filings we make with the Securities and Exchange Commission from time to time.

We undertake no obligation, and do not intend, to update these forward-looking statements, to review or confirm analysts' expectations, or to provide interim reports or updates on the progress of the current financial quarter.

About ServiceNow

ServiceNow (NYSE: NOW) is 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.

(c) 2021 ServiceNow, Inc. All rights reserved. ServiceNow, the ServiceNow logo, Now, 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.

ServiceNow, Inc.

Condensed Consolidated Statements of Operations

(in millions, except per share data)

(unaudited)

Three Months Ended Six Months Ended

June 30, June 30, June 30, June 30, 2021 2020 2021 2020

Revenues:

Subscription $ 1,330 $ 1,015 $ 2,623 $ 2,010

Professional services and other 79 56 146 107

Total revenues 1,409 1,071 2,769 2,117

Cost of revenues^ (1):

Subscription 248 172 476 332

Professional services and other 81 61 152 124

Total cost of revenues 329 233 628 456

Gross profit 1,080 838 2,141 1,661

Operating expenses^ (1):

Sales and marketing 557 426 1,081 867

Research and development 333 245 647 472

General and administrative 139 104 265 210

Total operating expenses 1,029 775 1,993 1,549

Income from operations 51 63 148 112

Interest expense (7 ) (8 ) (14 ) (17 )

Other income, net 6 7 15 15

Income before income taxes 50 62 149 110

Provision for (benefit from) income (9 ) 21 8 21 taxes

Net income $ 59 $ 41 $ 141 $ 89

Net income per share - basic $ 0.30 $ 0.21 $ 0.71 $ 0.47

Net income per share - diluted $ 0.29 $ 0.20 $ 0.70 $ 0.44

Weighted-average shares used to 198 191 197 191 compute net income per share - basic

Weighted-average shares used to 202 201 202 201 compute net income per share - diluted

(1)

Includes stock-based compensation as follows:

(1) Includes stock-based compensation as follows:

Three Months Ended

Six Months Ended

June 30, 2021

June 30, 2020

June 30, 2021

June 30, 2020

Cost of revenues:

Subscription

$

33

$

25

$

62

$

46

Professional services and other

15

13

28

25

Operating expenses:

Sales and marketing

99

79

192

149

Research and development

98

70

186

129

General and administrative

37

30

70

56

Three Months Ended Six Months Ended

June 30, June 30, June 30, June 30, 2021 2020 2021 2020

Cost of revenues:

Subscription $ 33 $ 25 $ 62 $ 46

Professional services and other 15 13 28 25

Operating expenses:

Sales and marketing 99 79 192 149

Research and development 98 70 186 129

General and administrative 37 30 70 56

ServiceNow, Inc.

Condensed Consolidated Balance Sheets

(in millions)

(unaudited)

June 30, 2021

December 31, 2020

Assets

Current assets:

Cash and cash equivalents

$

1,362

$

1,677

Short-term investments

1,622

1,415

Accounts receivable, net

781

1,009

Current portion of deferred commissions

255

229

Prepaid expenses and other current assets

205

192

Total current assets

4,225

4,522

Deferred commissions, less current portion

494

444

Long-term investments

1,350

1,468

Property and equipment, net

732

660

Operating lease right-of-use assets

466

454

Intangible assets, net

310

153

Goodwill

793

241

Deferred tax assets

665

673

Other assets

152

100

Total assets

$

9,187

$

8,715

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable

$

98

$

34

Accrued expenses and other current liabilities

608

668

Current portion of deferred revenue

3,023

2,963

Current portion of operating lease liabilities

80

72

Current debt, net

99

-

Total current liabilities

3,908

3,737

Deferred revenue, less current portion

49

45

Operating lease liabilities, less current portion

427

423

Long-term debt, net

1,483

1,640

Other long-term liabilities

45

36

Stockholders' equity

3,275

2,834

Total liabilities and stockholders' equity

$

9,187

$

8,715

ServiceNow, Inc.

Condensed Consolidated Balance Sheets

(in millions)

(unaudited)

June 30, 2021 December 31, 2020

Assets

Current assets:

Cash and cash equivalents $ 1,362 $ 1,677

Short-term investments 1,622 1,415

Accounts receivable, net 781 1,009

Current portion of deferred commissions 255 229

Prepaid expenses and other current assets 205 192

Total current assets 4,225 4,522

Deferred commissions, less current portion 494 444

Long-term investments 1,350 1,468

Property and equipment, net 732 660

Operating lease right-of-use assets 466 454

Intangible assets, net 310 153

Goodwill 793 241

Deferred tax assets 665 673

Other assets 152 100

Total assets $ 9,187 $ 8,715

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable $ 98 $ 34

Accrued expenses and other current liabilities 608 668

Current portion of deferred revenue 3,023 2,963

Current portion of operating lease liabilities 80 72

Current debt, net 99 -

Total current liabilities 3,908 3,737

Deferred revenue, less current portion 49 45

Operating lease liabilities, less current 427 423 portion

Long-term debt, net 1,483 1,640

Other long-term liabilities 45 36

Stockholders' equity 3,275 2,834

Total liabilities and stockholders' equity $ 9,187 $ 8,715

ServiceNow, Inc.

Condensed Consolidated Statements of Cash Flows

(in millions)

(unaudited)

Three Months Ended

Six Months Ended

June 30, 2021

June 30, 2020

June 30, 2021

June 30, 2020

Cash flows from operating activities:

Net income

$

59

$

41

$

141

$

89

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

115

83

221

159

Amortization of deferred commissions

70

52

136

101

Stock-based compensation

281

217

537

405

Deferred income taxes

(17

)

(1

)

(16

)

(3

)

Repayments of convertible senior notes attributable to debt discount

(6

)

(2

)

(13

)

(2

)

Other

5

4

22

16

Changes in operating assets and liabilities, net of effect of business combinations:

Accounts receivable

(130

)

(9

)

224

200

Deferred commissions

(103

)

(73

)

(217

)

(144

)

Prepaid expenses and other assets

(54

)

(12

)

(57

)

(32

)

Accounts payable

(14

)

17

75

38

Deferred revenue

10

9

85

69

Accrued expenses and other liabilities

84

42

(111

)

(36

)

Net cash provided by operating activities

300

368

1,027

860

Cash flows from investing activities:

Purchases of property and equipment

(91

)

(110

)

(198

)

(194

)

Business combinations, net of cash acquired

(513

)

-

(738

)

(83

)

Purchases of investments

(495

)

(580

)

(1,139

)

(1,108

)

Sales and maturities of investments

491

453

1,023

766

Other

(6

)

(6

)

1

(9

)

Net cash used in investing activities

(614

)

(243

)

(1,051

)

(628

)

Cash flows from financing activities:

Repayments of convertible senior notes attributable to principal

(25

)

(14

)

(53

)

(16

)

Proceeds from employee stock plans

-

24

95

91

Taxes paid related to net share settlement of equity awards

(124

)

(113

)

(315

)

(239

)

Net cash used in financing activities

(149

)

(103

)

(273

)

(164

)

Foreign currency effect on cash, cash equivalents and restricted cash

7

6

(11

)

(5

)

Net change in cash, cash equivalents and restricted cash

(456

)

28

(308

)

63

Cash, cash equivalents and restricted cash at beginning of period

1,827

813

1,679

778

Cash, cash equivalents and restricted cash at end of period

$

1,371

$

841

$

1,371

$

841

ServiceNow, Inc.

Condensed Consolidated Statements of Cash Flows

(in millions)

(unaudited)

Three Months Ended Six Months Ended

June 30, June June 30, June 30, 2021 30, 2021 2020 2020

Cash flows from operating activities:

Net income $ 59 $ 41 $ 141 $ 89

Adjustments to reconcile net incometo net cash provided by operating activities:

Depreciation and amortization 115 83 221 159

Amortization of deferred commissions 70 52 136 101

Stock-based compensation 281 217 537 405

Deferred income taxes (17 ) (1 ) (16 ) (3 )

Repayments of convertible senior (6 ) (2 ) (13 ) (2 )notes attributable to debt discount

Other 5 4 22 16

Changes in operating assets andliabilities, net of effect of business combinations:

Accounts receivable (130 ) (9 ) 224 200

Deferred commissions (103 ) (73 ) (217 ) (144 )

Prepaid expenses and other assets (54 ) (12 ) (57 ) (32 )

Accounts payable (14 ) 17 75 38

Deferred revenue 10 9 85 69

Accrued expenses and other 84 42 (111 ) (36 )liabilities

Net cash provided by operating 300 368 1,027 860 activities

Cash flows from investing activities:

Purchases of property and equipment (91 ) (110 ) (198 ) (194 )

Business combinations, net of cash (513 ) - (738 ) (83 )acquired

Purchases of investments (495 ) (580 ) (1,139 ) (1,108 )

Sales and maturities of investments 491 453 1,023 766

Other (6 ) (6 ) 1 (9 )

Net cash used in investing (614 ) (243 ) (1,051 ) (628 )activities

Cash flows from financing activities:

Repayments of convertible senior (25 ) (14 ) (53 ) (16 )notes attributable to principal

Proceeds from employee stock plans - 24 95 91

Taxes paid related to net share (124 ) (113 ) (315 ) (239 )settlement of equity awards

Net cash used in financing (149 ) (103 ) (273 ) (164 )activities

Foreign currency effect on cash, 7 6 (11 ) (5 )cash equivalents and restricted cash

Net change in cash, cash equivalents (456 ) 28 (308 ) 63 and restricted cash

Cash, cash equivalents andrestricted cash at beginning of 1,827 813 1,679 778 period

Cash, cash equivalents and $ 1,371 $ 841 $ 1,371 $ 841 restricted cash at end of period

ServiceNow, Inc.

GAAP to Non-GAAP Reconciliation

(in millions, except cRPO, RPO and per share data)

(unaudited)

Three Months Ended

Six Months Ended

June 30, 2021

June 30, 2020

Growth Rates

June 30, 2021

June 30, 2020

Growth Rates

Subscription revenues:

GAAP subscription revenues

$

1,330

$

1,015

31%

$

2,623

$

2,010

30%

Effects of foreign currency rate fluctuations

(45

)

(82

)

Non-GAAP adjusted subscription revenues(1)

$

1,285

27%

$

2,541

26%

Professional services and other revenues:

GAAP professional services and other revenues

$

79

$

56

41%

$

146

$

107

36%

Effects of foreign currency rate fluctuations

(3

)

(5

)

Non-GAAP adjusted professional service and other revenues(1)

$

76

36%

$

141

32%

Total revenues:

GAAP total revenues

$

1,409

$

1,071

32%

$

2,769

$

2,117

31%

Effects of foreign currency rate fluctuations

(47

)

(86

)

Non-GAAP adjusted total revenues(1)

$

1,362

27%

$

2,683

27%

cRPO (in billions):

GAAP cRPO

$

4.7

$

3.5

34%

$

4.7

$

3.5

34%

Effects of foreign currency rate fluctuations

(0.1

)

(0.1

)

Non-GAAP adjusted cRPO(1)

$

4.6

31%

$

4.6

31%

RPO (in billions):

GAAP RPO

$

9.5

$

7.0

35%

$

9.5

$

7.0

35%

Effects of foreign currency rate fluctuations

(0.2

)

(0.2

)

Non-GAAP adjusted RPO(1)

$

9.3

32%

$

9.3

32%

Subscription billings:

GAAP subscription revenues

$

1,330

$

1,015

31%

$

2,623

$

2,010

30%

Change in subscription deferred revenue, unbilled receivables and customer deposits

(2

)

3

70

63

Non-GAAP subscription billings

1,328

1,018

30%

2,693

2,073

30%

Effects of foreign currency rate fluctuations

(44

)

(83

)

Effects of fluctuations in billings duration

(9

)

(20

)

Non-GAAP adjusted subscription billings(2)

$

1,275

25%

$

2,590

25%

Professional services and other billings:

GAAP professional services and other revenues

$

79

$

56

41%

$

146

$

107

36%

Change in professional services and other deferred revenue

10

6

$

12

$

2

Non-GAAP professional services and other billings

89

62

44%

158

109

45%

Effects of foreign currency rate fluctuations

(3

)

Non-GAAP adjusted professional services and other billings(2)

$

86

39%

$

153

40%

Total billings:

GAAP total revenues

$

1,409

$

1,071

32%

$

2,769

$

2,117

31%

Change in total deferred revenue, unbilled receivables and customer deposits

8

8

83

65

Non-GAAP total billings

1,417

1,079

31%

2,852

2,182

31%

Effects of foreign currency rate fluctuations

(47

)

(88

)

Effects of fluctuations in billings duration

(9

)

(20

)

Non-GAAP adjusted total billings(2)

$

1,361

26%

$

2,744

26%

Cost of revenues:

GAAP subscription cost of revenues

$

248

$

172

$

476

$

332

Stock-based compensation

(33

)

(25

)

(62

)

(46

)

Amortization of purchased intangibles

(14

)

(12

)

(26

)

(19

)

Non-GAAP subscription cost of revenues

$

201

$

135

$

388

$

267

GAAP professional services and other cost of revenues

$

81

$

61

$

152

$

124

Stock-based compensation

(15

)

(13

)

(28

)

(25

)

Non-GAAP professional services and other cost of revenues

$

66

$

48

$

124

$

99

Gross profit:

GAAP subscription gross profit

$

1,082

$

843

$

2,147

$

1,678

Stock-based compensation

33

25

62

46

Amortization of purchased intangibles

14

12

26

19

Non-GAAP subscription gross profit

$

1,129

$

880

$

2,235

$

1,743

GAAP professional services and other gross loss

$

(2

)

$

(5

)

$

(6

)

$

(17

)

Stock-based compensation

15

13

28

25

Non-GAAP professional services and other gross profit

$

13

$

8

$

22

$

8

GAAP gross profit

$

1,080

$

838

$

2,141

$

1,661

Stock-based compensation

48

38

90

71

Amortization of purchased intangibles

14

12

26

19

Non-GAAP gross profit

$

1,142

$

888

$

2,257

$

1,751

Gross margin:

GAAP subscription gross margin

81

%

83

%

82

%

83

%

Stock-based compensation as % of subscription revenues

3

%

3

%

2

%

3

%

Amortization of purchased intangibles as % of subscription revenues

1

%

1

%

1

%

1

%

Non-GAAP subscription gross margin

85

%

87

%

85

%

87

%

GAAP professional services and other gross margin

(3

%)

(9

%)

(4

%)

(16

%)

Stock-based compensation as % of professional services and other revenues

19

%

23

%

19

%

23

%

Non-GAAP professional services and other gross margin

17

%

14

%

15

%

7

%

GAAP gross margin

77

%

78

%

77

%

78

%

Stock-based compensation as % of total revenues

3

%

4

%

3

%

4

%

Amortization of purchased intangibles as % of total revenues

1

%

1

%

1

%

1

%

Non-GAAP gross margin

81

%

83

%

81

%

83

%

Operating expenses:

GAAP sales and marketing expenses

$

557

$

426

$

1,081

$

867

Stock-based compensation

(99

)

(79

)

(192

)

(149

)

Amortization of purchased intangibles

-

-

(1

)

(1

)

Non-GAAP sales and marketing expenses

$

458

$

347

$

888

$

717

GAAP research and development expenses

$

333

$

245

$

647

$

472

Stock-based compensation

(98

)

(70

)

(186

)

(129

)

Amortization of purchased intangibles

-

-

-

(1

)

Business combination and other related costs

$

(1

)

$

-

$

(1

)

$

-

Non-GAAP research and development expenses

$

234

$

175

$

460

$

342

GAAP general and administrative expenses

$

139

$

104

$

265

$

210

Stock-based compensation

(37

)

(30

)

(70

)

(56

)

Amortization of purchased intangibles

(2

)

(2

)

(6

)

(5

)

Business combination and other related costs

(3

)

(1

)

(5

)

(4

)

Non-GAAP general and administrative expenses

$

97

$

71

$

184

$

145

GAAP total operating expenses

$

1,029

$

775

$

1,993

$

1,549

Stock-based compensation

(234

)

(179

)

(448

)

(334

)

Amortization of purchased intangibles

(2

)

(3

)

(7

)

(6

)

Business combination and other related costs

(4

)

(1

)

(6

)

(4

)

Non-GAAP total operating expenses

$

789

$

592

$

1,532

$

1,205

Income from operations:

GAAP income from operations

$

51

$

63

$

148

$

112

Stock-based compensation

282

217

538

405

Amortization of purchased intangibles

16

15

33

25

Business combination and other related costs

4

1

6

4

Non-GAAP income from operations

$

353

$

296

$

725

$

546

Operating margin:

GAAP operating margin

4

%

6

%

5

%

5

%

Stock-based compensation as % of total revenues

20

%

20

%

19

%

19

%

Amortization of purchased intangibles as % of total revenues

1

%

2

%

1

%

2

%

Business combination and other related costs as % of total revenues

-

%

-

%

1

%

-

%

Non-GAAP operating margin

25

%

28

%

26

%

26

%

Net income:

GAAP net income

$

59

$

41

$

141

$

89

Stock-based compensation

282

217

538

405

Amortization of purchased intangibles

16

15

33

25

Business combination and other related costs

4

1

6

4

Amortization of debt discount and issuance costs

2

8

4

17

Other

1

1

3

1

Income tax expense effects related to the above adjustments

(77

)

(39

)

(132

)

(91

)

Non-GAAP net income

$

287

$

243

$

593

$

450

Net income per share - basic and diluted:

GAAP net income per share - basic

$

0.30

$

0.21

$

0.71

$

0.47

GAAP net income per share - diluted

$

0.29

$

0.20

$

0.70

$

0.44

Non-GAAP net income per share - basic

$

1.45

$

1.27

$

3.01

$

2.36

Non-GAAP net income per share - diluted

$

1.42

$

1.23

$

2.93

$

2.27

GAAP weighted-average shares used to compute net income per share - basic

198

191

197

191

GAAP weighted-average shares used to compute net income per share - diluted

202

201

202

201

Effects of in-the-money portion of convertible senior notes(3)

-

(3

)

-

(3

)

Non-GAAP weighted-average shares used to compute net income per share - diluted

202

198

202

198

Free cash flow:

GAAP net cash provided by operating activities

$

300

$

368

$

1,027

$

860

Purchases of property and equipment

(91

)

(110

)

(198

)

(194

)

Repayments of convertible senior notes attributable to debt discount

6

2

13

2

Business combination and other related costs

53

-

53

-

Non-GAAP free cash flow

$

268

$

259

$

895

$

668

Free cash flow margin:

GAAP net cash provided by operating activities as % of total revenues

21

%

34

%

37

%

41

%

Purchases of property and equipment as % of total revenues

(6

%)

(10

%)

(7

%)

(9

%)

Repayments of convertible senior notes attributable to debt discount as % of total revenues

-

%

-

%

-

%

-

%

Business combination and other related costs as % of total revenues

4

%

-

%

2

%

-

%

Non-GAAP free cash flow margin

19

%

24

%

32

%

32

%

ServiceNow, Inc.

GAAP to Non-GAAP Reconciliation

(in millions, except cRPO, RPO and per share data)

(unaudited)

Three Months Ended Six Months Ended

June 30, June 30, Growth June 30, June 30, Growth 2021 2020 Rates 2021 2020 Rates

Subscription revenues:

GAAPsubscription $ 1,330 $ 1,015 31% $ 2,623 $ 2,010 30%revenues

Effects offoreign currency (45 ) (82 ) ratefluctuations

Non-GAAPadjusted $ 1,285 27% $ 2,541 26%subscriptionrevenues^(1)



Professionalservices and other revenues:

GAAPprofessional $ 79 $ 56 41% $ 146 $ 107 36%services andother revenues

Effects offoreign currency (3 ) (5 ) ratefluctuations

Non-GAAPadjustedprofessional $ 76 36% $ 141 32%service andother revenues^(1)



Total revenues:

GAAP total $ 1,409 $ 1,071 32% $ 2,769 $ 2,117 31%revenues

Effects offoreign currency (47 ) (86 ) ratefluctuations

Non-GAAPadjusted total $ 1,362 27% $ 2,683 27%revenues^(1)



cRPO (in billions):

GAAP cRPO $ 4.7 $ 3.5 34% $ 4.7 $ 3.5 34%

Effects offoreign currency (0.1 ) (0.1 ) ratefluctuations

Non-GAAPadjusted cRPO^ $ 4.6 31% $ 4.6 31%(1)



RPO (in billions):

GAAP RPO $ 9.5 $ 7.0 35% $ 9.5 $ 7.0 35%

Effects offoreign currency (0.2 ) (0.2 ) ratefluctuations

Non-GAAP $ 9.3 32% $ 9.3 32%adjusted RPO^(1)



Subscription billings:

GAAPsubscription $ 1,330 $ 1,015 31% $ 2,623 $ 2,010 30%revenues

Change insubscriptiondeferredrevenue, (2 ) 3 70 63 unbilledreceivables andcustomerdeposits

Non-GAAPsubscription 1,328 1,018 30% 2,693 2,073 30%billings

Effects offoreign currency (44 ) (83 ) ratefluctuations

Effects offluctuations in (9 ) (20 ) billingsduration

Non-GAAPadjusted $ 1,275 25% $ 2,590 25%subscriptionbillings^(2)



Professionalservices and other billings:

GAAPprofessional $ 79 $ 56 41% $ 146 $ 107 36%services andother revenues

Change inprofessionalservices and 10 6 $ 12 $ 2 other deferredrevenue

Non-GAAPprofessional 89 62 44% 158 109 45%services andother billings

Effects offoreign currency (3 ) ratefluctuations

Non-GAAPadjustedprofessional $ 86 39% $ 153 40%services andother billings^(2)



Total billings:

GAAP total $ 1,409 $ 1,071 32% $ 2,769 $ 2,117 31%revenues

Change in totaldeferredrevenue,unbilled 8 8 83 65 receivables andcustomerdeposits

Non-GAAP total 1,417 1,079 31% 2,852 2,182 31%billings

Effects offoreign currency (47 ) (88 ) ratefluctuations

Effects offluctuations in (9 ) (20 ) billingsduration

Non-GAAPadjusted total $ 1,361 26% $ 2,744 26%billings^(2)



Cost of revenues:

GAAPsubscription $ 248 $ 172 $ 476 $ 332 cost of revenues

Stock-based (33 ) (25 ) (62 ) (46 ) compensation

Amortization ofpurchased (14 ) (12 ) (26 ) (19 ) intangibles

Non-GAAPsubscription $ 201 $ 135 $ 388 $ 267 cost of revenues



GAAPprofessionalservices and $ 81 $ 61 $ 152 $ 124 other cost ofrevenues

Stock-based (15 ) (13 ) (28 ) (25 ) compensation

Non-GAAPprofessionalservices and $ 66 $ 48 $ 124 $ 99 other cost ofrevenues



Gross profit:

GAAPsubscription $ 1,082 $ 843 $ 2,147 $ 1,678 gross profit

Stock-based 33 25 62 46 compensation

Amortization ofpurchased 14 12 26 19 intangibles

Non-GAAPsubscription $ 1,129 $ 880 $ 2,235 $ 1,743 gross profit



GAAPprofessional $ (2 ) $ (5 ) $ (6 ) $ (17 ) services andother gross loss

Stock-based 15 13 28 25 compensation

Non-GAAPprofessionalservices and $ 13 $ 8 $ 22 $ 8 other grossprofit



GAAP gross $ 1,080 $ 838 $ 2,141 $ 1,661 profit

Stock-based 48 38 90 71 compensation

Amortization ofpurchased 14 12 26 19 intangibles

Non-GAAP gross $ 1,142 $ 888 $ 2,257 $ 1,751 profit



Gross margin:

GAAPsubscription 81 % 83 % 82 % 83 % gross margin

Stock-basedcompensation as% of 3 % 3 % 2 % 3 % subscriptionrevenues

Amortization ofpurchasedintangibles as % 1 % 1 % 1 % 1 % of subscriptionrevenues

Non-GAAPsubscription 85 % 87 % 85 % 87 % gross margin



GAAPprofessionalservices and (3 %) (9 %) (4 %) (16 %) other grossmargin

Stock-basedcompensation as% of 19 % 23 % 19 % 23 % professionalservices andother revenues

Non-GAAPprofessionalservices and 17 % 14 % 15 % 7 % other grossmargin



GAAP gross 77 % 78 % 77 % 78 % margin

Stock-basedcompensation as 3 % 4 % 3 % 4 % % of totalrevenues

Amortization ofpurchasedintangibles as % 1 % 1 % 1 % 1 % of totalrevenues

Non-GAAP gross 81 % 83 % 81 % 83 % margin



Operating expenses:

GAAP sales andmarketing $ 557 $ 426 $ 1,081 $ 867 expenses

Stock-based (99 ) (79 ) (192 ) (149 ) compensation

Amortization ofpurchased - - (1 ) (1 ) intangibles

Non-GAAP salesand marketing $ 458 $ 347 $ 888 $ 717 expenses



GAAP researchand development $ 333 $ 245 $ 647 $ 472 expenses

Stock-based (98 ) (70 ) (186 ) (129 ) compensation

Amortization ofpurchased - - - (1 ) intangibles

Businesscombination and $ (1 ) $ - $ (1 ) $ - other relatedcosts

Non-GAAPresearch and $ 234 $ 175 $ 460 $ 342 developmentexpenses



GAAP general andadministrative $ 139 $ 104 $ 265 $ 210 expenses

Stock-based (37 ) (30 ) (70 ) (56 ) compensation

Amortization ofpurchased (2 ) (2 ) (6 ) (5 ) intangibles

Businesscombination and (3 ) (1 ) (5 ) (4 ) other relatedcosts

Non-GAAP generaland $ 97 $ 71 $ 184 $ 145 administrativeexpenses



GAAP totaloperating $ 1,029 $ 775 $ 1,993 $ 1,549 expenses

Stock-based (234 ) (179 ) (448 ) (334 ) compensation

Amortization ofpurchased (2 ) (3 ) (7 ) (6 ) intangibles

Businesscombination and (4 ) (1 ) (6 ) (4 ) other relatedcosts

Non-GAAP totaloperating $ 789 $ 592 $ 1,532 $ 1,205 expenses



Income from operations:

GAAP income from $ 51 $ 63 $ 148 $ 112 operations

Stock-based 282 217 538 405 compensation

Amortization ofpurchased 16 15 33 25 intangibles

Businesscombination and 4 1 6 4 other relatedcosts

Non-GAAP income $ 353 $ 296 $ 725 $ 546 from operations



Operating margin:

GAAP operating 4 % 6 % 5 % 5 % margin

Stock-basedcompensation as 20 % 20 % 19 % 19 % % of totalrevenues

Amortization ofpurchasedintangibles as % 1 % 2 % 1 % 2 % of totalrevenues

Businesscombination andother related - % - % 1 % - % costs as % oftotal revenues

Non-GAAP 25 % 28 % 26 % 26 % operating margin



Net income:

GAAP net income $ 59 $ 41 $ 141 $ 89

Stock-based 282 217 538 405 compensation

Amortization ofpurchased 16 15 33 25 intangibles

Businesscombination and 4 1 6 4 other relatedcosts

Amortization ofdebt discount 2 8 4 17 and issuancecosts

Other 1 1 3 1

Income taxexpense effectsrelated to the (77 ) (39 ) (132 ) (91 ) aboveadjustments

Non-GAAP net $ 287 $ 243 $ 593 $ 450 income



Net income pershare - basic and diluted:

GAAP net incomeper share - $ 0.30 $ 0.21 $ 0.71 $ 0.47 basic

GAAP net incomeper share - $ 0.29 $ 0.20 $ 0.70 $ 0.44 diluted

Non-GAAP netincome per share $ 1.45 $ 1.27 $ 3.01 $ 2.36 - basic

Non-GAAP netincome per share $ 1.42 $ 1.23 $ 2.93 $ 2.27 - diluted



GAAPweighted-averageshares used to 198 191 197 191 compute netincome per share- basic



GAAPweighted-averageshares used to 202 201 202 201 compute netincome per share- diluted

Effects ofin-the-moneyportion of - (3 ) - (3 ) convertiblesenior notes^(3)

Non-GAAPweighted-averageshares used to 202 198 202 198 compute netincome per share- diluted



Free cash flow:

GAAP net cashprovided by $ 300 $ 368 $ 1,027 $ 860 operatingactivities

Purchases ofproperty and (91 ) (110 ) (198 ) (194 ) equipment

Repayments ofconvertiblesenior notes 6 2 13 2 attributable todebt discount

Businesscombination and 53 - 53 - other relatedcosts

Non-GAAP free $ 268 $ 259 $ 895 $ 668 cash flow



Free cash flow margin:

GAAP net cashprovided byoperating 21 % 34 % 37 % 41 % activities as %of totalrevenues

Purchases ofproperty andequipment as % (6 %) (10 %) (7 %) (9 %) of totalrevenues

Repayments ofconvertiblesenior notesattributable to - % - % - % - % debt discount as% of totalrevenues

Businesscombination andother related 4 % - % 2 % - % costs as % oftotal revenues

Non-GAAP free 19 % 24 % 32 % 32 % cash flow margin

(1)

Adjusted revenues, cRPO, RPO and the corresponding growth rates are derived by applying the average exchange rates in effect during the comparison period rather than the actual average exchange rates in effect during the current period.

(2)

Adjusted billings and the corresponding growth rates are derived by applying the average exchange rates in effect during the comparison period rather than the actual average exchange rates in effect during the current period, and by replacing the portion of multi-year billings in excess of twelve months during the current period with the portion of multi-year billings in excess of twelve months during the comparison period.

(3)

Effects of dilutive time-based stock awards, in-the-money portion of convertible senior notes and warrants are included in the GAAP weighted-average diluted shares in periods where we have GAAP net income. We exclude the in-the-money portion of convertible senior notes for non-GAAP weighted-average diluted shares as they are covered by our note hedges. We include stock awards with performance conditions not yet satisfied for non-GAAP weighted average diluted shares at forecasted attainment levels to the extent we believe it is probable that the performance condition will be met.

Note: Numbers are rounded for presentation purposes and may not foot.

ServiceNow, Inc.

Reconciliation of Non-GAAP Financial Guidance

The financial guidance provided below is an estimate based on information available as of June 30, 2021. 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. Further information on these and other factors that could affect our financial results are included in our Form 10-K for the year ended December 31, 2020 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 three months ended June 30, 2021. The company assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates.

Adjusted revenues, cRPO, RPO and the corresponding growth rates are(1) derived by applying the average exchange rates in effect during the comparison period rather than the actual average exchange rates in effect during the current period.

Adjusted billings and the corresponding growth rates are derived by applying the average exchange rates in effect during the comparison period(2) rather than the actual average exchange rates in effect during the current period, and by replacing the portion of multi-year billings in excess of twelve months during the current period with the portion of multi-year billings in excess of twelve months during the comparison period.

Effects of dilutive time-based stock awards, in-the-money portion of convertible senior notes and warrants are included in the GAAP weighted-average diluted shares in periods where we have GAAP net income. We exclude the in-the-money portion of convertible senior notes for(3) non-GAAP weighted-average diluted shares as they are covered by our note hedges. We include stock awards with performance conditions not yet satisfied for non-GAAP weighted average diluted shares at forecasted attainment levels to the extent we believe it is probable that the performance condition will be met.

Note: Numbers are rounded for presentation purposes and may not foot.

ServiceNow, Inc.

Reconciliation of Non-GAAP Financial Guidance

The financial guidance provided below is an estimate based on information available as of June 30, 2021. 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. Further information on these and other factors that could affect our financial results are included in our Form 10-K for the year ended December 31, 2020 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 three months ended June 30, 2021. The company assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates.

Three Months Ended

September September Growth 30, 2021 30, 2020^ Rates (3)



$1,400 - $1,091 28%GAAP subscription revenues $1,405 million -29% million

Note: Includes foreign currency benefit of $15 million



$1,400 - $1,091 28%GAAP subscription revenues $1,405 million -29% million



Change in subscription deferred revenue, (80) million (10) unbilled receivables and customer deposits million



$1,320 - $1,081 22% -Non-GAAP subscription billings $1,325 million 23% million

Note: Includes foreign currency benefit of$14 million Includes negative impact of billingsduration of $7 million



cRPO Year-over-year growth 30%



GAAP operating margin 2.5%



Stock-based compensation expense as % of 19% total revenues



Amortization of purchased intangibles as % 1% of total revenues



Business combination and other related 0% costs as % of total revenues



Non-GAAP operating margin 23.0%



GAAP weighted-average shares used to 203 million compute net income per share - diluted



Effects of in-the-money portion of (1) million convertible senior notes^(4)



Non-GAAP weighted-average shares used to 202 million compute net income per share - diluted



Twelve Months Ended

December 31, 2021

December 31, 2020(3)

Growth Rates

GAAP subscription revenues

$5,530 - $5,540 million

$4,286 million

29%

Note: Includes foreign currency benefit of $101 million

GAAP subscription revenues

$5,530 - $5,540 million

$4,286 million

29%

Change in subscription deferred revenue, unbilled receivables and customer deposits

785 million

696 million

Non-GAAP subscription billings

$6,315 - $6,325 million

$4,982 million

27%

Note: Includes foreign currency benefit of $104 million

Includes positive impact of billings duration of $6 million

GAAP subscription gross margin

82%

Stock-based compensation expense as % of subscription revenues

2%

Amortization of purchased intangibles as % of subscription revenues

1%

Non-GAAP subscription margin

85%

GAAP operating margin

4.3%

Stock-based compensation expense as % of total revenues

19%

Amortization of purchased intangibles as % of total revenues

1%

Business combination and other related costs as % of total revenues

0%

Non-GAAP operating margin

24.5%

GAAP net cash provided by operating activities as % of total revenues

37%

Purchases of property and equipment as % of total revenues

(7%)

Repayments of convertible senior notes attributable to debt discount as % of total revenues

0%

Business combination and other related costs as % of total revenues

1%

Non-GAAP free cash flow margin

31.0%

GAAP weighted-average shares used to compute net income per share - diluted

202 million

Effects of in-the-money portion of convertible senior notes(4)

(1) million

Non-GAAP weighted-average shares used to compute net income per share - diluted

202 million

Twelve Months Ended

December December Growth 31, 2021 31, 2020^ Rates (3)



$5,530 - $4,286GAAP subscription revenues $5,540 million 29% million

Note: Includes foreign currency benefit of $101 million



$5,530 - $4,286GAAP subscription revenues $5,540 million 29% million



Change in subscription deferred revenue, 785 million 696 unbilled receivables and customer deposits million



$6,315 - $4,982Non-GAAP subscription billings $6,325 million 27% million

Note: Includes foreign currency benefit of$104 million Includes positive impact of billings durationof $6 million



GAAP subscription gross margin 82%



Stock-based compensation expense as % of 2% subscription revenues



Amortization of purchased intangibles as % of 1% subscription revenues



Non-GAAP subscription margin 85%



GAAP operating margin 4.3%



Stock-based compensation expense as % of 19% total revenues



Amortization of purchased intangibles as % of 1% total revenues



Business combination and other related costs 0% as % of total revenues



Non-GAAP operating margin 24.5%



GAAP net cash provided by operating 37% activities as % of total revenues



Purchases of property and equipment as % of (7%) total revenues



Repayments of convertible senior notesattributable to debt discount as % of total 0% revenues



Business combination and other related costs 1% as % of total revenues



Non-GAAP free cash flow margin 31.0%



GAAP weighted-average shares used to compute 202 million net income per share - diluted



Effects of in-the-money portion of (1) million convertible senior notes^(4)



Non-GAAP weighted-average shares used to 202 million compute net income per share - diluted

(1)

Adjusted revenues and the corresponding growth rates are derived by applying the average exchange rates in effect during the comparison period rather than the exchange rates for the guidance period.

(2)

Adjusted billings and the corresponding growth rates are derived by applying the average exchange rates in effect during the comparison period rather than the exchange rates for the guidance period, and by replacing the portion of multi-year billings in excess of twelve months for the guidance period with the actual portion of multi-year billings in excess of twelve months during the comparison period.

(3)

Effects of foreign currency rate fluctuations and fluctuations in billing durations are not applicable for the comparison period.

(4)

We exclude the in-the-money portion of convertible senior notes for non-GAAP weighted-average diluted shares as they are covered by our note hedges.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210728005918/en/

CONTACT: Media Contact: Sara Day 650.336.3123 press@servicenow.com

CONTACT: Investor Contact: Darren Yip 925.388.7205 ir@servicenow.com