Servicenow 2018 Financial Analyst Day
Servicenow 2018 Financial Analyst Day
Forward‐looking statements include all statements that are not historical facts and can be identified by terms such as “anticipates,” “believes,” “could,” “seeks,”
“estimates” (including, without limitation, financial estimates denoted with an “E,” such as FY18E), “targets,” “guidance,” “expects,” “intends,” “may,” “plans,”
“potential,” “predicts,” “prospects,” “projects,” “should,” “will,” “would” or similar expressions and the negatives of those terms, although not all forward‐looking
statements contain these identifying words.
Forward‐looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to
be materially different from any future results, performance or achievements expressed or implied by the forward‐looking statements. We cannot guarantee that
we will achieve the plans, intentions, or expectations disclosed in our forward‐looking statements, and you should not place undue reliance on our forward‐looking
statements.
Forward-looking statements represent our management’s beliefs and assumptions only as of the date of this presentation. 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. Further information on these and other factors that could affect our financial results are included in the filings we make with the Securities
and Exchange Commission (the “SEC”), including those discussed in our most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q.
This presentation includes certain non‐GAAP financial measures and the corresponding growth rates as defined by SEC rules. For additional information, see the
slide titled “Statement Regarding Use of Non-GAAP Financial Measures.” Terms such as “Annual Contract Value” and “G2K Customer” shall have the meanings set
forth in our filings with the SEC.
The information in this presentation on new products, features, or functionality is intended to outline our general product direction and should not be relied upon in
making a purchasing decision. The information on new products, features, and functionality is for informational purposes only and shall not be incorporated into
any contract. The information on new products, features, and functionality is not a commitment, promise, or legal obligation to deliver any material, code or
functionality. The development, release, and timing of any features or functionality described for our products remains at our sole discretion.
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 the 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, which is a non-GAAP financial measure, is calculated 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. However, our calculation of free cash flow and free cash flow
margin 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 presentation for a reconciliation of GAAP and non-GAAP
results.
• Innovation
– CJ Desai, Chief Product Officer
• Break
• The Customer Perspective: Deloitte
– David Schneider, ServiceNow Chief Revenue Officer
– Dejan Slokar, Deloitte Partner and Global ServiceNow Alliance Lead
– Stephen Mansfield, Deloitte Chief Information Officer
• Sustainable Growth
– Michael Scarpelli, Chief Financial Officer
• Executive Q&A
John Donahoe
President and Chief Executive Officer
Why I joined…to build a great, enduring company
Aspiration
Exhibit “will to
They are Innovation and They invest in
fight”
purpose driven execution talent
and “will to win”
It shapes who we are, how we feel, and how we interact with the world,
so we must create great work experiences.
IT products
Global
Go-To-Market Team
Certified Customer
Partner Success
Ecosystem Group
8
$8,000
Scale product to market
Maintain focus on what
we’re doing
6
$6,000
4
$4,000
$2,000
2
0$0
Get product
Keep buildingmarket fit
great products
8
$8,000
Scale product
Execute to market
outstanding GTM
Maintain
Build focus success
customer on what
we’re doing
6 Invest in talent
$6,000
$2,000
2
0$0
$2,000
2
0$0
CJ Desai
Chief Product Officer
ServiceNow architecture: One platform, many products
Emerging products
IT products
• Automates unique and complex business processes that span different systems
Now Platform
Service Experiences
Integration Visual Low Code Service
Workflow 30 and APIs Taskboards Dev Tools Aware CMDB
© 2018 ServiceNow, Inc. All Rights Reserved. Confidential.
Our guiding framework: Disruptive technologies get
adopted over decades
Systems of engagement
Systems of autonomy
(action) Vehicles, focus on objects,
Mobile apps, focus on end user, AI is king (2020 – 2040)
customer is king (2000 – 2020)
Customer success
Natively built intelligent Virtual Agent workspace for Service IT Walk-up App, Major Incident
ITSM Agent and Integration with Desks and integration with Management, Business Crisis
Major Collaboration Tools intelligent Virtual Agents Management
Discover assets across public Service NOCpit view Optimize Cloud Resources for
ITOM and private clouds and Alert Intelligence usage and cost
1 2 3
# Production # Customer
instances transactions per month
DevOps
• Scale agile • Integration with
framework Open Source
• Integration with Agile Repository tools
Planning tools and
Collaboration tools
DEPLOY TEST
Release code to Test code
production
Customer success
Michael Scarpelli
Chief Financial Officer
Key takeaways
Consistent Market
Financial Model
Performance Opportunity
$1,933
0
200 0
-1
150 0
$1,391 -2
$1,005 -3
100 0
$683
-4
500
$425 -5
-6
0 -7
$492
208%
500 2.5
400
166% 2
$322 1.5
$230
300
53% 1
200
40% 0.5
100
$87 0
$28 -0.5
0 -1
64%
63% 62%
58%
51%
49%
48% 48%
46%
45%
42% 42%
41%
39%
37% 37% 37% Median: 37%
33%
29% 28%
27% 27% 26%
22%
20% 19%
18%
14% 14% 14%
5% 4%
(1%)
58 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.
3% 5%
2% 8% 9% 11%
3%
4%
12%
23%
95% 92%
88%
78%
66%
7% 98%
233 11%
9 2%
454 ~$20M ~$5M
161
3 82%
327
91
2 224 7% 99%
15%
158 1%
89 ~$15M ~$4M
78%
2013 2014 2015 2016 2017
25% 23%
25% 26%
25%
$575B spent on
Communicating
28%
40%
60% administrative tasks(2)
19%
14%
Shipping &
Administrative Customer Service Finance HR IT Legal Marketing Facilities & Other Sales
Receiving
Employee
Managing Expense Issue Escalation Invoice Approvals Problem Management Case Management Triggered Emails Equipment Ordering Lead Qualification Order Processing
Offboarding
Prospect
Room Scheduling Assign Tickets Capex Requests Recruiting & Selection Change Management Patent Processing Sales Rep Notification Office Moves Order Corrections
Communication
Dynamic Logistics Transfer Dept Budget Approvals Time Sheet Processing Service Mapping Contract Review Outsourced Catering Quote Approval Location Tracking
Personnel
Meeting Scheduling Schedule Employees Audit Preparations Vacation Tracking Event Management GRC Cleaning Tracking Proposal Creation
Management
Upsell Offerings AR – Contracts/Billing Travel Requests Project Management Open/Close Process Contract Signing Delay Communication
Expense Resource
Process Payments Vendor Onboarding Vendor Request Marketing Integration Product Picking
Reimbursements Management
Salary Changes
62 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.
(1) Based on report by International Data Corporation and McKinsey Global Institute, “The social economy: Unlocking value and (2) Based on ServiceNow’s 2015 “Today’s State of Work: The Productivity Drain” report
productivity through social technologies,” July 2012
Large market opportunity remains: Customer penetration
2,000 G2K
850 G2K
Customers
or
43%
~4,400
Customers
or
16%
(1) Based on Capital IQ screen of global companies with more than 1,000 employees and $500M 64 Note: Customer count as a Q4-17 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.
in annual revenue, and global education and government institutions with more than 1,000
employees
Large customer opportunities Outside of G2K
Customer Mix >$1M ACV G2K Non-G2K
18M active
fulfillers
or
18%
66 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.
Expansion within existing customers drives majority of new ACV…
Expansion NNACV New Customer NNACV
20% 20%
29% 25%
37%
80% 80%
71% 75%
63%
55%
2017
68%
2016
71%
2015
2014 64%
2013
65%
2012
2011 61%
2010 85%
97%
$8M
$7M
$5M
IT
Platform
IT Analytics
$3M Platform
IT Sec Ops
Platform Analytics HR
Analytics Sec Ops CSM
Sec Ops HR
$730k IT
$50k HR
Platform
IT
IT
2012 2013 2014 2015 2016 2017 TBD
69 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.
Investments to build an enduring company
adoption resulted in an increase in net cash provided by operating activities and a corresponding decrease in net cash provided by financing activities as compared to the amounts previously reported. Net cash provided
by operating activities increased $2.7M, $2.0M and $1.7M for the years ended December 31, 2015, 2014 and 2013 respectively.
Note: Numbers are rounded for presentation purpose.