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Servicenow 2018 Financial Analyst Day

The document outlines the forward-looking statements and non-GAAP financial measures presented during the Financial Analyst Day held in Las Vegas on May 7, 2018. It emphasizes the company's commitment to building a great, enduring enterprise software company while highlighting its strategic focus on innovation, customer success, and sustainable growth. The agenda includes presentations from key executives on the company's purpose, strategy, culture, and product evolution, as well as insights from Deloitte on customer perspectives.
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© © All Rights Reserved
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0% found this document useful (0 votes)
16 views73 pages

Servicenow 2018 Financial Analyst Day

The document outlines the forward-looking statements and non-GAAP financial measures presented during the Financial Analyst Day held in Las Vegas on May 7, 2018. It emphasizes the company's commitment to building a great, enduring enterprise software company while highlighting its strategic focus on innovation, customer success, and sustainable growth. The agenda includes presentations from key executives on the company's purpose, strategy, culture, and product evolution, as well as insights from Deloitte on customer perspectives.
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Financial Analyst Day

Las Vegas, Nevada


May 7, 2018
Safe Harbor and Other Information
This presentation contains “forward‐looking” statements that are based on our management’s beliefs and assumptions and on information currently available to
management. We intend for such forward‐looking statements to be covered by the safe harbor provisions for forward‐looking statements contained in the U.S.
Private Securities Litigation Reform Act of 1995. Forward‐looking statements include information concerning our possible or assumed strategy, future operations,
financing plans, operating model, financial position, future revenues, projected costs, competitive position, industry environment, potential growth opportunities,
potential market opportunities, plans and objectives of management and the effects of competition on our business.

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.

2 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.


Statement Regarding Use of Non-GAAP Financial Measures
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.

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.

3 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.


Agenda
• Purpose, strategy and culture
– John Donahoe, President and Chief Executive Officer

• 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

4 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.


Building An Enduring Company
Purpose, Strategy and Culture

John Donahoe
President and Chief Executive Officer
Why I joined…to build a great, enduring company
Aspiration

• Build great, enduring company (“Built-to-last”)


• Clear leader in enterprise software
• $1.5B $15B
• $15B $100B
• Most admired and respected company
• Great place to work

6 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.


What I’m hearing from customers

7 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.


What I think
1 Cloud tailwind is still in early days

2 Our opportunity is enormous

3 Our focus is building a great, enduring company

8 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.


Great enduring companies

Pillar 1 Pillar 2 Pillar 3 Pillar 3

Exhibit “will to
They are Innovation and They invest in
fight”
purpose driven execution talent
and “will to win”

Additional content, Additional content, Additional content, Additional content,


if necessary if necessary if necessary if necessary

9 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.


A simple framework

Why? Our Purpose

What? Our Strategy

How? Our Culture

10 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.


To bring inspiration and
innovation
to every athlete* in
the world
*If you have a body, you are an athlete

11 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.


Make people around the
world feel like they can
“belong anywhere.”

12 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.


“When I started ServiceNow in 2004, my vision was to build
a cloud-based platform that would enable regular people
to route work effectively through an enterprise.”
13 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.
Work matters
It’s where we spend a third of our lives.

It shapes who we are, how we feel, and how we interact with the world,
so we must create great work experiences.

Experiences that bring out the best in us.

When we’re at our best, we make everything around us better.

Our jobs, our coworkers and our employers benefit.


And our lives benefit even more.

Because by making the world of work, work better for people,


we make the world work better, too.

14 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.


Our Purpose

We make the world of work,


work better for people.

15 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.


A simple framework

Why? Our Purpose

What? Our Strategy

How? Our Culture

16 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.


Our 2018 priorities and action plan

Build great products and platform

Build Customer Success

Grow our talent

Establish company brand

17 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.


We have the products to win
Emerging products

Security Customer Service HR

IT products

ITSM ITOM ITBM & ITAM

User and Service Service Intelligence


Experience
Now Platform™

18 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.


We continue to evolve our strategy to drive growth

FY15 FY16 FY17 FY18+

Added PLS (ITOM, PA) Expanded PLS


(HR, SEC, CSM)
Segmented
Commercial vs.
Enterprise (US only)
Added
Added Client Directors Inspire
Added Med-Sled
(Top ACV Accts) Re-constituted Vertical (US only)
Alliances & Piloting
Channels Customer
Success
Growth 2.0

19 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.


Expansion requires more world-class teaming

Global
Go-To-Market Team

Certified Customer
Partner Success
Ecosystem Group

20 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.


Grow our talent

21 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.


Establish a company brand

22 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.


Our long-term vision
Phase 1 & 2
$10B
$10,000

Get product market fit

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

23 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.


Our long-term vision
Phase 1Phase
&2 3
$10B
$10,000

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

Establish company brand


4
$4,000

$2,000
2

0$0

24 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.


Our long-term vision
Phase 1Phase
Phase
& 2 34
$10B
$10,000

How will customer


Get product
Keep building needs
market
great fit evolve in the future?
products
How
Scaleshould
Execute we to
product innovate
market
outstanding GTM and evolve our
8
$8,000

product and platform?


Maintain
Build focus success
customer on what
What new
we’re doing markets should we expand into?
6 Invest in talent
$6,000

How should we leverage M&A?


Establish company brand
How do we continue to attract the right talent?
4
$4,000

$2,000
2

0$0

25 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.


Building An Enduring Company
Innovation

CJ Desai
Chief Product Officer
ServiceNow architecture: One platform, many products
Emerging products

Security Customer Service HR

IT products

ITSM ITOM ITBM & ITAM

User and Service Service Intelligence


Experience
Now Platform™

27 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.


Customers are using the Now Platform in creative ways

User and Service Service Intelligence


Experience
Now Platform
Workflow Industry

Delivering smart citizen services State & local government

Automated multicurrency expenses and usage


Global industrial manufacturing
reporting of 150k mobile devices

Modernization of legacy parcel tracking system Federal mail carrier

Shared Services to optimize complex workflow


Technology
across 18 strategic business areas

Scheduling and automating physician tasks Healthcare

28 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.


Strengths of the Now Platform drive adoption
User and Service Service Intelligence
Experience
Now Platform

• Cloud platform that is secure, scalable, and elastic

• Automates unique and complex business processes that span different systems

• Built-in analytics and intelligence

• Comprehensive feature set to build digital experiences

• Provides visibility and health in a multi-cloud IT infrastructure

29 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.


The Now Platform uniquely serves digital
transformation initiatives

Deliver great experiences for Automate and optimize


customers and employees manual workflows

Now Platform

User Experiences Service Service Knowledge Status


Community
Portal Catalog Base Notifications

Service Intelligence Machine Learning and Anomaly Peer Actionable Time-series


Intelligent Chatbots Detection Benchmarks Analytics Database

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)

Systems of record Systems of intelligence


ERP, CRM, HCM, SCP Algorithms, focus on signals,
product is king (1990 – 2010) data is king (2010 – 2030)

1990 2000 2010 2020 2030 2040


Source: Geoffrey Moore, Zone to Win Organizing to Compete in an Age of Disruption (2015)

31 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.


Our guiding framework: Phases of product evolution
Core Break-out categories Future categories

IT will always be our Service Management Develop products for


core products for Security, HR, future growth
and Customer Service

Phases 1-4 Phase 3,4 Phase 4


Investments Current
made in Phase 2 investments

IT products Emerging products New products

32 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.


Platform and product team priorities

Deliver great Deliver


experiences innovation

Customer success

33 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.


Organic innovation, combined with talent-based
and technology-oriented M&A

Deliver great experiences Deliver innovation

34 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.


IT products

35 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.


IT products of ServiceNow serve major functions of CIO

Service Operations Business Asset


Management Management Management Management

36 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.


IT products roadmap
1 2 3

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

IT Investment Portal to get Simplification and


Support for Scaled Agile
ITBM visibility into project and Enhancement of
Framework 4.5
demand status Resource Management

Expansion of Software Integration of Asset


ITAM Libraries for SAP and Adobe License Change Management Management with HR
Cloud Products Onboarding and Transitions

37 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.


Emerging products

38 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.


Emerging products roadmap

1 2 3

Modern UX to enhance End to End


Risk Scorecards for
Security productivity of a SOC Analyst Vulnerability Response
Vulnerability Response
and guided setup with guided setup

Major Issue management


Service Workspace for Mobile App for
CSM Customer Service Agent
and Enhanced
Field Service Agent
Knowledge management

Targeted Content Automation


New Experiences for Employee Document
HR based on Business Processes
HR Shared Service Agents Management
and policies

39 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.


Now Platform

40 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.


Snapshot of the Now Platform scale

# Production # Customer
instances transactions per month

~7,500 ~12 Billion

# of Cloud API calls


# licensed users per month

~18 Million ~18 Billion


41 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.
The Now Platform has three key stakeholders

Our product Platform as a service Developers, OEMs,


teams at for our customers and ISVs building on
ServiceNow building Intelligent our platform
Applications

42 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.


The Now Platform roadmap priorities

Flow designer and integration Native mobile


hub for low code/no code experiences and
application development and experience-aaS
3rd party integration

43 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.


Platform and product innovation schedule
L London N New York P Paris
Q3-18 Q3-19 Q3-20

Kingston Madrid Orlando


K M O
Q1-18 Q1-19 Q1-20

2018 2019 2020

44 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.


What’s new

45 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.


Available in

New: Virtual Agent


LONDON

46 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.


Available in

New: Agent Workspace


LONDON

47 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.


New: Native mobile interfaces
MADRID

Incidents Incidents Details Map View Activity Stream


Swipe Actions Call/Text/GPS Filter by Time/Location Add Attachments,
Images, Comments
48 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.
PLAN DEVELOP
New: Enterprise Decide what to do Write code

DevOps
• Scale agile • Integration with
framework Open Source
• Integration with Agile Repository tools
Planning tools and
Collaboration tools

London MONITOR BUILD


Make sure code Aggregate code
works as expected from all
Madrid developers
• Integration with
Automation and
Future Build tools

DEPLOY TEST
Release code to Test code
production

49 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.


NOW
Innovation
Unit

50 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.


Summary

51 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.


Platform and product team priorities

Deliver great Deliver


experiences innovation

Customer success

52 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.


Break
The Customer Perspective: Deloitte
Dejan Slokar, Partner and Global ServiceNow Alliance Lead
Stephen Mansfield, Chief Information officer
David Schneider, ServiceNow Chief Revenue Officer
Building An Enduring Company
Sustainable Growth

Michael Scarpelli
Chief Financial Officer
Key takeaways

Consistent Market
Financial Model
Performance Opportunity

Additional content, Additional content, Additional content,


if necessary if necessary if necessary

56 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.


Combination of high revenue and free cash flow growth
Revenue ($M) and Growth %
250 0

74% 61% 47% 38% 39% 1

$1,933
0

200 0

-1

150 0

$1,391 -2

$1,005 -3

100 0

$683
-4

500
$425 -5

-6

0 -7

2013 2014 2015 2016 2017


Non-GAAP Free Cash Flow ($M) and Growth % (1)
600
294% 3

$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

2013 2014 2015 2016 2017


57 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.
Note: Numbers reported under ASC 605
(1) See the tables included at the end of this presentation for a reconciliation to GAAP.
Unmatched relative to enterprise software peers
2017 Revenue Growth + 2017 Non-GAAP FCF Margin % for Enterprise Software Companies > $1B in Rev.

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.

Note: Numbers reported under ASC 605


Driven by mix shifting to emerging products…
IT Emerging Products Platform Add-Ons & Other

3% 5%
2% 8% 9% 11%
3%
4%
12%
23%

95% 92%
88%
78%
66%

2013 2014 2015 2016 2017


Note: IT = IT Service Mgmt, IT Operations Mgmt, IT Asset Mgmt, IT Business Mgmt 59 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.
Emerging Products = CSM, HR, Security, Intelligent Apps (custom apps, ServiceNow Store)
Platform Add-ons & Other = Performance Analytics, Cloud Options, Metric Base, Other
…Expanding relationships with our largest customers…
$1M+ Customers Top Customers
501 2017 2013
>$1M >$5M
IT Emerging Products Platform Add Ons & Other
47
10% 100%
16%
~$20M ~$8M
349
74%
22

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

60 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.


… And continued competition from legacy SW and manual workflows
Legacy Software Manual Workflows Other
2% 2% 3% 3%
7%

25% 23%
25% 26%
25%

73% 75% 72% 71% 68%

2013 2014 2015 2016 2017


61 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.
Large and growing opportunity to automate enterprise workflows
60% of Work is Unstructured Work Today 61% of Work Week Spent on Admin Work(1)
Structured Answering Email
Unstructured Gathering Info

$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

Purchase Order Processing Service Receiving


Scheduling Travel Identity Verification Employee Onboarding Incident Management NDA Processing Managing E-mail Lists Lead Assignment
Processing Requests Confirmation

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

Medical Leave Contact


Event Planning Integrate History Expense Approvals Asset Management Client Onboarding Site Inspection Quote Production Warehouse Logistics
Tracking Management

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

Billing and Returns Governance of Employee Status


Group Notifications Cloud Management Security Tracking Contract Preparation Returns Processing
Processing Approvals Change

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%

63 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.

Note: G2K count as of Q1-18


Large market opportunity remains: Customer penetration
~28,000 Enterprises(1)

~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

23% 24% 26%


32%
37%

77% 76% 74%


68%
63%

2013 2014 2015 2016 2017


65 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.
Large market opportunity remains: Customer expansion
~100M Enterprise Customer Employees

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%

2013 2014 2015 2016 2017


67 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.
…But landing new customers is equally important
Annual Growth
of Initial ACV

55%
2017
68%
2016
71%
2015
2014 64%
2013
65%
2012
2011 61%
2010 85%

97%

2010 2011 2012 2013 2014 2015 2016 2017


Note: Data as of Q4-17 68 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.
Profiling a Fortune 50 customer ~$20M

$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

1 Build great products and platform

2 Build Customer Success

3 Grow our talent

4 Establish company brand

70 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.


Target operating model

2020 Total Revenue >$4B


2020 Non-GAAP Subscription Gross Margin 84-86%
Annual Non-GAAP Operating Margin Expansion >1%
Annual Non-GAAP Free Cash Flow Margin Expansion >0%
2020 Non-GAAP Tax Rate ~20%
Annual Dilution Increase <3%

71 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.


Q&A
GAAP to Non-GAAP Reconciliation
in millions (except %'s) 2013* Margin 2014* Margin 2015* Margin 2016* Margin 2017* Margin
GAAP Net Cash Provided by Operating Activities (1) $ 83 20% $ 141 21% $ 318 32% $ 160 12% $ 643 33%
(-) Purchases of Property and Equipment 55 13% 54 8% 88 9% 106 8% 151 8%
(+) Cash Paid for Legal Settlements - 0% - 0% - 0% 268 19% - 0%
(+) Repayments of Convertible Senior Notes attributable to Debt Discount - 0% - 0% - 0% - 0% - 0%
Non-GAAP Free Cash Flow $ 28 7% $ 87 13% $ 230 23% $ 322 23% $ 492 25%

*Numbers reported under ASC 605.


During the year ended December 31, 2016, we early adopted Accounting Standards Update 2016-09, "Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting." This
(1)

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.

73 © 2018 ServiceNow, Inc. All Rights Reserved. Confidential.

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