Servicenow reports first quarter 2019 financial results
Santa clara, calif.--(business wire)--servicenow (nyse: now) today announced financial results for its first quarter ended march 31, 2019, with subscription revenues of $740 million in q1 2019, representing 36% year-over-year growth. servicenow, forbes’ no. 1 world’s most innovative company in 2018, serves more than 5,400 enterprise customers, including almost 75% of fortune 500 companies. during the quarter, servicenow closed 25 transactions with more than $1 million in net new annual contract value (acv). the company now has 717 total customers with more than $1 million in acv, representing 33% year-over-year growth. “the first quarter represented a strong start to the new year, as we continued the momentum from our outstanding 2018 performance,” said john donahoe, servicenow president and chief executive officer. “our performance shows the strength of our product and platform portfolio, and the core strategic partner role we are playing in enabling digital transformation for large public sector agencies, fortune 500 companies and leading global enterprises.” “subscription revenues grew 36% year-over-year,” said michael scarpelli, servicenow chief financial officer. “our u.s. federal business highlighted the quarter, representing 15% of our total net new acv, up from 6% in the prior year.” first quarter 2019 gaap and non-gaap results: the following table summarizes our financial results for the first quarter 2019: first quarter 2019gaap results first quarter 2019 non-gaap results(1) amount($ millions) year/yeargrowth (%) amount($ millions) year/yeargrowth (%) adjusted amount($ millions)(2) adjustedyear/yeargrowth (%) professional services and other revenues amount($ millions) margin (%) amount($ millions) margin (%) amount($ millions) earnings perbasic/dilutedshare ($) amount($ millions) earnings perbasic/dilutedshare ($) financial outlook our guidance is based on foreign exchange rates as of march 31, 2019 and includes gaap and non-gaap financial measures. the following table summarizes our guidance for the second quarter 2019: second quarter 2019gaap guidance second quarter 2019 non-gaap guidance(1) amount($ millions) year/yeargrowth (%) amount($ millions) year/yeargrowth (%) adjustedamount($ millions)(2) adjusted year/year growth(%) margin (%) amount(millions) weighted-average shares used to compute diluted net income per share the following table summarizes our updated guidance for fiscal year 2019: full-year 2019gaap guidance amount($ millions) year/yeargrowth (%) amount($ millions) year/yeargrowth (%) adjustedamount($ millions)(2) adjustedyear/ yeargrowth (%) amount(millions) the following table compares our updated full-year 2019 guidance against our previously issued full-year 2019 guidance dated january 30, 2019: comparison of updated full-year 2019 guidance to previously issued guidance(1)($ millions) previous guidancemidpoint(2) currency impact(3) duration impact(4) guidance change current guidancemidpoint(5) non-gaap subscription billings(6) conference call details the conference call will begin at 2 p.m. pacific time (22:00 bst) on april 24, 2019. interested parties may listen to the call by dialing 866.393.4306 (passcode: 3149948), or if outside north america, by dialing 734.385.2616 (passcode: 3149948). individuals may access the live teleconference from this webcast link (https://event.on24.com/wcc/r/1971097/1e9013c67d921362cdbb25cb0dc94f40). 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 855.859.2056 (passcode: 3149948), or if outside north america, by dialing 404.537.3406 (passcode: 3149948). 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 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. revenue adjusted for constant currency. 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 prior period presented (for q1 2018, the average exchange rates in effect for our major currencies were 1 usd to 0.8135 euros and 1 usd to 0.7185 british pound sterling (gbp)), rather than the actual average exchange rates in effect during the current period (for q1 2019, the average exchange rates in effect for our major currencies were 1 usd to 0.8804 euros and 1 usd 0.7679 gbp). we believe the presentation of revenues adjusted for constant currency facilitates the comparison of revenues year-over-year. billings. we believe billings is a useful leading indicator regarding the performance of our business. 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 for constant currency, as described above, and adjust 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 prior period presented. we believe these adjustments facilitate greater comparability in our billings information year-over-year. gross profit, income from operations and net income. our non-gaap presentation of gross profit, income from operations, and net income measures exclude 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. 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. free cash flow is defined as net cash provided by (used in) operating activities plus cash paid for legal settlements and repayments of convertible senior notes attributable to debt discount, 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) 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 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, (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 march 31, 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 and product names may be trademarks of the respective companies with which they are associated. servicenow, inc. condensed consolidated statements of operations (in thousands, except share and per share data) (unaudited) (1) includes stock-based compensation as follows: servicenow, inc. condensed consolidated balance sheets (in thousands) (unaudited) assets servicenow, inc. condensed consolidated statements of cash flows (in thousands) (unaudited) servicenow, inc. gaap to non-gaap reconciliation (in thousands, except share and per share data) (unaudited) growth rates business combination and other related costs as % of total revenues servicenow, inc.reconciliation of non-gaap financial guidance the financial guidance provided below is an estimate based on information available as of march 31, 2019. 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, 2018 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 march 31, 2019. the company assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates. twelve months ended
