Business wire
- Subscription revenues of $2,866 million in Q4 2024, representing 21% year-over-year growth, 21% in constant currency
- Total revenues of $2,957 million in Q4 2024, representing 21% year-over-year growth, 21% in constant currency
- Current remaining performance obligations of $10.27 billion as of Q4 2024, representing 19% year-over-year growth, 22% in constant currency
- Remaining performance obligations of $22.3 billion as of Q4 2024, representing 23% year-over-year growth, 26% in constant currency
- Nearly 500 customers with more than $5 million in ACV, representing 21% year-over-year growth
- ServiceNow's Board of Directors authorizes additional repurchases of up to $3 billion of common stock under share repurchase program with the primary objective of managing the impact of dilution
ServiceNow Reports Fourth Quarter and Full-Year 2024 Financial Results; Board of Directors Authorizes Additional $3B for Share Repurchase Program
Media Contact:
Johnna Hoff
(408) 250-8644
press@servicenow.com
Investor Contact:
Darren Yip
(925) 388-7205
ir@servicenow.com
ServiceNow (NYSE: NOW), the AI platform for business transformation, today announced financial results for its fourth quarter ended December 31, 2024, with subscription revenues of $2,866 million in Q4 2024, representing 21% year-over-year growth and 21% in constant currency.
“ServiceNow closed out the year exceeding Q4 expectations on top of our ‘beat and raise’ track record,” said ServiceNow Chairman and CEO Bill McDermott. “AI is fueling a top to bottom re-ordering of the enterprise technology landscape. Leaders are embracing the ServiceNow Platform as their AI agent control tower to unlock exponential productivity and seamlessly orchestrate end-to-end business transformation. We are still in the early days of a massive opportunity. ServiceNow’s innovation, growth, and profitability put us in a class of one.”
As of December 31, 2024, current remaining performance obligations (“cRPO”), contract revenue that will be recognized as revenue in the next 12 months, was $10.27 billion, representing 19% year-over-year growth and 22% in constant currency. The company now has 2,109 customers with more than $1 million in annual contract value (“ACV”), representing 12% year-over-year growth in customers, and nearly 500 customers with more than $5 million in ACV, representing 21% year-over-year growth.
“Q4 was a great quarter, capping a year of incredible innovation and execution,” said ServiceNow President and CFO Gina Mastantuono. “Our GenAI net new ACV stepped up meaningfully in Q4, as the number of Now Assist service desk deals grew over 150% quarter-over-quarter. We’re just scratching the surface of what’s possible. The moves we’re making in 2025 aren’t just about maintaining our lead—they’re about expanding it. We are setting ourselves up to define the future of agent-powered automation, solidify ServiceNow as the AI Platform for Business Transformation, and deliver strong growth year after year.”
Recent Business Highlights
Innovation
- Building on its leadership position in AI, ServiceNow today announced the latest breakthrough in the ServiceNow Platform, positioning it as the AI agent control tower. These innovations—a powerful new AI Agent Orchestrator to harmonize teams of AI agents working across tasks, systems, and departments, thousands of pre-built AI agents for every workflow, plus the new AI Agent Studio for building fully customized AI agents—will be available in March 2025 as part of ServiceNow’s Pro Plus and Enterprise Plus offerings to help accelerate enterprise AI agent adoption. As part of the single, trusted ServiceNow Platform, these capabilities build on the company's two-decade expertise driving exponential productivity across every person and every process by handling complex and ambiguous tasks that traditional automation cannot solve.
- During the quarter, ServiceNow continued to advance its innovation roadmap, releasing more than 150 new GenAI innovations for autonomous, responsible AI on the ServiceNow Platform. This included expanded capabilities to drive greater visibility and controls with an AI Governance tool for secure and compliant AI practices, multilingual support, and purpose-built GenAI solutions for configuration management, contract management, legal services, and health and safety.
Partnerships and Acquisitions
-
ServiceNow continues to partner with leading companies to accelerate customers’ AI transformation, today announcing the latest expansions to its technology partner ecosystem.
- ServiceNow and Google Cloud will broaden their partnership to launch ServiceNow on Google Cloud Marketplace and Google Distributed Cloud, as well as integrate ServiceNow Workflow Data Fabric and cross-enterprise workflows with Google Cloud AI’s infrastructure, development platforms, and productivity tools, to address demand from private- and public-sector enterprises.
- ServiceNow and Oracle will expand ServiceNow's Workflow Data Fabric capabilities through an integration with Oracle data sources, turning insights into action for enhanced decision-making and agility.
- ServiceNow and SoftwareOne Holding AG entered a multi-year strategic partnership to empower mutual customers to maximize the ROI of their software and cloud investments.
- ServiceNow and Visa expanded their strategic alliance to streamline costly, lengthy payment card dispute resolutions for financial institutions worldwide.
-
Additional partnerships during the quarter included:
- ServiceNow and ASDA with an expanded collaboration to improve employee and shopper experiences by uniting operations across technology, customer, and employee workflows.
- ServiceNow and AWS with new capabilities to accelerate AI transformation.
- ServiceNow and Five9 with a turnkey AI-powered solution for unified employee and customer experiences.
- ServiceNow and Microsoft with a vision to modernize the front-office with Microsoft Copilot and ServiceNow AI Agents, leveraging the unique strengths of both platforms to solve customer problems.
- Earlier in January, ServiceNow announced its acquisition of AI-native conversation data analysis platform Cuein, which will advance the development of next generation AI agents on the ServiceNow Platform.
- In Q4, the company also acquired Mission Secure to strengthen operational technology (OT) services for customers in industrial markets and provide them with increased visibility and context into their OT environments, improving decision-making and reducing downtime.
Investment
- Given ServiceNow’s strong cash position and its strategy of managing the impact of dilution, the Board of Directors authorized additional repurchases of up to $3 billion of common stock under its share repurchase program.1
- ServiceNow repurchased approximately 293,000 shares of its common stock for $296 million as part of its share repurchase program, with the primary objective of managing the impact of dilution. Of the original authorized amount of $1.5 billion, approximately $266 million remains available for future share repurchases.
Recognition
- On January 15, ServiceNow announced that it was named a Leader in the 2024 Gartner® Magic Quadrant™ for CRM Customer Engagement Center based on an evaluation of its Completeness of Vision and Ability to Execute.2 During the quarter, ServiceNow was named a Leader in the first ever 2024 Gartner® Magic Quadrant™ for AI Applications in IT Service Management (ITSM).3 ServiceNow also was named a Leader in The Forrester Wave™: Task-Centric Automation Software, Q4 2024.4
- As a testament to its world-class reputation and culture, ServiceNow today announced it was again recognized on the Fortune® World’s Most Admired Companies 2025™ list.5 During the quarter, ServiceNow also earned a spot on the American Opportunity Index, ranking No. 1 in the software category and No. 5 overall out of nearly 400 companies. The company also ranked second on the Forbes Most Trusted Companies in America 2025 list, in addition to placing on Fast Company 100 Best Workplaces for Innovators 2024, Fortune® Best Workplaces for Women 20245, and more.
Executive Leadership
- As ServiceNow continues to scale and sharpen its focus on strategic growth, its executive leadership team is essential to realizing its position as the enterprise AI leader. Therefore, the company is announcing the following executive role expansions: Gina Mastantuono as president and chief financial officer; Chris Bedi as chief customer officer and special advisor to the chairman for AI transformation; Paul Smith as president of global customer and field operations; Jacqui Canney as chief people and AI enablement officer; and Nick Tzitzon as vice chair.
(1) |
The program does not have a fixed expiration date, may be suspended, or discontinued at any time, and does not obligate ServiceNow to acquire any amount of its common stock. The timing, manner, price, and amount of any repurchases will be determined by ServiceNow at its discretion and will depend on a variety of factors, including business, economic and market conditions, prevailing stock prices, corporate and regulatory requirements, and other considerations. |
|
(2) |
Gartner, “Magic Quadrant for the CRM Customer Engagement Center,” by Pri Rathnayake, Drew Kraus, Wynn White, December 11, 2024. |
|
(3) |
Gartner, Inc., “Magic Quadrant for Artificial Intelligence Applications in IT Service Management,” by Chris Matchett, Rich Doheny, Chris Laske, Ankita Hundal, October 9, 2024. |
|
(4) |
Forrester Research, “The Forrester Wave™: Task-Centric Automation Software, Q4 2024,” by Bernhard Schaffrik with Pascal Matzke, Faith Born, Kara Hartig, December 5, 2024. |
|
(5) |
©2025 Fortune Media IP Limited. All rights reserved. Used under license. Fortune is a registered trademark and Fortune World’s Most Admired Companies™ is a trademark of Fortune Media IP Limited and are used under license. Fortune and Fortune Media IP Limited are not affiliated with, and do not endorse the products or services of, ServiceNow. |
Gartner Disclaimer
The Gartner content described herein, (the "Gartner Content") represents research opinion or viewpoints published, as part of a syndicated subscription service, by Gartner, Inc. ("Gartner"), and is not representation of fact. Gartner Content speaks as of its original publication date (and not as of the date of this earnings call and the opinions expressed in the Gartner Content are subject to change without notice.
Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner's research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.
GARTNER is a registered trademark and service mark of Gartner, Inc. and/or its affiliates in the U.S. and internationally, and MAGIC QUADRANT is a registered trademark of Gartner, Inc. And/or its affiliates and are used herein with permission. All rights reserved.
Forrester Disclaimer
Forrester does not endorse any company, product, brand, or service included in its research publications and does not advise any person to select the products or services of any company or brand based on the ratings included in such publications. Information is based on the best available resources. Opinions reflect judgment at the time and are subject to change. For more information, read about Forrester’s objectivity at www.forrester.com/about-us/objectivity/.
Fourth Quarter 2024 GAAP and Non-GAAP Results:
The following table summarizes our financial results for the fourth quarter 2024:
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|
|
|
|
|
|
Fourth Quarter 2024 GAAP Results |
Fourth Quarter 2024 Non-GAAP Results(1) |
|||
|
Amount
|
Year/Year
|
Amount
|
Year/Year
|
|
Subscription revenues |
$2,866 |
21% |
$2,859 |
21% |
|
Professional services and other revenues |
$91 |
26% |
$91 |
26.5% |
|
Total revenues |
$2,957 |
21% |
$2,950 |
21% |
|
|
|
|
|
|
|
|
Amount
|
Year/Year
|
Amount
|
Year/Year
|
|
cRPO |
$10.27 |
19% |
$10.49 |
22% |
|
RPO |
$22.3 |
23% |
$22.7 |
26% |
|
|
|
|
|
|
|
|
Amount
|
Margin (%) |
Amount
|
Margin (%)(2) |
|
Subscription gross profit |
$2,330 |
81% |
$2,416 |
84.5% |
|
Professional services and other gross (loss) profit |
($4) |
(4%) |
$7 |
8.5% |
|
Total gross profit |
$2,326 |
79% |
$2,423 |
82% |
|
Income from operations |
$374 |
13% |
$872 |
29.5% |
|
Net cash provided by operating activities |
$1,635 |
55% |
|
|
|
Free cash flow |
|
|
$1,400 |
47.5% |
|
|
|
|
|
|
|
|
Amount
|
Earnings per
|
Amount
|
Earnings per
|
|
Net income |
$384 |
$1.86 / $1.83 |
$769 |
$3.72 / $3.67 |
|
(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. |
|
(2) |
Refer to the table entitled “GAAP to Non-GAAP Reconciliation” for a reconciliation of GAAP to non-GAAP measures. |
|
(3) |
Non-GAAP subscription revenues and total revenues are adjusted for constant currency by excluding effects of foreign currency rate fluctuations and any gains or losses from foreign currency hedge contracts. Professional services and other revenues, cRPO, and RPO are adjusted only for constant currency. See the section entitled “Statement Regarding Use of Non-GAAP Financial Measures” for an explanation of non-GAAP measures. |
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Note: Numbers rounded for presentation purposes and may not foot. |
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Full-Year 2024 GAAP and Non-GAAP Results:
The following table summarizes our financial results for the full-year 2024:
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Full-Year 2024 GAAP Results |
Full-Year 2024 Non-GAAP Results(1) |
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|
Amount
|
Year/Year
|
Amount
|
Year/Year
|
|
Subscription revenues |
$10,646 |
23% |
$10,639 |
22.5% |
|
Professional services and other revenues |
$338 |
16% |
$337 |
16% |
|
Total revenues |
$10,984 |
22% |
$10,976 |
22.5% |
|
|
|
|
|
|
|
|
Amount
|
Year/Year
|
Amount
|
Year/Year
|
|
cRPO |
$10.27 |
19% |
$10.49 |
22% |
|
RPO |
$22.3 |
23% |
$22.7 |
26% |
|
|
|
|
|
|
|
|
Amount
|
Margin (%) |
Amount
|
Margin (%)(2) |
|
Subscription gross profit |
$8,704 |
82% |
$9,038 |
85% |
|
Professional services and other gross (loss) profit |
($7) |
(2%) |
$39 |
11.5% |
|
Total gross profit |
$8,697 |
79% |
$9,077 |
82.5% |
|
Income from operations |
$1,364 |
12% |
$3,254 |
29.5% |
|
Net cash provided by operating activities |
$4,267 |
39% |
|
|
|
Free cash flow |
|
|
$3,455 |
31.5% |
|
|
|
|
|
|
|
|
Amount
|
Earnings per
|
Amount
|
Earnings per
|
|
Net income |
$1,425 |
$6.92 / $6.84 |
$2,902 |
$14.10 / $13.92 |
|
(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) |
Refer to the table entitled “GAAP to Non-GAAP Reconciliation” for a reconciliation of GAAP to non-GAAP measures. |
|
(3) |
Non-GAAP subscription revenues and total revenues are adjusted for constant currency by excluding effects of foreign currency rate fluctuations and any gains or losses from foreign currency hedge contracts. Professional services and other revenues, cRPO, and RPO are adjusted only for constant currency. See the section entitled “Statement Regarding Use of Non-GAAP Financial Measures” for an explanation of non-GAAP measures. |
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Note: Numbers rounded for presentation purposes and may not foot. |
||
Financial Outlook
Our guidance includes GAAP and non?GAAP financial measures. The non?GAAP growth rates for subscription revenues are adjusted for constant currency by excluding the effects of foreign currency rate fluctuations and any gains or losses from foreign currency hedge contracts, and the non-GAAP growth rates for cRPO are adjusted only for constant currency to provide better visibility into the underlying business trends.
Since September 30, 2024, ServiceNow has seen an incremental strengthening of the U.S. dollar, resulting in a foreign exchange (“FX”) headwind of approximately $175 million for 2025 subscription revenues, which includes $40 million in Q1 2025, and $205 million for Q1 2025 cRPO.
Our guidance assumes a more pronounced second-half weighted linearity in our U.S. Federal business due to seasonality from the change in presidential administration.
In 2025, we will begin shifting more of our business model to include elements of consumption-based monetization across our AI and data solutions. For instance, we will include our new AI Agents in our Pro Plus and Enterprise Plus SKUs, forgoing upfront incremental new subscriptions to instead drive accelerated adoption and monetize increasing usage over time. We are also optimizing certain aspects of our go-to-market approach and creating more integrated solutions that we will announce at Knowledge 2025. Our guidance prudently reflects the flexibility to make these moves while delivering further free cash flow generation. Our free cash flow margin guidance reflects incremental expansion, building on the accelerated trajectory driven by our 2024 outperformance.
The following table summarizes our guidance for the first quarter 2025:
|
First Quarter 2025
|
|
First Quarter 2025
|
|
|
Amount
|
Year/Year
|
|
Constant Currency
|
Subscription revenues |
$2,995 - $3,000 |
18.5% - 19% |
|
19.5% - 20% |
|
|
|
|
|
cRPO |
|
19.5% |
|
20.5% |
|
|
|
|
|
|
|
|
|
Margin (%)(2) |
Income from operations |
|
|
|
30% |
|
|
|
|
|
|
|
Amount
|
|
|
Weighted-average shares used to compute diluted net income per share |
|
210 |
|
|
(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. |
|
(2) |
Refer to the table entitled “Reconciliation of Non-GAAP Financial Guidance” for a reconciliation of GAAP to non-GAAP measures. |
|
(3) |
Guidance for GAAP subscription revenues and GAAP subscription revenues and cRPO growth rates are based on the 31-day average of foreign exchange rates for December 2024 for entities reporting in currencies other than U.S. Dollars. |
The following table summarizes our guidance for the full-year 2025:
|
Full-Year 2025
|
|
Full-Year 2025
|
|
|
Amount
|
Year/Year
|
|
Constant Currency
|
Subscription revenues |
$12,635 - $12,675 |
18.5% - 19% |
|
19.5% - 20% |
|
|
|
|
|
|
|
|
|
Margin (%)(2) |
Subscription gross profit |
|
|
|
83.5% |
Income from operations |
|
|
|
30.5% |
Free cash flow |
|
|
|
32% |
|
|
|
|
|
|
|
Amount
|
|
|
Weighted-average shares used to compute diluted net income per share |
|
210 |
|
|
(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. |
|
(2) |
Refer to the table entitled “Reconciliation of Non-GAAP Financial Guidance” for a reconciliation of GAAP to non-GAAP measures. |
|
(3) |
GAAP subscription revenues and related growth rate for the future quarter included in our full-year 2025 guidance are based on the 31-day average of foreign exchange rates for December 2024 for entities reporting in currencies other than U.S. Dollars. |
|
| Note: Numbers are rounded for presentation purposes and may not foot. | ||
Conference Call Details
The conference call will begin at 2 p.m. Pacific Time (22:00 GMT) on January 29, 2025. Interested parties may listen to the call by dialing (888) 596-4144 (Passcode: 8135303), or if outside North America, by dialing (646) 968?2525 (Passcode: 8135303). Individuals may access the live teleconference from this webcast.
https://events.q4inc.com/attendee/426481593
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) 770?2030 (Passcode: 8135303), or if outside North America, by dialing (609) 800?9909 (Passcode: 8135303).
Investor Presentation Details
An investor presentation providing additional information, including forward-looking guidance, and analysis can be found at https://investors.servicenow.com.
Upcoming Investor Conferences
ServiceNow today announced that ServiceNow Chairman and Chief Executive Officer Bill McDermott will participate in a fireside chat at the Morgan Stanley Technology, Media & Telecom Conference on Monday, March 3, 2025, at 11:30 a.m. PT.
The live webcast will be accessible on the investor relations section of the ServiceNow website at https://investors.servicenow.com and archived on the ServiceNow site for a period of 30 days.
Statement Regarding Use of Non-GAAP Financial Measures
We use 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.
- Revenues. We adjust revenues and related growth rates for constant currency to provide a framework for assessing how our business performed excluding the effect of foreign currency rate fluctuations and any gains or losses from foreign currency hedge contracts that are reported in the current and comparative period. To exclude the effect of foreign currency rate fluctuations, 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 Q4 2023, the average exchange rates in effect for our major currencies were 1 USD to 0.93 Euros and 1 USD to 0.81 British Pound Sterling (“GBP”)), rather than the actual average exchange rates in effect during the current period (for Q4 2024, the average exchange rates in effect for our major currencies were 1 USD to 0.94 Euros and 1 USD to 0.78 GBP). Guidance for related growth rates is derived by applying the average exchange rates in effect during the comparison period, rather than the exchange rates for the guidance period, adjusted for any foreign currency hedging effects. We believe the presentation of revenues and related growth rates adjusted for constant currency facilitates the comparison of revenues year-over-year.
- Remaining performance obligations and current remaining performance obligations. We adjust cRPO and remaining performance obligations (“RPO”) and related growth rates for constant currency to provide a framework for assessing how our business performed. To present this information, current period results for entities reporting in currencies other than USD are converted into USD at the exchange rates in effect at the end of the comparison period (for Q4 2023, the end of the period exchange rates in effect for our major currencies were 1 USD to 0.91 Euros and 1 USD to 0.79 GBP), rather than the actual end of the period exchange rates in effect during the current period (for Q4 2024, the end of the period exchange rates in effect for our major currencies were 1 USD to 0.96 Euros and 1 USD to 0.80 GBP). Guidance for the related growth rate is derived by applying the end of period exchange rates in effect during the comparison period rather than the exchange rates in effect during the guidance period. 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, income tax effects and adjustments, and the income tax benefit from the release of a valuation allowance on deferred tax assets. 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 operating activities plus cash outflows 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 for gross profit, income from operations, net income, net income per share, and free cash flow.
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” and statements regarding the expected benefits of our announced partnerships. 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, among others, experiencing an actual or perceived cyber-security event or weakness; our ability to comply with evolving privacy laws, data transfer restrictions, and other foreign and domestic standards related to data and the Internet; errors, interruptions, delays or security breaches in or of our service or data centers; our ability to maintain and attract key employees and manage workplace culture; alleged violations of laws and regulations, including those relating to anti-bribery and anti-corruption and those relating to public sector contracting requirements; our ability to compete successfully against existing and new competitors; our ability to predict, prepare for and respond promptly to rapidly evolving technological, market and customer developments; 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; our ability to develop and gain customer demand for and acceptance of existing, new and improved products and services, including products that incorporate AI technology; our ability to expand and maintain our partnerships and partner programs, including expected market opportunity from such relationships, and realize the anticipated benefits thereof; global economic conditions; fluctuations in the value of foreign currencies relative to the U.S. Dollar; fluctuations in interest rates; our ability to consummate and realize the benefits of any strategic transactions or acquisitions; the impact of armed conflicts and bank failures on macroeconomic conditions; inflation; our ability to execute share repurchases, including the timing, manner, price, and amount of any repurchase; and fluctuations and volatility in our stock price.
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, 2024, 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 putting AI to work for people. We move with the pace of innovation to help customers transform organizations across every industry while upholding a trustworthy, human centered approach to deploying our products and services at scale. Our AI platform for business transformation connects people, processes, data, and devices to increase productivity and maximize business outcomes. For more information, visit: www.servicenow.com.
© 2025 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 |
Year Ended |
|||||||||
|
December 31,
|
December 31,
|
December 31,
|
December 31,
|
|||||||
Revenues: |
|
|
|
|
|||||||
Subscription |
$ |
2,866 |
$ |
2,365 |
$ |
10,646 |
$ |
8,680 |
|||
Professional services and other |
|
91 |
|
72 |
|
338 |
|
291 |
|||
Total revenues |
|
2,957 |
|
2,437 |
|
10,984 |
|
8,971 |
|||
Cost of revenues (1): |
|
|
|
|
|||||||
Subscription |
|
536 |
|
443 |
|
1,942 |
|
1,606 |
|||
Professional services and other |
|
95 |
|
73 |
|
345 |
|
315 |
|||
Total cost of revenues |
|
631 |
|
516 |
|
2,287 |
|
1,921 |
|||
Gross profit |
|
2,326 |
|
1,921 |
|
8,697 |
|
7,050 |
|||
Operating expenses (1): |
|
|
|
|
|||||||
Sales and marketing |
|
1,027 |
|
847 |
|
3,854 |
|
3,301 |
|||
Research and development |
|
668 |
|
562 |
|
2,543 |
|
2,124 |
|||
General and administrative |
|
257 |
|
242 |
|
936 |
|
863 |
|||
Total operating expenses |
|
1,952 |
|
1,651 |
|
7,333 |
|
6,288 |
|||
Income from operations |
|
374 |
|
270 |
|
1,364 |
|
762 |
|||
Interest income |
|
106 |
|
86 |
|
419 |
|
302 |
|||
Other expense, net |
|
(17) |
|
(9) |
|
(45) |
|
(56) |
|||
Income before income taxes |
|
463 |
|
347 |
|
1,738 |
|
1,008 |
|||
Provision for (benefit from) income taxes |
|
79 |
|
52 |
|
313 |
|
(723) |
|||
Net income |
$ |
384 |
$ |
295 |
$ |
1,425 |
$ |
1,731 |
|||
Net income per share - basic |
$ |
1.86 |
$ |
1.44 |
$ |
6.92 |
$ |
8.48 |
|||
Net income per share - diluted |
$ |
1.83 |
$ |
1.43 |
$ |
6.84 |
$ |
8.42 |
|||
Weighted-average shares used to compute net income per share - basic |
|
206 |
|
205 |
|
206 |
|
204 |
|||
Weighted-average shares used to compute net income per share - diluted |
|
209 |
|
207 |
|
208 |
|
206 |
|||
| (1) Includes stock-based compensation as follows: | |||||||||||
|
Three Months Ended |
Year Ended |
|||||||||
|
December 31,
|
December 31,
|
December 31,
|
December 31,
|
|||||||
Cost of revenues: |
|
|
|
|
|||||||
Subscription |
$ |
66 |
$ |
54 |
$ |
250 |
$ |
202 |
|||
Professional services and other |
|
11 |
|
12 |
|
46 |
|
52 |
|||
Operating expenses: |
|
|
|
|
|||||||
Sales and marketing |
|
146 |
|
127 |
|
565 |
|
505 |
|||
Research and development |
|
176 |
|
149 |
|
655 |
|
579 |
|||
General and administrative |
|
55 |
|
71 |
|
230 |
|
266 |
|||
ServiceNow, Inc. Condensed Consolidated Balance Sheets (in millions) |
|||||
|
December 31, 2024 |
December 31, 2023 |
|||
|
(unaudited) |
|
|||
Assets |
|
|
|||
Current assets: |
|
|
|||
Cash and cash equivalents |
$ |
2,304 |
$ |
1,897 |
|
Short-term investments |
|
3,458 |
|
2,980 |
|
Accounts receivable, net |
|
2,240 |
|
2,036 |
|
Current portion of deferred commissions |
|
517 |
|
461 |
|
Prepaid expenses and other current assets |
|
668 |
|
403 |
|
Total current assets |
|
9,187 |
|
7,777 |
|
Deferred commissions, less current portion |
|
999 |
|
919 |
|
Long-term investments |
|
4,111 |
|
3,203 |
|
Property and equipment, net |
|
1,763 |
|
1,358 |
|
Operating lease right-of-use assets |
|
693 |
|
715 |
|
Intangible assets, net |
|
209 |
|
224 |
|
Goodwill |
|
1,273 |
|
1,231 |
|
Deferred tax assets |
|
1,385 |
|
1,508 |
|
Other assets |
|
763 |
|
452 |
|
Total assets |
$ |
20,383 |
$ |
17,387 |
|
Liabilities and Stockholders’ Equity |
|
|
|||
Current liabilities: |
|
|
|||
Accounts payable |
$ |
68 |
$ |
126 |
|
Accrued expenses and other current liabilities |
|
1,369 |
|
1,365 |
|
Current portion of deferred revenue |
|
6,819 |
|
5,785 |
|
Current portion of operating lease liabilities |
|
102 |
|
89 |
|
Total current liabilities |
|
8,358 |
|
7,365 |
|
Deferred revenue, less current portion |
|
95 |
|
81 |
|
Operating lease liabilities, less current portion |
|
687 |
|
707 |
|
Long-term debt, net |
|
1,489 |
|
1,488 |
|
Other long-term liabilities |
|
145 |
|
118 |
|
Stockholders’ equity |
|
9,609 |
|
7,628 |
|
Total liabilities and stockholders’ equity |
$ |
20,383 |
$ |
17,387 |
|
ServiceNow, Inc. Condensed Consolidated Statements of Cash Flows (in millions) (unaudited) |
|||||||||||
|
Three Months Ended |
Year Ended |
|||||||||
|
December 31,
|
December 31,
|
December 31,
|
December 31,
|
|||||||
Cash flows from operating activities: |
|
|
|
|
|||||||
Net income |
$ |
384 |
$ |
295 |
$ |
1,425 |
$ |
1,731 |
|||
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|||||||
Depreciation and amortization |
|
154 |
|
154 |
|
564 |
|
562 |
|||
Amortization of deferred commissions |
|
147 |
|
126 |
|
550 |
|
459 |
|||
Stock-based compensation |
|
454 |
|
413 |
|
1,746 |
|
1,604 |
|||
Deferred income taxes |
|
51 |
|
17 |
|
98 |
|
(857) |
|||
Other |
|
(20) |
|
13 |
|
(51) |
|
— |
|||
Changes in operating assets and liabilities, net of effect of business combinations: |
|
|
|
|
|||||||
Accounts receivable |
|
(981) |
|
(852) |
|
(254) |
|
(300) |
|||
Deferred commissions |
|
(252) |
|
(264) |
|
(713) |
|
(717) |
|||
Prepaid expenses and other assets |
|
(65) |
|
(20) |
|
(332) |
|
(203) |
|||
Accounts payable |
|
(94) |
|
46 |
|
(52) |
|
(142) |
|||
Deferred revenue |
|
1,534 |
|
1,302 |
|
1,179 |
|
1,085 |
|||
Accrued expenses and other liabilities |
|
323 |
|
375 |
|
107 |
|
176 |
|||
Net cash provided by operating activities |
|
1,635 |
|
1,605 |
|
4,267 |
|
3,398 |
|||
Cash flows from investing activities: |
|
|
|
|
|||||||
Purchases of property and equipment |
|
(253) |
|
(261) |
|
(852) |
|
(694) |
|||
Business combinations, net of cash acquired(1) |
|
(31) |
|
— |
|
(113) |
|
(279) |
|||
Purchases of other intangibles |
|
(10) |
|
— |
|
(40) |
|
(3) |
|||
Purchases of investments |
|
(1,079) |
|
(829) |
|
(5,031) |
|
(4,634) |
|||
Purchases of non-marketable investments |
|
(32) |
|
(19) |
|
(181) |
|
(75) |
|||
Sales and maturities of investments |
|
728 |
|
654 |
|
3,752 |
|
3,522 |
|||
Other |
|
(61) |
|
11 |
|
(36) |
|
(4) |
|||
Net cash used in investing activities |
|
(738) |
|
(444) |
|
(2,501) |
|
(2,167) |
|||
Cash flows from financing activities: |
|
|
|
|
|||||||
Proceeds from employee stock plans |
|
— |
|
1 |
|
237 |
|
194 |
|||
Repurchases of common stock |
|
(296) |
|
(256) |
|
(696) |
|
(538) |
|||
Taxes paid related to net share settlement of equity awards |
|
(175) |
|
(126) |
|
(700) |
|
(459) |
|||
Business combination (1) |
|
— |
|
— |
|
(184) |
|
— |
|||
Net cash used in financing activities |
|
(471) |
|
(381) |
|
(1,343) |
|
(803) |
|||
Foreign currency effect on cash, cash equivalents and restricted cash |
|
(9) |
|
5 |
|
(17) |
|
1 |
|||
Net change in cash, cash equivalents and restricted cash |
|
417 |
|
785 |
|
406 |
|
429 |
|||
Cash, cash equivalents and restricted cash at beginning of period |
|
1,893 |
|
1,119 |
|
1,904 |
|
1,475 |
|||
Cash, cash equivalents and restricted cash at end of period |
$ |
2,310 |
$ |
1,904 |
$ |
2,310 |
$ |
1,904 |
|||
(1) |
The year ended December 31, 2024 reflects a reclassification of $184 million from investing activities to financing activities related to the second installment payment made in the acquisition of G2K Group GmbH during the three months ended March 31, 2024. |
ServiceNow, Inc. GAAP to Non-GAAP Reconciliation (in millions, except per share data) (unaudited) |
|||||||||||
|
Three Months Ended |
Year Ended |
|||||||||
|
December 31,
|
December 31,
|
December 31,
|
December 31,
|
|||||||
|
|
|
|
|
|||||||
Gross profit: |
|
|
|
|
|||||||
GAAP subscription gross profit |
$ |
2,330 |
$ |
1,922 |
$ |
8,704 |
$ |
7,074 |
|||
Stock-based compensation |
|
66 |
|
54 |
|
250 |
|
202 |
|||
Amortization of purchased intangibles |
|
20 |
|
20 |
|
84 |
|
77 |
|||
Non-GAAP subscription gross profit |
$ |
2,416 |
$ |
1,996 |
$ |
9,038 |
$ |
7,353 |
|||
|
|
|
|
|
|||||||
GAAP professional services and other gross loss |
$ |
(4) |
$ |
(1) |
$ |
(7) |
$ |
(24) |
|||
Stock-based compensation |
|
11 |
|
12 |
|
46 |
|
52 |
|||
Non-GAAP professional services and other gross profit |
$ |
7 |
$ |
11 |
$ |
39 |
$ |
28 |
|||
|
|
|
|
|
|||||||
GAAP gross profit |
$ |
2,326 |
$ |
1,921 |
$ |
8,697 |
$ |
7,050 |
|||
Stock-based compensation |
|
77 |
|
66 |
|
296 |
|
254 |
|||
Amortization of purchased intangibles |
|
20 |
|
20 |
|
84 |
|
77 |
|||
Non-GAAP gross profit |
$ |
2,423 |
$ |
2,007 |
$ |
9,077 |
$ |
7,381 |
|||
|
|
|
|
|
|||||||
Gross margin: |
|
|
|
|
|||||||
GAAP subscription gross margin |
|
81% |
|
81% |
|
82% |
|
82% |
|||
Stock-based compensation as % of subscription revenues |
|
2% |
|
2% |
|
2% |
|
2% |
|||
Amortization of purchased intangibles as % of subscription revenues |
|
1% |
|
1% |
|
1% |
|
1% |
|||
Non-GAAP subscription gross margin |
|
84.5% |
|
84.5% |
|
85% |
|
84.5% |
|||
|
|
|
|
|
|||||||
GAAP professional services and other gross margin |
|
(4%) |
|
(1%) |
|
(2%) |
|
(8%) |
|||
Stock-based compensation as % of professional services and other revenues |
|
12% |
|
17% |
|
14% |
|
18% |
|||
Non-GAAP professional services and other gross margin |
|
8.5% |
|
15% |
|
11.5% |
|
9.5% |
|||
|
|
|
|
||||||||
GAAP gross margin |
|
79% |
|
79% |
|
79% |
|
79% |
|||
Stock-based compensation as % of total revenues |
|
3% |
|
3% |
|
3% |
|
3% |
|||
Amortization of purchased intangibles as % of total revenues |
|
1% |
|
1% |
|
1% |
|
1% |
|||
Non-GAAP gross margin |
|
82% |
|
82.5% |
|
82.5% |
|
82.5% |
|||
|
|
|
|
|
|||||||
Income from operations: |
|
|
|
|
|||||||
GAAP income from operations |
$ |
374 |
$ |
270 |
$ |
1,364 |
$ |
762 |
|||
Stock-based compensation |
|
454 |
|
413 |
|
1,746 |
|
1,604 |
|||
Amortization of purchased intangibles |
|
23 |
|
22 |
|
94 |
|
85 |
|||
Business combination and other related costs |
|
4 |
|
12 |
|
33 |
|
38 |
|||
Legal settlements |
|
17 |
|
— |
|
17 |
$ |
— |
|||
Non-GAAP income from operations |
$ |
872 |
$ |
717 |
$ |
3,254 |
$ |
2,489 |
|||
|
|
|
|
|
|||||||
Operating margin: |
|
|
|
|
|||||||
GAAP operating margin |
|
13% |
|
11% |
|
12% |
|
8% |
|||
Stock-based compensation as % of total revenues |
|
15% |
|
17% |
|
16% |
|
18% |
|||
Amortization of purchased intangibles as % of total revenues |
|
1% |
|
1% |
|
1% |
|
1% |
|||
Business combination and other related costs as % of total revenues |
|
—% |
|
—% |
|
—% |
|
—% |
|||
Legal settlements as % of total revenues |
|
1% |
|
—% |
|
—% |
|
—% |
|||
Non-GAAP operating margin |
|
29.5% |
|
29.5% |
|
29.5% |
|
27.5% |
|||
|
|
|
|
|
|||||||
Net income: |
|
|
|
|
|||||||
GAAP net income |
$ |
384 |
$ |
295 |
$ |
1,425 |
$ |
1,731 |
|||
Stock-based compensation |
|
454 |
|
413 |
|
1,746 |
|
1,604 |
|||
Amortization of purchased intangibles |
|
23 |
|
22 |
|
94 |
|
85 |
|||
Business combination and other related costs |
|
4 |
|
12 |
|
33 |
|
38 |
|||
Legal settlements |
|
17 |
|
— |
|
17 |
|
— |
|||
Income tax effects and adjustments(1) |
|
(113) |
|
(34) |
|
(413) |
|
(193) |
|||
Release of a valuation allowance on deferred tax assets |
|
— |
|
(65) |
|
— |
|
(1,050) |
|||
Non-GAAP net income |
$ |
769 |
$ |
643 |
$ |
2,902 |
$ |
2,215 |
|||
|
|
|
|
|
|||||||
Net income per share - basic and diluted: |
|
|
|
|
|||||||
GAAP net income per share - basic |
$ |
1.86 |
$ |
1.44 |
$ |
6.92 |
$ |
8.48 |
|||
GAAP net income per share - diluted |
$ |
1.83 |
$ |
1.43 |
$ |
6.84 |
$ |
8.42 |
|||
Non-GAAP net income per share - basic |
$ |
3.72 |
$ |
3.14 |
$ |
14.10 |
$ |
10.85 |
|||
Non-GAAP net income per share - diluted |
$ |
3.67 |
$ |
3.11 |
$ |
13.92 |
$ |
10.78 |
|||
|
|
|
|
|
|||||||
Weighted-average shares used to compute net income per share - basic |
|
206 |
|
205 |
|
206 |
|
204 |
|||
|
|
|
|
|
|||||||
Weighted-average shares used to compute net income per share - diluted |
|
209 |
|
207 |
|
208 |
|
206 |
|||
|
|
|
|
|
|||||||
Free cash flow: |
|
|
|
|
|||||||
GAAP net cash provided by operating activities |
$ |
1,635 |
$ |
1,605 |
$ |
4,267 |
$ |
3,398 |
|||
Purchases of property and equipment |
|
(253) |
|
(261) |
|
(852) |
|
(694) |
|||
Cash paid for legal settlements |
|
17 |
|
— |
|
17 |
|
— |
|||
Business combination and other related costs |
|
1 |
|
— |
|
23 |
|
24 |
|||
Non-GAAP free cash flow |
$ |
1,400 |
$ |
1,344 |
$ |
3,455 |
$ |
2,728 |
|||
|
|
|
|
|
|||||||
Free cash flow margin: |
|
|
|
|
|||||||
GAAP net cash provided by operating activities as % of total revenues |
|
55% |
|
66% |
|
39% |
|
38% |
|||
Purchases of property and equipment as % of total revenues |
|
(9%) |
|
(11%) |
|
(8%) |
|
(8%) |
|||
Cash paid for legal settlements as % of total revenues |
|
1% |
|
—% |
|
—% |
|
—% |
|||
Business combination and other related costs as % of total revenues |
|
—% |
|
—% |
|
—% |
|
—% |
|||
Non-GAAP free cash flow margin |
|
47.5% |
|
55% |
|
31.5% |
|
30.5% |
|||
(1) |
We use a non-GAAP effective tax rate for evaluating our operating results to provide consistency across reporting periods. Based on our long-term projections, we are using a non-GAAP tax rate of 20% and 19% for the years ended December 31, 2024 and 2023, respectively. This non-GAAP tax rate could change for various reasons including significant changes in our geographic earnings mix or fundamental tax law changes in major jurisdictions in which we operate. |
|
Note: Numbers are rounded for presentation purposes and may not foot. |
||
ServiceNow, Inc. Reconciliation of Non-GAAP Financial Guidance |
|
|
Three Months Ending |
|
March 31, 2025 |
|
|
|
|
GAAP operating margin |
13.5% |
|
|
Stock-based compensation expense as % of total revenues |
16% |
|
|
Amortization of purchased intangibles as % of total revenues |
1% |
|
|
Business combination and other related costs as % of total revenues |
—% |
|
|
Non-GAAP operating margin |
30% |
|
Twelve Months Ending |
|
December 31, 2025 |
|
|
|
|
GAAP subscription gross margin |
80.5% |
|
|
Stock-based compensation expense as % of subscription revenues |
2% |
|
|
Amortization of purchased intangibles as % of subscription revenues |
1% |
|
|
Non-GAAP subscription margin |
83.5% |
|
|
GAAP operating margin |
14% |
|
|
Stock-based compensation expense as % of total revenues |
16% |
|
|
Amortization of purchased intangibles as % of total revenues |
1% |
|
|
Business combination and other related costs as % of total revenues |
—% |
|
|
Non-GAAP operating margin |
30.5% |
|
|
GAAP net cash provided by operating activities as % of total revenues |
40% |
|
|
Purchases of property and equipment as % of total revenues |
(8%) |
|
|
Business combination and other related costs as % of total revenues |
—% |
|
|
Non-GAAP free cash flow margin |
32% |
|
|
Note: Numbers are rounded for presentation purposes and may not foot. |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20250129748610/en/
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