01—Abstract
Summary
Summary of the 10-K filed February 3, 2022. Cited figures are marked; the original filing is the authoritative source.
ServiceNow, Inc.'s 2021 10-K filing highlights a robust year of growth, driven by strong demand for its digital workflow platform across IT, Employee, Customer, and Creator workflows.
The company continues to expand its customer base, surpassing 7,400 enterprise customers, with significant growth in customers with Annual Contract Value (ACV) over $1 milliona, reaching 1,359. Total revenues saw a substantial 30% increase, fueled by subscription revenue growth, and the company demonstrated strong free cash flow generation, up 31% year-over-year.
Investments in research and development and strategic acquisitions in AI and observability underscore ServiceNow's commitment to innovation and platform enhancement, positioning it to capitalize on the ongoing digital transformation trend across various industries. The company also maintained a high renewal rate of 98%b, indicating strong customer retention and satisfaction with its platform.
02—Key points
Key Highlights
- ServiceNow experienced a 30% year-over-year revenue growth, reaching $5.9 billion, primarily driven by its subscription services.
- The company expanded its customer base to over 7,400 enterprise customers, with a notable increase in large enterprise clients, evidenced by 1,359 customers with ACV greater than $1 million.
- Free cash flow increased by 31% to $1.8 billion, showcasing strong operational performance and cash generation capabilities.
- ServiceNow maintained a high customer renewal rate of 98%, demonstrating strong customer loyalty and the stickiness of its platform.
- Significant investments were made in research and development, alongside strategic acquisitions like LightStep, Inc. and Element AI Inc., to enhance AI capabilities and observability solutions.
- The company reported a substantial Remaining Performance Obligation (RPO) of $11.5 billion, indicating strong future revenue visibility.
- ServiceNow continues its focus on the 'Future of Work' strategy, implementing flexible work policies to attract and retain top talent.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2021, ServiceNow kept $0.04.
- Revenue$5.90B100.0%
- Cost of revenue−$1.35B22.9%
- Gross profit$4.54B77.1%
- Operating costs−$4.29B72.7%
- Operating income$257.0M4.4%
- Interest, other & tax−$27.0M0.5%
- Net income$230.0M3.9%
Where FY2021 revenue went
$5.90B- Other operating costs: $2.89B, 49% of revenue
- R&D: $1.40B, 24% of revenue
- Cost of revenue: $1.35B, 23% of revenue
- Net income: $230.0M, 3.9% of revenue
Kept 3.9% as net incomeNet income $230.0M · 3.9%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2021filed February 3, 2022Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $5.90B$4.52B | +30.5% |
| Cost of Revenue | $1.35B$987.00M | +37.1% |
| Gross Profit | $4.54B$3.53B | +28.6% |
| R&D Expenses | $1.40B$1.02B | +36.4% |
| Operating Expenses | $4.29B$3.33B | +28.6% |
| Operating Income | $257.00M$199.00M | +29.1% |
| Interest Expense | $28.00M$33.00M | −15.2% |
| Net Income | $230.00M$119.00M | +93.3% |
| EPS (Basic) | $0.23$0.12 | +90.2% |
| EPS (Diluted) | $0.23$0.12 | +91.5% |
| Shares Outstanding (Basic) | 990.47M965.48M | +2.6% |
| Shares Outstanding (Diluted) | 1.02B1.01B | +0.3% |
05—Questions
Frequently Asked Questions
What are ServiceNow's primary business segments or workflow categories?
ServiceNow categorizes its workflows into four primary areas: Information Technology (IT), Employee, Customer, and Creator. These segments represent the core areas where their Now Platform helps organizations digitize workflows and improve experiences.
How is ServiceNow's revenue structured?
The majority of ServiceNow's revenue comes from subscription services, which include access to its cloud-based platform, support, and updates. A smaller portion comes from professional services and other related revenues.
What is the significance of 'Remaining Performance Obligations' (RPO) for ServiceNow?
RPO represents contracted revenue that has not yet been recognized. A significant and growing RPO, like ServiceNow's $11.5 billion at the end of 2021, indicates strong future revenue streams and provides investors with visibility into the company's growth trajectory.
How does ServiceNow manage its financial health and liquidity?
ServiceNow demonstrates strong financial health, generating significant positive operating cash flows. As of December 31, 2021, the company had $4.9 billion in cash, cash equivalents, and investments, providing ample resources to fund operations, strategic investments, and manage its debt obligations.
06—Continue