Summary
ServiceNow, Inc. (NOW) reported its financial results for the quarter and six months ended June 30, 2016. The company demonstrated strong revenue growth, primarily driven by its subscription services, which increased by 45% year-over-year for the quarter and 47% for the six-month period. While overall revenues showed a healthy upward trend, the company reported a net loss for both periods. A significant factor impacting the net loss was a substantial legal settlement charge of $270 million recognized in the first six months of 2016, related to resolving patent infringement lawsuits with Hewlett Packard Enterprise (HPE) and BMC Software. Despite the reported net loss, the company's operational metrics suggest underlying business strength. Billings, a non-GAAP measure indicating sales volume, grew by 33% year-over-year for the quarter and 37% for the six-month period. The company also saw an increase in large enterprise customers, with the number of customers with an Annual Contract Value (ACV) greater than $1 million growing from 187 to 272 year-over-year. Management anticipates continued revenue growth, though at a decelerating rate, and expects to continue incurring GAAP losses due to ongoing investments and non-cash charges.
Financial Highlights
49 data points| Revenue | $341.31M |
| Cost of Revenue | $96.65M |
| Gross Profit | $244.66M |
| R&D Expenses | $70.36M |
| Operating Expenses | $292.94M |
| Operating Income | -$48.28M |
| Interest Expense | $8.25M |
| Net Income | -$49.63M |
| EPS (Basic) | $-0.06 |
| Shares Outstanding (Basic) | 819.19M |
Key Highlights
- 1Total revenues grew by 38% year-over-year to $341.3 million for the three months ended June 30, 2016, and by 41% to $647.2 million for the six months ended June 30, 2016.
- 2Subscription revenue, the primary revenue driver, increased by 45% year-over-year for the quarter to $290.7 million and by 47% for the six-month period to $558.1 million.
- 3The company reported a net loss of $49.6 million for the quarter and $383.0 million for the six months ended June 30, 2016.
- 4A significant legal settlement charge of $270 million was recorded in the six months ended June 30, 2016, primarily impacting the net loss.
- 5Billings, a key performance indicator for sales volume, increased by 33% year-over-year to $374.9 million for the quarter and by 37% to $751.6 million for the six-month period.
- 6The number of customers with an Annual Contract Value (ACV) greater than $1 million increased significantly from 187 as of June 30, 2015, to 272 as of June 30, 2016.
- 7The company's cash and cash equivalents and short-term investments totaled $806.7 million as of June 30, 2016, providing ample liquidity.