Transcription

Investor PresentationFirst Quarter 2021

Safe Harbor and Other InformationThis presentation contains “forward‐looking” statements that are based on our management’s beliefs and assumptions and on information currently available to management.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, the effects ofcompetition on our business and customer trends.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 FY21E), “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 differentfrom any future results, performance or achievements expressed or implied by the forward-looking statements. Additionally, these forward-looking statements, particularly our guidance,involve risk, uncertainties and assumptions based on information available to us as of 4/28/21, including those related to the continued impacts of COVID-19 on our business, future financialperformance and global economic conditions. Many of these assumptions relate to matters that are beyond our control and changing rapidly, including, but not limited to, the timeframesfor and severity of social distancing and other mitigation requirements, the timing of headwinds from COVID-19, the availability of vaccinations, the continued impact of COVID-19 on newor existing customers’ purchasing decisions and the length of our sales cycles, renewal timing or billings terms, particularly for customers in certain industries highly affected by COVID-19.Significant variation from the assumptions underlying our forward-looking statements could cause our actual results to vary or cause us to modify our guidance higher or lower, and theimpact could be significant. Further information on these and other factors that could cause or contribute to such differences include, but are not limited to those discussed in the sectiontitled “Risk Factors” in our Annual Report on Form 10-K filed for the year ended December 31, 2020 and in our other Securities and Exchange Commission (“SEC”) filings, including ourQuarterly Report on Form 10-Q that will be filed for the quarter ended March 31, 2021. We cannot guarantee that we will achieve the plans, intentions, or expectations disclosed in ourforward-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 theseforward-looking statements, to review or confirm analysts’ expectations, or to provide interim reports or updates on the progress of the current financial quarter.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 “StatementRegarding Use of Non-GAAP Financial Measures.”Terms such as “Average Contract Term,” "Remaining Performance Obligations (RPO)," "Current Remaining Performance Obligations (cRPO") and “Renewal Rate” shall have the meaningsset 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 purchasingdecision. 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 orfunctionality described for our products remains at our sole discretion. 2 2021 ServiceNow, Inc. All Rights Reserved.

Statement Regarding Use ofNon-GAAP Financial MeasuresWe report non-GAAP financial measures in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP.We present revenues, revenue growth rates, and current remaining performance obligations and remaining performance obligations growth rates adjusted for constant currencyto provide a framework for assessing how our business performed excluding the effect of foreign currency rate fluctuations. To present this information, current period results forentities reporting in currencies other than U.S. Dollars are converted into U.S. Dollars at the exchange rates in effect for the comparison period, rather than the actual exchangerates in effect for the current period. We believe the presentation of revenues and corresponding growth rates adjusted for constant currency facilitates the comparison ofrevenues year-over-year. We believe the presentation of current remaining performance obligations and remaining performance obligations growth rates adjusted for constantcurrency facilitates the comparison of current remaining performance obligations and remaining performance obligations year-over-year, respectively.We define subscription billings, professional services and other billings, and total billings as the applicable revenue plus the applicable change in deferred revenue, unbilledreceivables and customer deposits as presented or derived from the statement of cash flows. We adjust billings for constant currency, as described above, and for constantduration by replacing the portion of multi-year billings in excess of twelve months during the current period with the portion of multi-year billings in excess of twelve months duringthe comparison period. We believe these adjustments facilitate greater comparability in our billings information year-over-year. We believe billings is one indicator of theperformance of our business. Our non-GAAP presentation of normalized subscription billings growth rate adjusts for an irregular payment cycle in 2020 where some customers paidus in both Q1 and Q4 2020. In Q4 2020, we received a substantial amount of subscription billings pulled forward from Q1 2021 due to early customer payments. We believe the highlevels of early payments were the result of customers having excess cash at the end of 2020, due to the incremental cost savings they experienced from COVID-19 and are onetime in nature. We believe providing normalized subscription billings growth rate adjusted for these early payments is a better indicator of our performance and underlying businesstrends and facilitates greater comparability in our billings information year-over-year.Our non-GAAP presentation of gross profit, income from operations, and net income measures exclude certain non-cash or non-recurring items, including stock-basedcompensation expense, amortization of debt discount and issuance costs related to our convertible senior notes, loss on early note conversions, amortization of purchasedintangibles, legal settlements, business combination and other related costs, the related income tax effect of these adjustments, and the one-time income tax benefit from therelease of a valuation allowance on the deferred tax assets. The non-GAAP weighted-average shares used to compute our non-GAAP net income per share - diluted excludes thedilutive 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, thedilutive 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 webelieve it is probable that the performance condition will be met. We believe these adjustments provide useful supplemental information to investors and facilitates the analysis ofour operating results and comparison of operating results across reporting periods.Free cash flow, which is a non-GAAP financial measure, is defined as net cash provided by (used in) operating activities plus cash paid for legal settlements and repayments ofconvertible 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 oftotal 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 andperformance 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 resultsunder GAAP, as well as our supplemental non-GAAP information and the reconciliation between these presentations, to more fully understand our business. Please see the tablesincluded at the end of this presentation for the reconciliation of GAAP and non-GAAP results. 3 2021 ServiceNow, Inc. All Rights Reserved.

We make the world of work, work better for people ServiceNow delivers digitalworkflows that create greatexperiences and unlockproductivity.Our 6,900 global enterprisecustomers include approximately80% of the Fortune 500. They allrely on ServiceNow solutions usingthe Now Platform—the intelligentand intuitive cloud platform—forsuccessful digital transformation.Our aspiration is to be thedefining enterprise softwarecompany of the 21st century.ServiceNow IT Service Management was named a 2019 Gartner Peer Insights Customers’ Choice IT Service Management Tools and ServiceNow Governance Risk and Compliance was named a 2019 Gartner Peer Insights Customers’ Choice Integrated Risk Management Solutions Market. The GARTNER PEERINSIGHTS CUSTOMERS’ CHOICE badge is a trademark and service mark of Gartner, Inc., and/or its affiliates, and is used herein with permission. All rights reserved. Gartner Peer Insights Customers’ Choice constitute the subjective opinions of individual end-user reviews, ratings, and data applied against adocumented methodology; they neither represent the views of, nor constitute an endorsement by, Gartner or its affiliates. e-management-tools and d-risk-management 2020 FORTUNE Media IP Limited. All rights reserved. Used under license. FORTUNE and FORTUNE World’s Most Admired Companies are registered trademarks of FORTUNE Media IP Limited and are used under license. FORTUNE is not affiliated with, and does not endorse the products or services of, ServiceNow. 2020 FORTUNE Media IP Limited. All rights reserved. Used under license. Future 50 is a trademark of FORTUNE Media IP Limited and is used under license. FORTUNE and FORTUNE Media IP Limited are not affiliated with, and do not endorse products or services of, ServiceNow.From FORTUNE 2021 FORTUNE Media IP Limited. All rights reserved. Used under license. FORTUNE and FORTUNE 100 Best Companies to Work For are registered trademarks of Fortune Media IP Limited and are used under license. FORTUNE and Fortune Media IP Limited are not affiliated with, and do notendorse products or services of, ServiceNow. 2020 FORTUNE Media IP Limited. All rights reserved. Used under license. FORTUNE 4and FORTUNE World’s Most Admired Companies are registered trademarks ofFORTUNE Media IP Limited and are used under license. FORTUNE is not affiliatedwith, and does not endorse the products or services of, ServiceNow. 2021 ServiceNow, Inc. All Rights Reserved.

Now Platform : The platform of platforms for the digital WorkflowsCreatorWorkflowsTransform yourbusiness withworkflows thatoptimize productivityand resilience.Create connectedand engagingexperiences for youremployees.Connect yourcustomer operationsto boost loyalty.Build connectedcross-enterpriseworkflow apps fast. 5 2021 ServiceNow, Inc. All Rights Reserved.

Q1-21 Financial HighlightsQ1 2021 ResultsQuarterly ResultsSubscription Revenues 1,293M30%Non-GAAP Subscription Billings(1) 1,365M29%Current RPO (cRPO) 4.4B33%Remaining Performance Obligations (RPO) 8.8B34%Non-GAAP Operating Margin(1)27%300bpsNon-GAAP Free Cash Flow Margin(1)46%700bpsNon-GAAP Normalized Subscription BillingsIncrease Y/Y37%(2)(1) This financial metric and its corresponding growth rate are calculated on a non-GAAP basis. See appendix for a reconciliation of non-GAAP financial measures to the most comparable GAAP measures.(2) Growth rate calculated on a Non-GAAP basis. See appendix for reconciliation of Non-GAAP financial measures to the most comparable GAAP measures.Note: Numbers rounded for presentation purposes. 6 2021 ServiceNow, Inc. All Rights Reserved.

Guidance SummaryQ2 2021Quarterly GuidanceIncrease (Decrease) Y/YSubscription Revenues 1,290M - 1,295M27% - 28%Non-GAAP Subscription Billings(1) 1,250M - 1,255M23%Non-GAAP Operating Margin(1)22%( 600bps)Current RPO (cRPO) Growth(2)30%NAFull-Year 2021Full-Year GuidanceIncrease (Decrease) Y/YSubscription Revenues 5,455M - 5,470M27% – 28%Non-GAAP Subscription Billings(1) 6,190M - 6,205M24% - 25%Non-GAAP Subscription Gross Margin(1)85%( 100bps)Non-GAAP Operating Margin(1)23.5%( 150bps)Non-GAAP Free Cash Flow Margin(1)30%( 200bps)Non-GAAP Normalized Subscription Billings28%(2)(1) This financial metric and its corresponding growth rate are calculated on a non-GAAP basis. See appendix for a reconciliation of non-GAAP financial measures to the most comparable GAAP measures.(2) Growth rate calculated on a Non-GAAP basis. See appendix for reconciliation of Non-GAAP financial measures to the most comparable GAAP measures.Note: Numbers rounded for presentation purposes 7 2021 ServiceNow, Inc. All Rights Reserved.

Comparison to Previously Issued Guidance 20 1,278 1,293 5,490 32 5,463( 59)( 5)( M)SubscriptionRevenuesY/Y Growth30%28% 1,313( M) 47 1,36524%29%Currency Impact(2)Duration impact(4)24%25%Q1-21APrev. Guidance Midpoint(1)27%( 5)Non-GAAPSubscriptionBillings(3)Y/Y Growth 1128%FY21EQ1-21 PerformanceActual ResultsGuidance ChangeCurrent Guidance Midpoint(1) Refers to previously issued financial guidance dated 1/27/21.(2) GAAP subscription revenues and non-GAAP subscription billings included in our quarterly guidance is based on foreign exchange rates in effect at the end of the current quarter for entities reporting in currencies other than U.S. Dollars. Currency impactin Q1 2021 and full-year 2021 represents the impact of the difference between the actual average rates in the period used to calculate our Q1 2021 and full-year 2021 actual results and the rates as of 12/31/20 assumed in our previously issued guidancedated 1/27/2021(3) Subscription billings and the corresponding growth figures are calculated on a non-GAAP basis. See appendix for reconciliation of non-GAAP financial measures.(4) Duration impact represents the impact of billings greater than 12 months in excess of guidance assumptions 8 2021 ServiceNow, Inc. All Rights Reserved.

Year-Over-Year SubscriptionRevenues and Billings Growth36% 34% 36%33%30% 32%33% 31%35%29%32%29%34%30%26%34% 32%31%SubscriptionRevenuesQ1-20A27% 2%Q4-20AQ3-20A36%25% 26%Q2-20APrevious Year Growth28%41%38%25% 24%Q4-20AQ3-20AActual GrowthQ1-21A30% 29%25%Q1-21AFY20A31% 32% 31%FY20ANon-GAAP Adjusted Growth(1)Sub Revenue: Constant Currency(2)Sub Billings : Constant Currency Constant Duration(3)(1) Adjusted subscription revenues, subscription billings, adjusted subscription billings and the corresponding growth figures are calculated on a non-GAAP basis. See appendix for reconciliation of non-GAAP financial measures.(2) Adjusted revenues and the corresponding growth rates are derived by applying the average exchange rates in effect during the comparison period rather than the exchange rate for the current or guidance period.(3) Adjusted billings and the corresponding growth rates are derived by applying the average exchange rates in effect during the comparison period rather than the exchange rates for the current or guidance period, and by replacing the portion ofmulti-year billings in excess of twelve months during the current or guidance period with the portion of multi-year billings in excess of twelve months during the comparison period. 9 2021 ServiceNow, Inc. All Rights Reserved.

Currency and Duration Impact toYear-Over-Year Sub. Revenues and Sub. Billings( M) 1,016 12 1,027 1,091 1,184 1,077 1,161 1,293( 37)( 23)( 14) 1,256 4,286 4,272( 14)SubscriptionRevenuesY/Y Growth32%30% 1,018 12 3 1,033 1,08126%25%Q2-20AActuals 0 1,06929%( 31) ( 0)24%25%Q4-20ADuration Impact(2)32% 1,36531%FY20AQ1-21A 1,315( 39)38%41%Q3-20ACurrency Impact(1) 1,79626%30%Q4-20A 1,828( 12)Non-GAAPSubscriptionBillings(3)Y/Y Growth32%Q3-20AQ2-20A( M)29%31% 4,982( 11)29%25%( 20) 0 4,96331%32%Q1-21AFY20ANon-GAAP Adjusted Sub. Revenues and Sub. Billings(3)(1) Adjusted revenues and the corresponding growth rates are derived by applying the average exchange rates in effect during the comparison period rather than the exchange rates for the current or guidance period.(2) Adjusted billings and the corresponding growth rates are derived by applying the average exchange rates in effect during the comparison period rather than the exchange rates for the current or guidance period, and by replacing the portion ofmulti-year billings in excess of twelve months during the current or guidance period with the portion of multi-year billings in excess of twelve months during the comparison period.(3) Adjusted subscription revenues, subscription billings, adjusted subscription billings and the corresponding growth figures are calculated on a non-GAAP basis. See appendix for reconciliation of non-GAAP financial measures.Note: Numbers rounded for presentation purposes. 10 2021 ServiceNow, Inc. All Rights Reserved.

Remaining Performance ObligationsCurrent RPONoncurrent RPO( B) 6.6 7.0 8.9 8.8 4.5 4.4 34% / 30% cc(1)Total RPO 33% / 29% cc(1)Current RPO 7.3 3.5 3.5 3.3 3.5 3.8 4.4 4.4Q1-20Q2-20Q3-20Q4-20Q1-21 3.3Q1-21Y/Y Growth(1) Current period end results for entities reporting in currencies other than U.S. Dollars are converted into U.S. Dollars at the exchange rates in effect at the end of the comparison period, rather than the actual exchange rates in effect at the end of thecurrent period. The total RPO and current RPO growth rates adjusted for constant currency are calculated on a non-GAAP basis. See appendix for reconciliation to non-GAAP financial measures.Note: Numbers rounded for presentation purposes 11 2021 ServiceNow, Inc. All Rights Reserved.

Customer Cohort GrowthAnnual Growthof Initial ACV54%74%66%71%84%91%73%84%93%128%134% (1)(1) As an illustrative example, 2010 customer cohort started with a contract of initial ACV (annual contract value) of 100 and grew to ACV of 1,574 as of Q1-21, representing annual growth of initial ACV of 134%.Note: Chart reflects growth in total annual contract value over time, inclusive of losses, for the group of customers that joined ServiceNow in each respective year. Annual Growth represents increases in total annual contract value after the initial contract ofeach customer. 12 2021 ServiceNow, Inc. All Rights Reserved.

Expansion of Customer Relations