now-20240331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2024


☐			Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number: 001-35580

SERVICENOW, INC.

(Exact name of Registrant as specified in its charter)


Delaware						20-2056195
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification Number)

ServiceNow, Inc.

2225 Lawson Lane

Santa Clara, California 95054

(Address, including zip code, of Registrant’s principal executive offices)

(408) 501-8550

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and formal fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Common stock, par value $0.001 per share

NOW

The New York Stock Exchange

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes ☒ No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☒ No ☐

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Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large Accelerated Filer	☒	Accelerated Filer	☐
Non-Accelerated Filer	☐	Smaller Reporting Company	☐
		Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of April 30, 2024, there were approximately 205 million shares of the Registrant’s Common Stock outstanding.

TABLE OF CONTENTS


		Page
	PART I
Item 1.	Financial Statements	1
	Condensed Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023	1
	Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2024 and 2023	2
	Condensed Consolidated Statements of Stockholders’ Equity for the Three Months Ended March 31, 2024 and 2023	3
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2024 and 2023	4
	Notes to Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30
Item 4.	Controls and Procedures	31

	PART II
Item 1.	Legal Proceedings	32
Item 1A.	Risk Factors	32
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32
Item 5.	Other Information	33
Item 6.	Exhibits	34
	Signatures

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PART I

ITEM 1. FINANCIAL STATEMENTS

SERVICENOW, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions)


	March 31, 2024		December 31, 2023
Assets	(unaudited)
Current assets:
Cash and cash equivalents	$	2,056	$	1,897
Short-term investments	3,054		2,980
Accounts receivable, net	1,306		2,036
Current portion of deferred commissions	474		461
Prepaid expenses and other current assets	482		403
Total current assets	7,372		7,777
Deferred commissions, less current portion	930		919
Long-term investments	3,666		3,203
Property and equipment, net	1,450		1,358
Operating lease right-of-use assets	698		715
Intangible assets, net	224		224
Goodwill	1,224		1,231
Deferred tax assets	1,478		1,508
Other assets	502		452
Total assets	$	17,544	$	17,387
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	223	$	126
Accrued expenses and other current liabilities	1,018		1,365
Current portion of deferred revenue	5,700		5,785
Current portion of operating lease liabilities	92		89

Total current liabilities	7,033		7,365
Deferred revenue, less current portion	100		81
Operating lease liabilities, less current portion	693		707
Long-term debt, net	1,488		1,488
Other long-term liabilities	123		118
Total liabilities	9,437		9,759
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.001 par value; shares authorized: 10,000; no shares issued or outstanding	—		—
Common stock, $0.001 par value; shares authorized: 600,000; shares issued: 206,497 and 205,619; shares outstanding: 205,382 and 204,724	—		—
Treasury stock, at cost (shares held: 1,115 and 895)	(707)		(535)
Additional paid-in capital	6,466		6,131
Accumulated other comprehensive loss	(68)		(37)
Retained earnings	2,416		2,069
Total stockholders’ equity	8,107		7,628
Total liabilities and stockholders’ equity	$	17,544	$	17,387

See accompanying notes to condensed consolidated financial statements

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SERVICENOW, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in millions, except number of shares which are reflected in thousands and per share data)

(unaudited)


	Three Months Ended March 31,
	2024		2023
Revenues:
Subscription	$	2,523	$	2,024
Professional services and other	80		72
Total revenues	2,603		2,096
Cost of revenues(1):
Subscription	441		354
Professional services and other	79		84
Total cost of revenues	520		438
Gross profit	2,083		1,658
Operating expenses(1):
Sales and marketing	923		823
Research and development	606		492
General and administrative	222		199

Total operating expenses	1,751		1,514
Income from operations	332		144
Interest income	101		60
Other expense, net	(8)		(16)
Income before income taxes	425		188
Provision for income taxes	78		38
Net income	$	347	$	150

Net income per share - basic	$	1.69	$	0.74
Net income per share - diluted	$	1.67	$	0.73

Weighted-average shares used to compute net income per share - basic	205,108		203,385
Weighted-average shares used to compute net income per share - diluted	207,684		204,263
Other comprehensive (loss) income:
Foreign currency translation adjustments	$	(30)	$	13
Unrealized (loss) gain on investments, net of tax	(13)		19

Unrealized gain on derivative instruments, net of tax	12		—
Other comprehensive (loss) income	(31)		32
Comprehensive income	$	316	$	182

(1)Includes stock-based compensation as follows:


	Three Months Ended March 31,
	2024		2023
Cost of revenues:
Subscription	$	58	$	46
Professional services and other	12		14
Operating expenses:
Sales and marketing	134		126
Research and development	159		135
General and administrative	59		60

See accompanying notes to condensed consolidated financial statements

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SERVICENOW, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in millions, except number of shares which are reflected in thousands)

(unaudited)


	Three Months Ended March 31, 2024
	Common Stock			Treasury Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity
	Shares	Amount		Shares	Amount
Balance at December 31, 2023	205,619	$	—	(895)	$	(535)	$	6,131	$	2,069	$	(37)	$	7,628
Common stock and Treasury stock issued under employee stock plans	878	—		5	3		128		—		—		131
Common stock repurchased	—	—		(225)	(175)		—		—		—		(175)
Taxes paid related to net share settlement of equity awards	—	—		—	—		(215)		—		—		(215)
Stock-based compensation	—	—		—	—		422		—		—		422
Other comprehensive loss, net of tax	—	—		—	—		—		—		(31)		(31)
Net income	—	—		—	—		—		347		—		347
Balance at March 31, 2024	206,497	$	—	(1,115)	$	(707)	$	6,466	$	2,416	$	(68)	$	8,107


	Three Months Ended March 31, 2023
	Common Stock			Additional Paid-in Capital	Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity
	Shares	Amount
Balance at December 31, 2022	202,882	$	—		$	4,796	$	338	$	(102)	$	5,032
Common stock issued under employee stock plans	858	—			117		—		—		117

Taxes paid related to net share settlement of equity awards	—	—			(112)		—		—		(112)

SEC Form 10-Q filed by ServiceNow Inc.