NOW Q4 2020 Earnings

Call Details

• Call Title: ServiceNow, Inc. Q4 2020 Earnings Call
• Date: January 27, 2021 at 7:00 PM UTC
• Management Team:
  • Lisa Banks (Senior Vice President of Finance)
  • Bill McDermott (Chairman and Chief Executive Officer)
  • Gina Mastantuono (Chief Financial Officer)

Call Summary

Financial Performance

• Q4 subscription revenues were $1.184B, representing 32% year-over-year growth inclusive of a three-point FX tailwind.
• Q4 subscription billings were $1.828B, representing 41% year-over-year growth and a $183M beat versus the high end of guidance.
• Remaining performance obligations ended the quarter at approximately $8.9B, representing 35% year-over-year growth, and current RPO was approximately $4.4B, representing 33% year-over-year growth.
• Q4 operating margin was 22%, which was a 100 basis point beat versus guidance and broadly consistent with the prior year on a year-over-year basis.
• Full year 2020 operating margin was 25% and the company reported $1.4B in free cash flow for the year.
• Free cash flow margin for the quarter improved materially due to lower T&E and strong collections, with full year free cash flow of 32% and noted year-over-year expansion in cash conversion metrics.

Guidance

• Q1 2021 subscription revenues were guided to $1.275B to $1.28B, representing 28% to 29% year-over-year growth including a 4-point FX tailwind.
• Q1 2021 subscription billings were guided to $1.31B to $1.315B, representing 24% to 25% year-over-year growth, with Q1 normalized billing growth excluding early payments projected at 32% year-over-year.
• Company introduced quarterly CRPO guidance and expects CRPO growth of 32% year-over-year for Q1 2021, including a five-point FX tailwind.
• Full year 2021 subscription revenue guidance is $5.48B to $5.5B, representing 28% year-over-year growth including a three-point FX tailwind.
• Full year 2021 subscription billings guidance is $6.205B to $6.225B, representing 25% year-over-year growth and 28% to 29% normalized growth excluding the one-time early payments in 2020.
• Full year 2021 operating margin was guided to 23.5%, and full year free cash flow margin was guided to 30%.
• Guidance incorporates assumptions about the timing of normalized T&E returning in the back half of 2021 and a 200/350 basis point timing impact from $80M of early customer payments in Q4 2020.