ServiceNow (NOW) Tops Q1 EPS by 10c
ServiceNow (NYSE: NOW) reported Q1 EPS of $1.05, $0.10 better than the analyst estimate of $0.95. Revenue for the quarter came in at $1.05 billion versus the consensus estimate of $1.02 billion.
Financial Outlook
While we believe we are in a strong financial position to weather impacts caused to our business by COVID-19, many of our customers are now operating under very challenging circumstances, especially those in industries highly affected by COVID-19, and may re-evaluate their spend. As such, the second quarter 2020 guidance and updated full-year 2020 guidance we are providing today factor in the expected impacts of COVID-19 based on information available to us today. Our guidance is also based on the assumption that generally the most significant headwinds will occur in the second and third quarters of 2020 and there will be increased uncertainty around new business, renewal timing or billings terms, particularly with customers in these highly affected industries. We are further assuming that economic conditions will begin to open up more broadly by the end of the year. Significant variation from these assumptions could cause us to modify our guidance higher or lower.
Our guidance includes GAAP and non-GAAP financial measures.
The following table summarizes our guidance for the second quarter 2020:
| Second Quarter 2020 GAAP Guidance |
| Second Quarter 2020 Non-GAAP Guidance(1) | |||||||||
| Amount | Year/Year |
| Amount | Year/Year | Adjusted | Adjusted | |||||
Subscription revenues | $995 - $1,000 | 27% - 28% |
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| $1,008 - $1,013 | 29% - 30% | |||||
Subscription billings |
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| $960 - $980 | 18% - 20% | $976 - $996 | 20% - 22% | |||||
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| Margin (%) |
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Income from operations |
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| 23% |
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Weighted-average shares used to compute diluted net income per share |
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| 196 |
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| (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 “Reconciliation of Non-GAAP Financial Guidance” for a reconciliation of GAAP to non-GAAP measures. | |
| (2) | Guidance for GAAP subscription revenues and non-GAAP subscription billings is based on foreign exchange rates as of March 31, 2020 for entities reporting in currencies other than U.S. Dollars. | |
| (3) | Non-GAAP adjusted subscription revenues are adjusted for constant currency. Non-GAAP adjusted subscription billings are adjusted for constant currency and constant billings duration. See the section entitled “Statement Regarding Use of Non-GAAP Financial Measures” for an explanation of non-GAAP measures, and the table entitled “Reconciliation of Non-GAAP Financial Guidance” for a reconciliation of GAAP to non-GAAP measures. |
The following table summarizes our guidance for full-year 2020:
| Full-Year 2020 GAAP Guidance |
| Full-Year 2020 Non-GAAP Guidance(1) | |||||||||
| Amount | Year/Year |
| Amount | Year/Year | Adjusted | Adjusted | |||||
Subscription revenues | $4,125 - $4,145 | 27% |
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| $4,167 - $4,187 | 28% - 29% | |||||
Subscription billings |
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| $4,600 - $4,660 | 21% - 23% | $4,664 - $4,724 | 23% - 25% | |||||
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| Margin (%) |
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Subscription gross profit |
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| 86% |
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Income from operations |
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| 23% |
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Free cash flow |
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| 29% | |||||||
For earnings history and earnings-related data on ServiceNow (NOW) click here.