SEC Form 10-Q filed by ServiceNow Inc.

10/23/24 7:13:09 PM ET

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2024


☐			Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number: 001-35580

SERVICENOW, INC.

(Exact name of Registrant as specified in its charter)


Delaware						20-2056195
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification Number)

ServiceNow, Inc.

2225 Lawson Lane

Santa Clara, California 95054

(Address, including zip code, of Registrant’s principal executive offices)

(408) 501-8550

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and formal fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Common stock, par value $0.001 per share

NOW

The New York Stock Exchange

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes ☒ No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☒ No ☐

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Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large Accelerated Filer	☒	Accelerated Filer	☐
Non-Accelerated Filer	☐	Smaller Reporting Company	☐
		Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of September 30, 2024, there were approximately 206 million shares of the Registrant’s Common Stock outstanding.

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		Page
	PART I
Item 1.	Financial Statements	1
	Condensed Consolidated Balance Sheets as of September 30, 2024 and December 31, 2023	1
	Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2024 and 2023	2
	Condensed Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended September 30. 2024 and 2023	4
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2024 and 2023	5
	Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32
Item 4.	Controls and Procedures	33

	PART II
Item 1.	Legal Proceedings	34
Item 1A.	Risk Factors	34
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34
Item 5.	Other Information	35
Item 6.	Exhibits	36
	Signatures

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PART I

ITEM 1. FINANCIAL STATEMENTS

SERVICENOW, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions, except number of shares which are reflected in thousands)


	September 30, 2024		December 31, 2023
Assets	(unaudited)
Current assets:
Cash and cash equivalents	$	1,885	$	1,897
Short-term investments	3,410		2,980
Accounts receivable, net	1,308		2,036
Current portion of deferred commissions	502		461
Prepaid expenses and other current assets	591		403
Total current assets	7,696		7,777
Deferred commissions, less current portion	946		919
Long-term investments	3,829		3,203
Property and equipment, net	1,718		1,358
Operating lease right-of-use assets	661		715
Intangible assets, net	214		224
Goodwill	1,291		1,231
Deferred tax assets	1,444		1,508
Other assets	635		452
Total assets	$	18,434	$	17,387
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	165	$	126
Accrued expenses and other current liabilities	1,058		1,365
Current portion of deferred revenue	5,457		5,785
Current portion of operating lease liabilities	106		89

Total current liabilities	6,786		7,365
Deferred revenue, less current portion	77		81
Operating lease liabilities, less current portion	650		707
Long-term debt, net	1,489		1,488
Other long-term liabilities	142		118
Total liabilities	9,144		9,759
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.001 par value; shares authorized: 10,000; no shares issued or outstanding	—		—
Common stock, $0.001 par value; shares authorized: 600,000; shares issued: 207,693 and 205,619; shares outstanding: 206,317 and 204,724	—		—
Treasury stock, at cost (shares held: 1,376 and 895)	(926)		(535)
Additional paid-in capital	7,126		6,131
Accumulated other comprehensive loss	(20)		(37)
Retained earnings	3,110		2,069
Total stockholders’ equity	9,290		7,628
Total liabilities and stockholders’ equity	$	18,434	$	17,387

See accompanying notes to condensed consolidated financial statements

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SERVICENOW, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in millions, except number of shares which are reflected in thousands and per share data)

(unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Revenues:
Subscription	$	2,715	$	2,216	$	7,780	$	6,315
Professional services and other	82		72		247		219
Total revenues	2,797		2,288		8,027		6,534
Cost of revenues(1):
Subscription	496		420		1,406		1,163
Professional services and other	88		76		250		242
Total cost of revenues	584		496		1,656		1,405
Gross profit	2,213		1,792		6,371		5,129
Operating expenses(1):
Sales and marketing	944		799		2,827		2,454
Research and development	626		549		1,875		1,562
General and administrative	225		213		679		621

Total operating expenses	1,795		1,561		5,381		4,637
Income from operations	418		231		990		492
Interest income	108		82		313		216
Other expense, net	(10)		(14)		(28)		(47)
Income before income taxes	516		299		1,275		661
Provision for (benefit from) income taxes	84		57		234		(775)
Net income	$	432	$	242	$	1,041	$	1,436

Net income per share - basic	$	2.09	$	1.18	$	5.06	$	7.04
Net income per share - diluted	$	2.07	$	1.17	$	5.00	$	7.00

Weighted-average shares used to compute net income per share - basic	206,158		204,464		205,639		203,961
Weighted-average shares used to compute net income per share - diluted	208,552		206,277		208,004		205,194
Other comprehensive income (loss):
Foreign currency translation adjustments	$	50	$	(64)	$	3	$	(51)
Unrealized gain (loss) on investments, net of tax	60		(2)		44		(4)

Unrealized loss on derivative instruments, net of tax	(52)		—		(30)		—
Other comprehensive income (loss)	58		(66)		17		(55)
Comprehensive income	$	490	$	176	$	1,058	$	1,381

(1)Includes stock-based compensation as follows:

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	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Cost of revenues:
Subscription	$	64	$	52	$	184	$	148
Professional services and other	11		11		35		40
Operating expenses:
Sales and marketing	144		132		419		378
Research and development	150		150		479		430
General and administrative	57		68		175		195

See accompanying notes to condensed consolidated financial statements

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SERVICENOW, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in millions, except number of shares which are reflected in thousands)

(unaudited)


	Three Months Ended September 30, 2024														Three Months Ended September 30, 2023
	Common Stock			Treasury Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity		Common Stock			Treasury Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity
	Shares	Amount		Shares	Amount										Shares	Amount		Shares	Amount
Balance at beginning of the period	206,967	$	—	(1,110)	$	(704)	$	6,770	$	2,678	$	(78)	$	8,666	204,267	$	—	—	$	—	$	5,485	$	1,532	$	(91)	$	6,926
Common stock and Treasury stock issued under employee stock plans	726	—		6	3		103		—		—		106		788	—		—	—		76		—		—		76
Common stock repurchased	—	—		(272)	(225)		—		—		—		(225)		—	—		(500)	(282)		—		—		—		(282)
Taxes paid related to net share settlement of equity awards	—	—		—	—		(173)		—		—		(173)		—	—		—	—		(127)		—		—		(127)
Stock-based compensation	—	—		—	—		426		—		—		426		—	—		—	—		413		—		—		413
Other comprehensive income (loss), net of tax	—	—		—	—		—		—		58		58		—	—		—	—		—		—		(66)		(66)
Net income	—	—		—	—		—		432		—		432		—	—		—	—		—		242		—		242
Balance at end of the period	207,693	$	—	(1,376)	$	(926)	$	7,126	$	3,110	$	(20)	$	9,290	205,055	$	—	(500)	$	(282)	$	5,847	$	1,774	$	(157)	$	7,182


	Nine Months Ended September 30, 2024											Nine Months Ended September 30, 2023
	Common Stock			Treasury Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity			Common Stock			Treasury Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity
	Shares	Amount			Shares									Amount			Shares	Amount		Shares									Amount
Balance at beginning of the period	205,619	$	—		(895)	$	(535)	$	6,131	$	2,069	$	(37)		$	7,628	202,882	$	—	—	$	—	$	4,796	$	338	$	(102)		$	5,032
Common stock and Treasury stock issued under employee stock plans	2,074	—			16	9		228		—		—			237		2,173	—		—	—		193		—		—			193
Common stock repurchased	—	—			(497)	(400)		—		—		—			(400)		—	—		(500)	(282)		—		—		—			(282)
Taxes paid related to net share settlement of equity awards	—	—			—	—		(525)		—		—			(525)		—	—		—	—		(333)		—		—			(333)
Stock-based compensation	—	—			—	—		1,292		—		—			1,292		—	—		—	—		1,191		—		—			1,191

Other comprehensive income (loss), net of tax	—	—			—	—		—		—		17			17		—	—		—	—		—		—		(55)			(55)
Net income	—	—			—	—		—		1,041		—			1,041		—	—		—	—		—		1,436		—			1,436
Balance at end of the period	207,693	$	—		(1,376)	$	(926)	$	7,126	$	3,110	$	(20)		$	9,290	205,055	$	—	(500)	$	(282)	$	5,847	$	1,774	$	(157)		$	7,182

See accompanying notes to condensed consolidated financial statements

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SERVICENOW, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

(unaudited)


	Nine Months Ended September 30,
	2024		2023
Cash flows from operating activities:
Net income	$	1,041	$	1,436
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	410		408

Amortization of deferred commissions	403		333

Stock-based compensation	1,292		1,191
Deferred income taxes	47		(874)




Other	(31)		(13)
Changes in operating assets and liabilities, net of effect of business combinations:
Accounts receivable	727		552
Deferred commissions	(461)		(453)
Prepaid expenses and other assets	(267)		(183)
Accounts payable	42		(188)
Deferred revenue	(355)		(217)
Accrued expenses and other liabilities	(216)		(199)
Net cash provided by operating activities	$	2,632	$	1,793
Cash flows from investing activities:
Purchases of property and equipment	(599)		(433)
Business combinations, net of cash acquired	(82)		(279)
Purchases of other intangibles	(30)		(3)
Purchases of investments	(3,952)		(3,805)
Purchases of non-marketable investments	(149)		(56)


Sales and maturities of investments	3,024		2,868

Other	25		(15)
Net cash used in investing activities	$	(1,763)	$	(1,723)
Cash flows from financing activities:








Proceeds from employee stock plans	237		193
Repurchases of common stock	(400)		(282)
Taxes paid related to net share settlement of equity awards	(525)		(333)
Business combination	(184)		—
Net cash used in financing activities	$	(872)	$	(422)
Foreign currency effect on cash, cash equivalents and restricted cash	(8)		(4)
Net change in cash, cash equivalents and restricted cash	(11)		(356)
Cash, cash equivalents and restricted cash at beginning of period	1,904		1,475
Cash, cash equivalents and restricted cash at end of period	$	1,893	$	1,119
Cash, cash equivalents and restricted cash at end of period:
Cash and cash equivalents	$	1,885	$	1,112
Restricted cash included in prepaid expenses and other current assets	8		7

Total cash, cash equivalents and restricted cash shown in the condensed consolidated statements of cash flows	$	1,893	$	1,119
Supplemental disclosures of other cash flow information:
Interest paid	$	23	$	23
Income taxes paid, net of refunds	183		103
Non-cash investing and financing activities:



Property and equipment included in accounts payable, accrued expenses and other liabilities	49		63

See accompanying notes to condensed consolidated financial statements

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SERVICENOW, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Unless the context requires otherwise, references in this report to “ServiceNow,” the “Company,” “we,” “us,” and “our” refer to ServiceNow, Inc. and its consolidated subsidiaries.

(1) Description of the Business

ServiceNow was founded on a simple premise: to make work flow better. Our intelligent platform, the Now Platform, is a cloud-based solution with embedded artificial intelligence and machine learning capabilities that helps global enterprises across industries, universities and governments unify and digitize their workflows. Our workflow applications built on the Now Platform are organized along four primary areas: Technology, Customer and Industry, Employee and Creator. The products under each of our workflows help customers connect, automate and empower work across systems and silos to enable great outcomes for businesses and great experiences for people. The Now Platform orchestrates work across our customers’ cloud platforms and systems of choice, allowing our customers to get work done regardless of their current and future preferred systems of record and collaboration platforms.

(2) Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements and condensed footnotes have been prepared in accordance with the applicable rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. Accordingly, they do not include all of the information and footnotes required by United States (“U.S.”) generally accepted accounting principles (“GAAP”) for complete financial statements due to the permitted exclusion of certain disclosures for interim reporting. In the opinion of management, all adjustments (consisting of normal recurring items) considered necessary under GAAP for fair statement of results for the interim periods presented have been included. As a result of displaying amounts in millions, rounding differences may exist in the condensed consolidated financial statements and footnote tables. The results of operations for the three and nine months ended September 30, 2024 are not necessarily indicative of the results to be expected for the year ending December 31, 2024 or for other interim periods or future years. The condensed consolidated balance sheet as of December 31, 2023 is derived from audited consolidated financial statements; however, it does not include all of the information and footnotes required by GAAP for complete financial statements. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2023, which was filed with the SEC on January 25, 2024.

Principles of Consolidation

The accompanying condensed consolidated financial statements have been prepared in conformity with GAAP, and include our accounts and the accounts of our wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated upon consolidation.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make certain estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, as well as reported amounts of revenues and expenses during the reporting period. Such management estimates and assumptions include, but are not limited to, standalone selling price for each distinct performance obligation included in customer contracts with multiple performance obligations, the period of benefit for deferred commissions, valuation of intangible assets, the useful life of property and equipment and identifiable intangible assets, stock-based compensation expense and income taxes. Actual results could differ from those estimates.

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In January 2024, we completed an assessment of the useful life of our data center equipment and determined we should increase the estimated useful life of data center equipment from four years to five years. This change in accounting estimate was effective beginning fiscal year 2024. Based on the carrying amount of data center equipment included in property and equipment, net as of December 31, 2023, the effect of this change in estimate for the three and nine months ended September 30, 2024, was a reduction in depreciation expense of $24 million and $81 million, respectively, and an increase in net income of $21 million and $65 million, or $0.10 and $0.31 per share basic and $0.10 and $0.31 per share diluted, respectively.

Significant Accounting Policies

We have incorporated two updates to our significant accounting policies during the nine months ended September 30, 2024. The first is the change in useful life of our data center equipment discussed above and the second is related to our cash flow hedging program initiated during the quarter ended March 31, 2024 to hedge a portion of our forecasted foreign currency denominated revenues as discussed below. There were no other updates to our significant accounting policies disclosed in “Note 2 – Summary of Significant Accounting Policies” of our Annual Report on Form 10-K for the year ended December 31, 2023.

Derivative Financial Instruments

Cash flow hedging

We record derivatives at fair value as either assets or liabilities on our condensed consolidated balance sheets. For derivative contracts entered into to hedge a portion of our forecasted foreign currency denominated revenues that are designated and qualify as cash flow hedges, the unrealized gain or loss on the derivative instrument is reported as a component of accumulated other comprehensive income (loss) and reclassified into earnings as subscription revenues when the hedged transaction affects earnings. Derivatives not designated as hedging instruments are adjusted to fair value through earnings as other expense, net in the period during which changes in fair value occur.

The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions. We also formally assess, both at the inception of the hedge, and on an ongoing basis, whether each derivative is highly effective in offsetting changes in cash flows of the hedged item. Fluctuations in the value of the derivative instruments are generally offset by changes in the hedged item; however, if it is determined that a derivative is not highly effective as a hedge or if a derivative ceases to be a highly effective hedge, the Company will discontinue hedge accounting prospectively for the affected derivative.

Concentration of Credit Risk and Significant Customers

Credit risk arising from accounts receivable is mitigated to a certain extent due to our large number of customers and their dispersion across various industries and geographies. We had one customer, a U.S. federal channel partner and systems integrator, that represented 27% of our accounts receivable balance as of September 30, 2024 and 11% of our total revenues for each of the three and nine months ended September 30, 2024. Based on our periodic credit evaluations, there have been no historical collection concerns with this customer. There were no customers that individually exceeded 10% of our accounts receivable balance as of December 31, 2023 or our total revenues for each of the three and nine months ended September 30, 2023. For purposes of assessing concentration of credit risk and significant customers, a group of customers under common control or customers that are affiliates of each other are regarded as a single customer.

Revision of Prior Period Financial Statements

During the quarter ended June 30, 2024, the Company identified an immaterial error in the condensed consolidated statements of cash flows for the period ended March 31, 2024 relating to a misclassification between investing cash outflows and financing cash outflows. The second installment payment for a business combination completed during the quarter ended September 30, 2023, totaling $184 million, was incorrectly classified as an investing cash outflow instead of a financing cash outflow. The Company determined that the error was not material to any previously issued financial statements and will revise such error in its Quarterly Report on Form 10-Q for the three months ending March 31, 2025.

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(3) Investments

Marketable Debt Securities

The following is a summary of our available-for-sale debt securities recorded within short-term and long-term investments on the condensed consolidated balance sheets (in millions):


	September 30, 2024
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Available-for-sale debt securities:
Commercial paper	$	297	$	1	$	—	$	298
Corporate notes and bonds	4,566		41		(1)		4,606
Certificates of deposit	42		—		—		42
U.S. government and agency securities	2,196		9		(1)		2,204
Mortgage-backed and asset-backed securities	103		—		(14)		89

Total available-for-sale debt securities	$	7,204	$	51	$	(16)	$	7,239


	December 31, 2023
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Available-for-sale debt securities:
Commercial paper	$	349	$	—	$	—	$	349
Corporate notes and bonds	3,579		10		(13)		3,576
Certificates of deposit	94		—		—		94
U.S. government and agency securities	2,081		3		(6)		2,078
Mortgage-backed and asset-backed securities	102		—		(16)		86

Total available-for-sale debt securities	$	6,205	$	13	$	(35)	$	6,183

As of September 30, 2024, the contractual maturities of our available-for-sale debt securities, excluding those securities classified within cash and cash equivalents on the condensed consolidated balance sheet and mortgage-backed and asset-backed securities that do not have a single maturity, did not exceed 37 months. The fair values of available-for-sale debt securities, by remaining contractual maturity, are as follows (in millions):


	September 30, 2024
Due within 1 year	$	3,410
Due in 1 year through 5 years	3,740
Instruments not due in single maturity	89
Total	$	7,239

As of September 30, 2024, unrealized losses of $16 million from available-for-sale debt securities are from securities in a continuous unrealized loss position greater than 12 months. As of September 30, 2024, the fair value of available-for-sale debt securities in a continuous unrealized loss position totaled $1,419 million, the majority of which has been in a continuous unrealized loss position for greater than 12 months. As of December 31, 2023, the fair value of available-for-sale debt securities in a continuous unrealized loss position totaled $3,731 million.

For all available-for-sale debt securities that were in unrealized loss positions, we have determined that it is more likely than not we will hold the securities until maturity or a recovery of the cost basis. Unrealized losses on available-for-sale debt securities were due primarily to changes in market interest rates, and credit-related impairment losses were immaterial as of September 30, 2024.

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Non-Marketable Equity Investments

As of September 30, 2024 and December 31, 2023, the total amount of non-marketable equity investments in privately held companies included in other assets on our condensed consolidated balance sheets was $396 million and $268 million, respectively. Our non-marketable equity investments are primarily accounted for using the measurement alternative, which measures the investments at cost, minus impairment, if any, plus or minus changes resulting from qualifying observable price changes resulting from the issuance of similar or identical securities in an orderly transaction by the same issuer. Determining whether an observed transaction is similar to a security within our portfolio requires judgment based on the rights and preferences of the securities. Recording upward and downward adjustments to the carrying value of our non-marketable equity investments as a result of observable price changes requires quantitative assessments of the fair value of our non-marketable equity investments using various valuation methodologies and involves the use of estimates. The adjustments made during the three and nine months ended September 30, 2024 and 2023 were immaterial. We classify these fair value measurements as Level 3 within the fair value hierarchy.

(4) Fair Value Measurements

The following table presents our fair value hierarchy for our assets measured at fair value on a recurring basis as of September 30, 2024 (in millions):


	Level 1		Level 2		Total
Cash equivalents:
Money market funds	$	1,162	$	—	$	1,162
Commercial paper	—		44		44


Deposits	238		—		238
U.S. government and agency securities	—		4		4
Marketable securities:
Commercial paper	—		298		298
Corporate notes and bonds	—		4,606		4,606
Certificates of deposit	—		42		42
U.S. government and agency securities	—		2,204		2,204
Mortgage-backed and asset-backed securities	—		89		89



Total	$	1,400	$	7,287	$	8,687

The following table presents our fair value hierarchy for our assets measured at fair value on a recurring basis as of December 31, 2023 (in millions):


	Level 1		Level 2		Total
Cash equivalents:
Money market funds	$	1,215	$	—	$	1,215
Commercial paper	—		79		79
Corporate notes and bonds	—		2		2

Deposits	295		—		295
U.S. government and agency securities	—		4		4
Marketable securities:
Commercial paper	—		349		349
Corporate notes and bonds	—		3,576		3,576
Certificates of deposit	—		94		94
U.S. government and agency securities	—		2,078		2,078
Mortgage-backed and asset-backed securities	—		86		86

Total	$	1,510	$	6,268	$	7,778

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We determine the fair value of our security holdings based on pricing from our service providers and market prices from industry-standard independent data providers. Such market prices may be quoted prices in active markets for identical assets (Level 1 inputs), pricing determined using inputs other than quoted prices that are observable either directly or indirectly (Level 2 inputs) or using unobservable inputs that are supported by little or no market activity (Level 3 inputs). Our non-marketable equity investments are not included in the table above and are discussed in Note 3. See Note 8 for the fair value measurement of our derivative contracts and Note 10 for the fair value measurement of our long-term debt, which are also not included in the table above. Our marketable equity investments are classified within Level 1 and were immaterial as of September 30, 2024 and December 31, 2023.

(5) Business Combinations

During the nine months ended September 30, 2024, we completed certain acquisitions for total purchase consideration of $81 million primarily to enhance our products with the acquired technology and engineering workforce. The acquisitions were not material to our condensed consolidated financial statements, either individually or in the aggregate.

On July 17, 2023, we acquired all outstanding shares of G2K Group GmbH, an artificial intelligence powered platform, for $465 million in a cash transaction. The consideration was paid in two installments, with the first payment made in July 2023 and the second payment made in February 2024. The acquisition is intended to enhance our Now Platform with the acquired smart Internet of Things technology, enabling businesses to intelligently action digital and in-store data with enterprise-grade workflows.

The purchase price was allocated based on the estimated fair value of the developed technology intangible asset of $75 million (six-year estimated useful life), net tangible liabilities of $1 million, deferred tax liabilities of $23 million and goodwill of $414 million, which is not deductible for income tax purposes.

Goodwill is primarily attributed to the value expected from synergies resulting from the business combination. The fair values assigned to tangible and intangible assets acquired, liabilities assumed and income taxes payable and deferred taxes are based on management’s estimates and assumptions.

We have included the financial results of these business combinations in the condensed consolidated financial statements from the date of acquisition, which were immaterial.

(6) Goodwill and Intangible Assets

The changes in the carrying amounts of goodwill were as follows (in millions):



	Carrying Amount
Balance as of December 31, 2023	$	1,231
Goodwill acquired	58
Foreign currency translation adjustments	2
Balance as of September 30, 2024	$	1,291

Intangible assets, net consists of the following (in millions):


	September 30, 2024		December 31, 2023
Developed technology	$	575	$	516
Patents	73		72
Other	11		11
Intangible assets, gross	659		599
Less: accumulated amortization	(445)		(375)
Intangible assets, net	$	214	$	224

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The weighted-average useful life of the acquired developed technology for the nine months ended September 30, 2024 and 2023 was approximately five years. Amortization expense for intangible assets for the three months ended September 30, 2024 and 2023 was $23 million and $21 million, respectively, and for the nine months ended September 30, 2024 and 2023 was $71 million and $63 million, respectively.

The following table presents the estimated future amortization expense related to intangible assets held at September 30, 2024 (in millions):


Years Ending December 31,
Remainder of 2024	$	22
2025	76
2026	45
2027	31
2028	26
Thereafter	14
Total future amortization expense	$	214

(7) Property and Equipment

Property and equipment, net consists of the following (in millions):


	September 30, 2024		December 31, 2023
Computer equipment	$	2,642	$	2,136
Computer software	107		96
Leasehold and other improvements	316		292
Furniture and fixtures	88		86

Construction in progress	43		33
Property and equipment, gross	3,196		2,643
Less: Accumulated depreciation	(1,478)		(1,285)
Property and equipment, net	$	1,718	$	1,358

Construction in progress consists of costs primarily related to leasehold and other improvements. Depreciation expense for the three months ended September 30, 2024 and 2023 was $96 million and $98 million, respectively, and for the nine months ended September 30, 2024 and 2023 was $264 million and $267 million, respectively.

(8) Derivative Contracts

Derivatives Designated as Hedging Instruments

We entered into forward contracts to hedge a portion of our forecasted foreign currency denominated revenues during the three and nine months ended September 30, 2024. These forward contracts are recorded at fair value and have maturities of up to 34 months. As of September 30, 2024, we had outstanding cash flow hedges with total notional values of $1.6 billion. We classify cash flows related to our cash flow hedges as operating activities in our condensed consolidated statements of cash flows.

The total gross fair values of derivatives designated as hedging instruments recorded within the condensed consolidated balance sheets were as follows (in millions):



Condensed Consolidated Balance Sheets Location	September 30, 2024



Accrued expenses and other current liabilities	$	25
Other long-term liabilities	$	10

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As of September 30, 2024, approximately $25 million of the pre-tax derivative loss from accumulated other comprehensive income (loss) is expected to be recognized in subscription revenues within the next 12 months.

To receive hedge accounting treatment, all hedging relationships are formally documented at the inception of the hedge and the hedges must be highly effective in offsetting changes to future cash flows on hedged transactions. We evaluate hedge effectiveness at the inception of the hedge prospectively, and on an ongoing basis both retrospectively and prospectively. We report changes in fair value of these cash flow hedges as a component of accumulated other comprehensive income (loss) and subsequently reclassify into earnings in the same period the forecasted transaction affects earnings. Amounts reclassified to subscription revenues were a loss of $2 million for the three months ended September 30, 2024 and a gain of $3 million for the nine months ended September 30, 2024. There was no ineffectiveness in the Company’s cash flow hedging program for each of the three and nine months ended September 30, 2024.

Derivatives not Designated as Hedging Instruments

Our derivatives not designated as hedging instruments consist of foreign currency forward contracts that we primarily use to hedge monetary assets and liabilities denominated in non-functional currencies. These foreign currency forward contracts are recorded at fair value and have maturities of 12 months or less. The changes in the fair value of these contracts are recorded in other expense, net on the condensed consolidated statements of comprehensive income. As of September 30, 2024 and December 31, 2023, we had foreign currency forward contracts with total notional values of $2.3 billion and $1.7 billion, respectively, which were not designated as hedging instruments. The gross fair value of these foreign currency forward contracts was immaterial as of September 30, 2024 and December 31, 2023. The gains (losses) recognized for these foreign currency forward contracts from derivatives not designated as hedging instruments were immaterial for each of the three and nine months ended September 30, 2024 and 2023.

All foreign currency forward contracts, both designated and not designated as hedging instruments, are classified within Level 2 as the valuation inputs are based on quoted prices and market observable data of similar instruments in active markets, such as currency spot and forward rates.

(9) Deferred Revenue and Performance Obligations

Revenues recognized from beginning period deferred revenue during the three months ended September 30, 2024 and 2023 were $2.5 billion and $2.0 billion, respectively, and $5.1 billion and $4.1 billion for the nine months ended September 30, 2024 and 2023, respectively.

Remaining Performance Obligations

Transaction price allocated to remaining performance obligations (“RPO”) represents contracted revenue that has not yet been recognized, which includes deferred revenue and non-cancellable amounts that will be invoiced and recognized as revenues in future periods. RPO excludes contracts that are billed in arrears, such as certain time and materials contracts, as we apply the “right to invoice” practical expedient under relevant accounting guidance.

As of September 30, 2024, the total non-cancellable RPO under our contracts with customers was $19.5 billion and we expect to recognize revenues on approximately 48% of these RPO over the following 12 months. The majority of the non-current RPO will be recognized over the next 13 to 36 months.

(10) Debt

For the periods ended September 30, 2024 and December 31, 2023, the carrying value of our outstanding debt was $1,489 and $1,488 million, respectively, net of unamortized debt discount and issuance costs of $11 million and $12 million, respectively.

We consider the fair value of the 2030 Notes at September 30, 2024 and December 31, 2023 to be a Level 2 measurement. The estimated fair value of the 2030 Notes based on the closing trading price per $100, was $1,290 million and $1,236 million at September 30, 2024 and December 31, 2023, respectively.

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2030 Notes

In August 2020, we issued 1.40% fixed rate ten-year notes with an aggregate principal amount of $1.5 billion due on September 1, 2030 (the “2030 Notes”). The 2030 Notes were issued at 99.63% of principal and we incurred $13 million for debt issuance costs. The effective interest rate for the 2030 Notes was 1.53% and included interest payable, amortization of debt issuance cost and amortization of debt discount. Interest is payable semi-annually in arrears on March 1 and September 1 of each year, beginning on March 1, 2021, and the entire outstanding principal amount is due at maturity on September 1, 2030. The 2030 Notes are unsecured obligations and the indentures governing the 2030 Notes contain customary events of default and covenants that, among others and subject to exceptions, restrict our ability to incur or guarantee debt secured by liens on specified assets or enter into sale and lease-back transactions with respect to specified properties.

(11) Accumulated Other Comprehensive Income (Loss)

The following tables show the components of accumulated other comprehensive income (loss), net of tax, in the stockholders’ equity section of our condensed consolidated balance sheets (in millions):


	Unrealized Gains (Losses) on Derivative Instruments		Unrealized Gains (Losses) on Investments		Foreign Currency Translation Adjustment		Total

Balance as of December 31, 2023	$	—	$	(39)	$	2	$	(37)
Other comprehensive (loss) income before reclassifications	(27)		44		3		20
Amounts reclassified from accumulated other comprehensive loss	(3)		—		—		(3)
Net current period other comprehensive (loss) income	(30)		44		3		17
Balance as of September 30, 2024	$	(30)	$	5	$	5	$	(20)


	Unrealized Gains (Losses) on Derivative Instruments		Unrealized Gains (Losses) on Investments		Foreign Currency Translation Adjustment		Total

Balance as of December 31, 2022	$	—	$	(77)	$	(25)	$	(102)
Other comprehensive loss before reclassifications	—		(4)		(51)		(55)
Amounts reclassified from accumulated other comprehensive loss	—		—		—		—
Net current period other comprehensive loss	—		(4)		(51)		(55)
Balance as of September 30, 2023	$	—	$	(81)	$	(76)	$	(157)

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(12) Stockholders' Equity

Common Stock

We are authorized to issue a total of 600 million shares of common stock as of September 30, 2024. Holders of our common stock are not entitled to receive dividends unless declared by our board of directors. As of September 30, 2024, we had 206.3 million shares of common stock, net of treasury stock, outstanding and had reserved shares of common stock for future issuance as follows (in thousands):


			September 30, 2024
Stock plans:
Options outstanding			948
RSUs(1)			6,354
Shares of common stock available for future grants:
Amended and Restated 2021 Equity Incentive Plan(2)			9,579
Amended and Restated 2012 Employee Stock Purchase Plan(2)			8,119

Total shares of common stock reserved for future issuance			25,000

(1)Represents the number of shares issuable upon settlement of outstanding restricted stock units (“RSUs”) and performance-based RSUs (“PRSUs”), as discussed in Note 13.

(2)Refer to Note 13 for a description of these plans.

We issued a total of 2.1 million and 2.2 million shares for the nine months ended September 30, 2024 and 2023, respectively, from stock option exercises, vesting of RSUs, net of employee payroll taxes, and purchases from the employee stock purchase plan (“ESPP”).

Treasury Stock

In May 2023, our board of directors authorized a program to repurchase up to $1.5 billion of our common stock (the “Share Repurchase Program”). Under this new program, we may repurchase our common stock from time to time through open market purchases, in privately negotiated transactions, or by other means, including through the use of trading plans intended to qualify under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, in accordance with applicable securities laws and other restrictions. The Share Repurchase Program does not have a fixed expiration date, may be suspended or discontinued at any time, and does not obligate us to acquire any amount of common stock. The timing, manner, price, and amount of any repurchases will be determined by us at our discretion and will depend on a variety of factors, including business, economic and market conditions, prevailing stock prices, corporate and regulatory requirements, and other considerations.

During the three and nine months ended September 30, 2024, the Company repurchased 0.3 million and 0.5 million shares of its common stock for $225 million and $400 million, respectively. During the three and nine months ended September 30, 2023, the Company repurchased 0.5 million shares of its common stock for $282 million. All repurchases were made in open market transactions. Repurchases of common stock are recognized as treasury stock and held for future issuance. As of September 30, 2024, approximately $562 million of the originally authorized amount under the Share Repurchase Program remained available for future repurchases.

(13) Equity Awards

We currently have three equity incentive plans: 2012 Equity Incentive Plan (the “2012 Plan”), amended and restated 2021 Equity Incentive Plan (the “2021 Plan”) and 2022 New-Hire Equity Incentive Plan (the “2022 Plan”). The 2012 Plan was terminated in connection with the initial approval of the 2021 Plan on June 7, 2021 but continues to govern the terms of outstanding equity awards that were granted prior to the termination of the 2012 Plan. As of June 7, 2021, we no longer grant equity awards pursuant to the 2012 Plan. The 2021 Plan, as amended and restated, was approved by the shareholders on June 1, 2023 to increase shares available for future grants by approximately 10 million shares. Upon effectiveness of the 2021 Plan, as amended and restated, the 2022 Plan was terminated, and no additional awards under the 2022 Plan have been made since the amendment and restatement of the 2021 Plan. Outstanding equity awards under the 2022 Plan continue to be subject to the terms and conditions of the 2022 Plan.

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The 2021 Plan and the 2012 Plan provide for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, RSUs, performance-based stock awards and other forms of equity compensation (collectively, “equity awards”). The 2022 Plan permits the grant of any of the foregoing awards with the exception of incentive stock options. In addition, the 2022 Plan, the 2021 Plan and the 2012 Plan provide for the grant of performance cash awards. Incentive stock options may be granted only to employees. All other equity awards may be granted to employees, including officers, as well as directors and consultants.

Our Amended and Restated 2012 Employee Stock Purchase Plan (the “2012 ESPP”) authorizes the issuance of shares of common stock pursuant to purchase rights granted to our employees. The price at which common stock is purchased under the 2012 ESPP is equal to 85% of the fair market value of our common stock on the first or last day of the offering period, whichever is lower. Offering periods are six months long and begin on February 1 and August 1 of each year. The number of shares of common stock reserved for issuance will not be increased without shareholder approval.

Stock Options

A summary of stock option activity for the nine months ended September 30, 2024 was as follows:


	Number of Shares	Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value
	(in thousands)			(in years)	(in millions)
Outstanding at December 31, 2023	1,150	$	603.30

Exercised	(74)	$	327.00		$	34
Forfeited	(128)	$	645.02
Outstanding at September 30, 2024	948	$	619.04	6.8	$	261
Vested and expected to vest as of September 30, 2024	837	$	610.33	6.8	$	238
Vested and exercisable as of September 30, 2024	238	$	433.25	5.9	$	110

Aggregate intrinsic value represents the difference between the estimated fair value of our common stock and the exercise price of outstanding, in-the-money options.

The total fair value of stock options vested during the nine months ended September 30, 2024 was $41 million. No stock options were granted during the nine months ended September 30, 2024.

During the year ended December 31, 2021, a one-time long-term performance-based option award was granted to the Chief Executive Officer (“2021 CEO Performance Award”) and to certain executives (collectively “2021 Performance Awards”) under the 2021 Plan at a total grant date fair value of $232 million. The 2021 Performance Awards will vest in eight equal tranches based on service and achievement of both performance and market conditions, subject to continued employment and specifically for the 2021 CEO Performance Award, as CEO or Executive Chairman of the Company, through each vesting date. The performance and market conditions for a particular tranche may be achieved at different points in time and in any order but will become eligible to vest only when all service, performance and market conditions for the respective tranche are met but no earlier than two years from date of grant. The performance and market conditions must be achieved by September 30, 2026 (the “Performance Period”). The stock price metric will be achieved when both the 180-day volume weighted-average price (“VWAP”) and the 30-day VWAP equal or exceed the respective tranche stock price metric on any day during the Performance Period. The performance metric is achieved when the trailing four-quarter cumulative GAAP subscription revenues equal or exceed the respective tranche performance target. Shares acquired upon exercise of the options cannot be sold, transferred or disposed until after the end of the Performance Period and the 2021 Performance Awards will expire ten years from the respective date of grant. During the nine months ended September 30, 2024, the first tranche was vested based on the achievement of both the performance and market conditions.

The fair value of the 2021 Performance Awards and the corresponding derived service periods were estimated using the Monte Carlo simulation. Stock-based compensation expense is recognized on a graded vesting basis over the requisite service period for each respective tranche, but not shorter than the two-year minimum service period, and includes an assessment of when it is probable the performance condition will be achieved, which involves a subjective assessment of our future financial projections.

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As of September 30, 2024, total unrecognized compensation cost, adjusted for estimated forfeitures, related to unvested stock options was $10 million. The weighted-average remaining vesting period of unvested stock options at September 30, 2024 was approximately one year.

RSUs

A summary of RSU activity for the nine months ended September 30, 2024 was as follows:


	Number of Shares	Weighted-Average Grant-Date Fair Value Per Share
	(in thousands)
Outstanding at December 31, 2023	6,262	$	506.77
Granted	2,866	$	778.65
Vested	(2,309)	$	537.32
Forfeited	(465)	$	562.17
Outstanding at September 30, 2024	6,354	$	614.27
Expected to vest as of September 30, 2024	5,698

RSUs outstanding as of September 30, 2024 were comprised of 5.9 million RSUs with only service conditions and 0.5 million RSUs with both service and performance conditions, including certain RSUs with additional market conditions. The total intrinsic value of the RSUs vested was $1.8 billion for the nine months ended September 30, 2024. As of September 30, 2024, the aggregate intrinsic value of RSUs outstanding was $5.7 billion and RSUs expected to vest was $5.1 billion.

PRSUs have service, performance and market vesting criteria. The ultimate number of shares eligible to vest range from 0% to 200%, subject to our board of directors compensation committee’s approval of performance metrics achievement and, for certain PRSUs, total shareholder return relative to that of the S&P 500 index. The eligible shares subject to PRSUs granted during the nine months ended September 30, 2024 will vest in one to three years contingent on each holder’s continuous status as an employee on the applicable vesting dates. The number of PRSUs granted included in the table above reflects the shares that could be eligible to vest at 100% of target for PRSUs and includes adjustments for over or under achievement for PRSUs granted in the prior year. We recognized $106 million and $111 million of stock-based compensation, net of actual and estimated forfeitures, associated with PRSUs on a graded vesting basis during the nine months ended September 30, 2024 and 2023, respectively.

As of September 30, 2024, total unrecognized compensation cost, adjusted for estimated forfeitures, related to unvested RSUs was $3.1 billion, and the weighted-average remaining vesting period was approximately three years.

(14) Net Income Per Share

Basic net income per share attributable to common stockholders is computed by dividing net income attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. Diluted net income per share is computed by dividing net income attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period, adjusted for the effects of dilutive shares of common stock, which are comprised of outstanding stock options, RSUs and ESPP obligations. Stock awards with performance or market conditions are included in dilutive shares to the extent all conditions are met. The potentially dilutive shares of common stock are computed using the treasury stock method or the as-if converted method, as applicable. The effects of outstanding stock options, RSUs and ESPP obligations are excluded from the computation of diluted net income per share in periods in which the effect would be antidilutive.

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The following table presents the calculation of basic and diluted net income per share attributable to common stockholders (in millions, except for number of shares reflected in thousands and per share data):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Numerator:
Net income	$	432	$	242	$	1,041	$	1,436
Denominator:
Weighted-average shares outstanding - basic	206,158		204,464		205,639		203,961
Weighted-average effect of potentially dilutive securities:
Common stock options	131		122		138		118
RSUs	2,258		1,674		2,218		1,113
ESPP obligations	5		17		9		2






Weighted-average shares outstanding - diluted	208,552		206,277		208,004		205,194
Net income per share - basic	$	2.09	$	1.18	$	5.06	$	7.04
Net income per share - diluted	$	2.07	$	1.17	$	5.00	$	7.00
Common stock options, RSUs and ESPP obligations excluded from diluted net income per share because their effect would have been anti-dilutive	1,082		3,068		2,715		3,647

(15) Provision for (Benefit from) Income Taxes

We compute our provision for income taxes by applying the estimated annual effective tax rate to year-to-date income from recurring operations and adjust the provision for discrete tax items recorded in the period.

Our income tax provision was $84 million and $234 million for the three and nine months ended September 30, 2024, respectively. The income tax provision was primarily attributable to the mix of earnings and losses in countries with differing statutory tax rates, offset by excess tax benefits of stock-based compensation.

The income tax provision was $57 million for the three months ended September 30, 2023, and our income tax benefit was $775 million for the nine months ended September 30, 2023. The income tax provision was primarily attributable to the mix of earnings and losses in countries with differing statutory tax rates, tax deductible research and development costs and the valuation allowance release through the effective tax rate. The income tax benefit was primarily attributable to the release of the valuation allowance of certain U.S. federal and state deferred tax assets.

We regularly assess the need for a valuation allowance against our deferred tax assets. In making that assessment, we consider both positive and negative evidence related to the likelihood of realization of the deferred tax assets to determine, based on the weight of available evidence, whether it is more likely than not that some or all of the deferred tax assets will not be realized. As of June 30, 2023, we achieved cumulative U.S. income during the prior twelve quarters when considering pre-tax income adjusted for permanent differences and other comprehensive losses. Based on all available positive and negative evidence, having demonstrated sustained profitability which is objective and verifiable, and taking into account anticipated future earnings, we concluded it is more likely than not that our U.S. federal and state deferred tax assets will be realizable, with the exception of California. We released $985 million of our valuation allowance during the nine months ended September 30, 2023. As of September 30, 2024, we continue to maintain a valuation allowance against our California deferred tax assets due to the uncertainty regarding realizability of these deferred tax assets as they have not met the “more likely than not” realization criteria, particularly as we expect research and development tax credit generation to exceed our ability to use the credits in future years. We will continue to monitor the need for a valuation allowance against our deferred tax assets on a quarterly basis.

We are subject to taxation in the United States and foreign jurisdictions. As of September 30, 2024, our tax years 2004 to 2023 remain subject to examination in most jurisdictions.

Due to differing interpretations of tax laws and regulations, tax authorities may dispute our tax filing positions. We periodically evaluate our exposures associated with our tax filing positions and believe that adequate amounts have been reserved for adjustments that may result from tax examinations.

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(16) Commitments and Contingencies

Operating Leases

For some of our offices and data centers, we have entered into non-cancellable operating lease agreements with various expiration dates through 2035. Certain lease agreements include options to renew or terminate the lease, which are not reasonably certain to be exercised and therefore are not factored into our determination of lease payments.

Total operating lease costs were $33 million and $98 million for the three and nine months ended September 30, 2024, respectively, and $33 million and $96 million for the three and nine months ended September 30, 2023, respectively.

For each of the nine months ended September 30, 2024 and 2023, total cash paid for amounts included in the measurement of operating lease liabilities was $61 million. Operating lease liabilities arising from obtaining operating right-of-use assets totaled $21 million and $93 million for the nine months ended September 30, 2024 and 2023, respectively.

As of September 30, 2024, the weighted-average remaining lease term is approximately eight years, and the weighted-average discount rate is 4%.

Maturities of operating lease liabilities as of September 30, 2024 are presented in the table below (in millions):



Remainder of 2024	$	31
2025	135
2026	112
2027	97
2028	91
Thereafter	428
Total operating lease payments	894
Less: imputed interest	(138)
Present value of operating lease liabilities	$	756

In addition to the amounts above, as of September 30, 2024, we have one operating lease for office space that has not yet commenced with undiscounted cash flows of $50 million. This operating lease is expected to commence during 2025 with a lease term of ten years.

Other Commitments

Other contractual commitments primarily consist of data center and IT operations and sales and marketing activities related to our daily business operations. There were no material contractual obligations that were entered into during the nine months ended September 30, 2024 that were outside the ordinary course of business. We have entered into various non-cancellable agreements with cloud service providers, under which we have committed to spend an aggregate of $805 million through 2029 on cloud services.

In addition to the amounts above, the repayment of our 2030 Notes with an aggregate principal amount of $1.5 billion is due on September 1, 2030. Refer to Note 10 for further information regarding our 2030 Notes.

Further, $60 million of unrecognized tax benefits have been recorded as liabilities as of September 30, 2024.

Legal Proceedings

We are party to certain litigation and other legal proceedings. While legal proceedings are inherently unpredictable and subject to uncertainties, we do not believe the ultimate resolution of any such proceedings is likely to result in a material loss. We accrue for loss contingencies when it is both probable that we will incur the loss and when we can reasonably estimate the amount of the loss or range of loss.

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On July 5, 2022, InQuisient Inc. (“Plaintiff”) filed a complaint against ServiceNow, Inc. in the U.S. District Court for the District of Delaware, alleging the Now Platform’s use of relational databases infringes three of Plaintiff’s patents. Plaintiff is seeking injunctive relief and unspecified damages. The Company filed an answer denying Plaintiff’s allegations and asserts Plaintiff’s patents are, among other things, invalid, not infringed and otherwise unenforceable. A trial date has been set for January 27, 2025. While the Company continues to vigorously defend this matter, we cannot predict the outcome with any degree of certainty. We are unable to reasonably estimate the possible loss or range of loss, if any.

Any adverse determination related to intellectual property claims or other litigation could prevent us from offering our services and adversely affect our financial condition and results of operations. For additional information regarding intellectual property litigation, see “Risk Factors—Lawsuits by third parties that allege we infringe their intellectual property rights could harm our business and operating results” and “Risk Factors—Our intellectual property protections may not provide us with a competitive advantage, and defending our intellectual property may result in substantial expenses that harm our operating results” included in our Annual Report on Form 10-K for the year ended December 31, 2023.

Other

As previously disclosed, through its internal processes, the Company received a complaint that raised potential compliance issues related to one of its government contracts. The Company initiated an internal investigation, with the assistance of outside legal counsel, into the validity of these claims that concern the hiring of the Chief Information Officer of the U.S. Army as the Company’s Head of Global Public Sector in March 2023. As a result of the investigation, the Company’s Board of Directors determined that the Company’s President and Chief Operating Officer and the hired individual violated Company policy regarding a possible conflict relating to such individual’s hiring. On July 24, 2024, the Company and its President and Chief Operating Officer came to a mutual agreement that he would resign from all positions with the Company, effective immediately. The other individual also has departed the Company. The Company has informed the Department of Justice, the Department of Defense Office of Inspector General and the Army Suspension and Debarment Office of the investigation and is continuing to cooperate with the Department of Justice, which has commenced its own investigation into these matters. The Company cannot predict the timing, outcome or possible impact of the investigation.

Indemnification Provisions

Our agreements include provisions indemnifying customers against intellectual property and other third-party claims. In addition, we have entered into indemnification agreements with our directors, executive officers and certain other officers that will require us, among other things, to indemnify them against certain liabilities that may arise as a result of their affiliation with us. We have not incurred any costs as a result of such indemnification obligations and have not recorded any liabilities related to such obligations in the condensed consolidated financial statements.

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(17) Information about Geographic Areas and Products

Revenues by geographic area, based on the location of our users, were as follows for the periods presented (in millions):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
North America(1)	$	1,778	$	1,452	$	5,080	$	4,165
EMEA(2)	700		585		2,037		1,664
Asia Pacific and other	319		251		910		705
Total revenues	$	2,797	$	2,288	$	8,027	$	6,534

Property and equipment, net by geographic area were as follows (in millions):


	September 30, 2024		December 31, 2023
North America(3)	$	1,080	$	871
EMEA(2)	426		312
Asia Pacific and other	212		175
Total property and equipment, net	$	1,718	$	1,358

(1)Revenues attributed to the United States were 94% of North America revenues for each of the three and nine months ended September 30, 2024 and 2023.

(2)Europe, the Middle East and Africa (“EMEA”).

(3)Property and equipment, net attributed to the United States were 78% and 79% of property and equipment, net attributable to North America as of September 30, 2024 and December 31, 2023, respectively.

Subscription revenues consist of the following (in millions):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Digital workflow products	$	2,398	$	1,961	$	6,877	$	5,587
ITOM products	317		255		903		728
Total subscription revenues	$	2,715	$	2,216	$	7,780	$	6,315

Our digital workflow products include most of our product offerings and are generally priced on a per user basis. Our remaining product offerings, primarily comprised of our IT Operations Management (“ITOM”) products, are predominantly priced on a subscription unit basis.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition, results of operations and cash flows should be read in conjunction with the (1) unaudited condensed consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q, and (2) the audited consolidated financial statements and notes thereto and management’s discussion and analysis of financial condition and results of operations for the year ended December 31, 2023 included in the Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”), on January 25, 2024. This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements are often identified by the use of words such as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “could,” “estimate,” or “continue,” and similar expressions or variations. Forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to those identified herein, and those discussed in the section titled “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K filed with the SEC on January 25, 2024 and in Part II, Item 1A of our Quarterly Report on Form 10-Q filed with the SEC on July 25, 2024 and in our other SEC filings. We disclaim any obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.

Investors and others should note that we announce material financial information to our investors using our investor relations website (https://www.servicenow.com/company/investor-relations.html), SEC filings, press releases, public conference calls and webcasts. We use these channels, as well as social media, to communicate with our investors and the public about our Company, our services and other issues. It is possible that the information we post on social media could be deemed to be material information. Therefore, we encourage investors, the media and others interested in our Company to review the information we post on the social media channels listed on our investor relations website.

Our free cash flow measure included in the section entitled “Key Business Metrics—Free Cash Flow,” is not in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). This non-GAAP financial measure is not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP. This measure may be different from non-GAAP financial measures used by other companies, limiting its usefulness for comparison purposes. We encourage investors to carefully consider our results under GAAP, as well as our supplemental non-GAAP results, to more fully understand our business.

Overview

ServiceNow was founded on a simple premise: to make work flow better. Our purpose is to make the world work better for everyone. Our intelligent platform, the Now Platform, is a cloud-based solution with embedded artificial intelligence and machine learning capabilities that helps global enterprises across industries, universities and governments unify and digitize their workflows. The Now Platform automates workflows across an entire enterprise by connecting disparate departments, systems and silos in a seamless way to unlock productivity and improve experiences for both employees and customers. Our workflow applications built on the Now Platform are organized along four primary areas: Technology, Customer and Industry, Employee and Creator. The transformation to digital operations, enabled by the Now Platform, increases our customers’ resiliency and security and delivers great experiences and additional value to their C-suite, employees and consumers.

We are closely monitoring the Russian invasion of Ukraine and the current armed conflict in Israel and the Gaza Strip. While these events are still evolving and the outcomes remain highly uncertain, we do not believe these conflicts will have a material impact on our business and results of operations. However, if the conflicts continue or worsen, leading to greater global economic disruptions and uncertainty, our business and results of operations could be materially impacted. Our customers in these regions represented an immaterial portion of our net assets as of September 30, 2024 and December 31, 2023, and of our total consolidated revenues for each of the three and nine months ended September 30, 2024 and 2023.

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Additionally, other macroeconomic events, including higher interest rates, global inflation and bank failures, have led to economic uncertainty in the global economy. To mitigate risk, our cash and cash equivalents are distributed across several large financial institutions and are not concentrated in one financial institution. We have not experienced any impact to our liquidity or to our current and projected business operations and financial condition due to recent macroeconomic events. Further, we have policy restrictions on the types of securities that can be purchased as part of our available-for-sale debt securities portfolio. These restrictions take industry and company concentration limits into consideration among other things. Furthermore, the majority of our non-marketable equity investments do not have material relationships with any one financial institution, and therefore, we believe that our exposure to loss as a result of bank failure is immaterial. We will continue to monitor the direct and indirect impact of macroeconomic events on our business and financial results.

See the “Risk Factors” section in Part I, Item 1A of our Annual Report on Form 10-K filed with the SEC on January 25, 2024 for further discussion of the possible impact of conflicts and macroeconomic events on our business and financial results.

Key Business Metrics

Remaining performance obligations. Transaction price allocated to remaining performance obligations (“RPO”) represents contracted revenue that has not yet been recognized, which includes deferred revenue and non-cancellable amounts that will be invoiced and recognized as revenue in future periods. RPO excludes contracts that are billed in arrears, such as certain time and materials contracts, as we apply the “right to invoice” practical expedient under relevant accounting guidance. Current remaining performance obligations (“cRPO”) represents RPO that will be recognized as revenue in the next 12 months.

As of September 30, 2024, our RPO was $19.5 billion, of which 48% represented cRPO. RPO and cRPO increased by 36% and 26%, respectively, compared to September 30, 2023. Factors that may cause our RPO to vary from period to period include the following:

•Foreign currency exchange rates. While a majority of our contracts have historically been in U.S. Dollars, an increasing percentage of our contracts in recent periods has been in foreign currencies, particularly the Euro and British Pound Sterling. Fluctuations in foreign currency exchange rates as of the balance sheet date will cause variability in our RPO.

•Mix of offerings. In a minority of cases, we allow our customers to host our software by themselves or through a third-party service provider. In self-hosted offerings, we recognize a portion of the revenue upfront upon the delivery of the software and as a result, such revenue is excluded from RPO.

•Subscription start date. From time to time, we enter into contracts with a subscription start date in the future and these amounts are included in RPO if such contracts are signed by the balance sheet date.

•Timing of contract renewals. While customers typically renew their contracts at the end of the contract term, from time to time, customers may do so either before or after the scheduled expiration date. For example, in cases where we are successful in selling additional products or services to an existing customer, a customer may decide to renew its existing contract early to ensure that all its contracts expire on the same date. In other cases, prolonged negotiations or other factors may result in a contract not being renewed until after it has expired.

•Contract duration. While we typically enter into multi-year subscription services, the duration of our contracts varies. Further, we continue to see an increase in the number of 12-month agreements entered into with the U.S. federal government throughout the year, with the highest number of agreements entered into in the quarter ended September 30, driven primarily by timing of their annual budget expenditures. We sometimes also enter into contracts with durations that have a 12-month or shorter term to enable the contracts to co-terminate with the existing contract. The contract duration will cause variability in our RPO.

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Number of customers with ACV greater than $1 million. We count the total number of customers with annual contract value (“ACV”) greater than $1 million as of the end of the period. We had 2,020 and 1,772 customers with ACV greater than $1 million as of September 30, 2024 and 2023, respectively. For purposes of customer count, a customer is defined as an entity that has a unique Dunn & Bradstreet Global Ultimate (“GULT”) Data Universal Numbering System (“DUNS”) number and an active subscription contract as of the measurement date. The DUNS number is a global standard for business identification and tracking. We make exceptions for holding companies, government entities and other organizations for which the GULT, in our judgment, does not accurately represent the ServiceNow customer. For example, while all U.S. government agencies roll up to “Government of the United States” under the GULT, we count each government agency that we contract with as a separate customer. Our customer count is subject to adjustments for acquisitions, spin-offs and other market activity; accordingly, we restate previously disclosed number of customers with ACV greater than $1 million calculations to allow for comparability. ACV is calculated based on the foreign exchange rate in effect at the time the contract was signed. Foreign exchange rate fluctuations could cause some variability in the number of customers with ACV greater than $1 million. We believe information regarding the total number of customers with ACV greater than $1 million provides useful information to investors because it is an indicator of our growing customer base and demonstrates the value customers are receiving from the Now Platform.

Free cash flow. We define free cash flow, a non-GAAP financial measure, as GAAP net cash provided by operating activities plus cash outflows for legal settlements, repayments of convertible senior notes attributable to debt discount and business combination and other related costs including compensation expense, reduced by purchases of property and equipment. Purchases of property and equipment are otherwise included in cash used in investing activities under GAAP. We believe information regarding free cash flow provides useful information to investors because it is an indicator of the strength and performance of our business operations. However, our calculation of free cash flow may not be comparable to similar measures used by other companies. A calculation of free cash flow is provided below:


	Nine Months Ended September 30,				% Change
	2024		2023

	(dollars in millions)
Free cash flow:
Net cash provided by operating activities	$	2,632	$	1,793	47%
Purchases of property and equipment	(599)		(433)		38%
Business combination and other related costs	22		24		(8%)
Free cash flow	$	2,055	$	1,384	48%

We have historically seen higher collections in the quarter ended March 31 due to seasonality in timing of entering into customer contracts, which is significantly higher in the quarter ended December 31. Additionally, we have historically seen higher disbursements in the quarters ended March 31 and September 30 due to payouts under our annual commission plans, purchases under our employee stock purchase plan, payouts under our bonus plans and coupon payments related to our 2030 Notes.

Renewal rate. We calculate our renewal rate by subtracting our attrition rate from 100%. Our attrition rate for a period is equal to the ACV from customers lost during the period, divided by the sum of (i) the total ACV from all customers that renewed during the period, excluding changes in price or users, and (ii) the total ACV from all customers lost during the period. Accordingly, our renewal rate is calculated based on ACV and is not based on the number of customers that have renewed. Further, our renewal rate does not reflect increased or decreased purchases from our customers to the extent such customers are not lost customers or lapsed renewals. A lost customer is a customer that did not renew an expiring contract and that, in our judgment, will not be renewed. Typically, a customer that reduces its subscription upon renewal is not considered a lost customer. However, in instances where the subscription decrease represents the majority of the customer’s ACV, we may deem the renewal as a lost customer. For our renewal rate calculation, we define a customer as an entity with a separate production instance of our service and an active subscription contract as of the measurement date, instead of an entity with a unique GULT or DUNS number. We adjust our renewal rate for acquisitions, consolidations and other customer events that cause the merging of two or more accounts occurring at the time of renewal. Our renewal rate was 98% for each of the three and nine months ended September 30, 2024 and 2023. As our renewal rate is impacted by the timing of renewals, which could occur in advance of, or subsequent to the original contract end date, period-to-period comparison of renewal rates may not be meaningful.

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Components of Results of Operations

Revenues

Subscription revenues. Subscription revenues are primarily comprised of fees that give customers access to the ordered subscription service for both self-hosted offerings and cloud-based subscription offerings, and related standard and enhanced support and updates, if any, to the subscription service during the subscription term. For our cloud-based offerings, we recognize revenue ratably over the subscription term. For self-hosted offerings, a substantial portion of the sales price is recognized upon delivery of the software, which may cause greater variability in our subscription revenues and subscription gross margin. Pricing includes multiple instances, hosting and support services, data backup and disaster recovery services, as well as future updates, when and if available, offered during the subscription term. We typically invoice our customers for subscription fees in annual increments upon execution of the initial contract or subsequent renewal. Our contracts are generally non-cancellable during the subscription term, though a customer can terminate for breach if we materially fail to perform.

Professional services and other revenues. Our arrangements for professional services are primarily on a time-and-materials basis, and we generally invoice our customers monthly in arrears for the professional services based on actual hours and expenses incurred. Some of our professional services arrangements are on a fixed fee basis. Professional services revenues are recognized as services are delivered. Other revenues primarily consist of fees from customer training delivered on-site or through publicly available classes. Typical payment terms require our customers to pay us within 30 days of invoice.

We sell our subscription services primarily through our direct sales organization. We also sell services through managed service providers and resale partners. We also generate revenues from certain professional services and from training of customers and partner personnel, through both our direct team and indirect sales channel. Revenues from our direct sales organization represented 78% of our total revenues for each of the three and nine months ended September 30, 2024 and 79% of our total revenues for each of the three and nine months ended September 30, 2023. For purposes of calculating revenues from our direct sales organization, revenues from systems integrators and managed services providers are included as part of the direct sales organization.

Seasonality. We have historically experienced seasonality in terms of when we enter into customer agreements. We sign a significantly higher percentage of agreements with new customers, as well as expansion with existing customers, in the fourth quarter of each year. The increase in customer agreements for the fourth quarter is primarily a result of both large enterprise account buying patterns typical in the software industry, which are driven primarily by the expiration of annual authorized budgeted expenditures, and the terms of our commission plans, which incentivize our direct sales organization to meet their annual quotas by December 31. Furthermore, we usually sign a significant portion of these agreements during the last month, and often the last two weeks, of each quarter. This seasonality of entering into customer agreements is sometimes not immediately apparent in our revenues, due to the fact that we recognize subscription revenues from our cloud offering contracts over the term of the subscription agreement, which is generally 12 to 36 months. In addition, we continue to see an increase in the number of 12-month agreements entered into with the U.S. federal government throughout the year, with the highest number of agreements entered into in the third quarter driven primarily by the timing of their annual budget expenditures. This larger mix of contracts with 12-month renewal terms in the third quarter will generally cause variability in our RPO and cRPO in subsequent quarters until they are renewed. Although these seasonal factors may be common in the technology industry, historical patterns should not be considered a reliable indicator of our future sales activity or performance.

Cost of Revenues

Cost of subscription revenues. Cost of subscription revenues consists primarily of expenses related to hosting our services and providing support to our customers. These expenses are comprised of data center capacity costs, which include colocation costs associated with our data centers as well as interconnectivity between data centers, depreciation related to our infrastructure hardware equipment dedicated for customer use, amortization of intangible assets, expenses associated with software, public cloud service costs, IT services and dedicated customer support, personnel-related costs directly associated with data center operations and customer support, including salaries, benefits, bonuses and stock-based compensation and allocated overhead.

Cost of professional services and other revenues. Cost of professional services and other revenues consists primarily of personnel-related costs directly associated with our professional services and training departments, including salaries, benefits, bonuses and stock-based compensation, the costs of contracted third-party partners, travel expenses and allocated overhead.

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Professional services are performed directly by our services team, as well as by contracted third-party partners. Fees paid by us to third-party partners are primarily recognized as cost of revenues as the professional services are delivered. Cost of revenues associated with our professional services engagements contracted with third-party partners as a percentage of professional services and other revenues was 27% and 21% for the three and nine months ended September 30, 2024, respectively, and 10% for each of the three and nine months ended September 30, 2023.

Sales and Marketing

Sales and marketing expenses consist primarily of personnel-related expenses directly associated with our sales and marketing staff, including salaries, benefits, bonuses and stock-based compensation. Sales and marketing expenses also include the amortization of commissions paid to our sales employees, including related payroll taxes and fringe benefits. In addition, sales and marketing expenses include branding expenses, marketing program expenses, which include events such as Knowledge, and costs associated with purchasing advertising and marketing data, software and subscription services dedicated for sales and marketing use and allocated overhead.

Research and Development

Research and development expenses consist primarily of personnel-related expenses directly associated with our research and development staff, including salaries, benefits, bonuses, stock-based compensation and allocated overhead. Research and development expenses also include data center capacity costs, costs associated with outside services contracted for research and development purposes and depreciation of infrastructure hardware equipment that is used solely for research and development purposes.

General and Administrative

General and administrative expenses consist primarily of personnel-related expenses for our executive, finance, legal, human resources, facilities and administrative personnel, including salaries, benefits, bonuses, stock-based compensation, external legal, accounting and other professional services fees, other corporate expenses, amortization of intangible assets and allocated overhead.

Provision for (Benefit from) Income Taxes

Provision for (benefit from) income taxes consists of federal, state and foreign income taxes. Our income tax provision for the three and nine months ended September 30, 2024 is primarily attributable to the mix of earnings and losses in countries with differing statutory tax rates, offset by excess tax benefits of stock-based compensation. We continue to maintain a valuation allowance against our California deferred tax assets due to the uncertainty regarding realizability of these deferred tax assets as they have not met the “more likely than not” realization criteria, particularly as we expect research and development tax credit generation to exceed our ability to use the credits in future years.

Comparison of the Three and Nine Months Ended September 30, 2024 and 2023

Revenues


	Three Months Ended September 30,				% Change	Nine Months Ended September 30,				% Change
	2024		2023			2024		2023

	(dollars in millions)					(dollars in millions)
Revenues:
Subscription	$	2,715	$	2,216	23%	$	7,780	$	6,315	23%
Professional services and other	82		72		14%	247		219		13%
Total revenues	$	2,797	$	2,288	22%	$	8,027	$	6,534	23%
Percentage of revenues:
Subscription	97%		97%			97%		97%
Professional services and other	3%		3%			3%		3%
Total	100%		100%			100%		100%

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Subscription revenues increased by $499 million and $1,465 million for the three and nine months ended September 30, 2024, respectively, compared to the three and nine months ended September 30, 2023, primarily driven by increased purchases by new and existing customers. Included in subscription revenues is $81 million and $67 million of revenues recognized upfront from the delivery of software associated with self-hosted offerings during the three months ended September 30, 2024 and 2023, respectively, and $275 million and $210 million during the nine months ended September 30, 2024 and 2023, respectively.

We expect subscription revenues for the year ending December 31, 2024 to increase in absolute dollars and remain relatively flat as a percentage of revenue as we continue to add new customers and existing customers increase their usage of our products compared to the year ended December 31, 2023.

Our expectations for revenues, cost of revenues and operating expenses for the remainder of 2024 are based on the 30-day average of foreign exchange rates for September 30, 2024.

Subscription revenues consist of the following:


	Three Months Ended September 30,				% Change	Nine Months Ended September 30,				% Change
	2024		2023			2024		2023

	(dollars in millions)					(dollars in millions)
Digital workflow products	$	2,398	$	1,961	22%	$	6,877	$	5,587	23%
ITOM products	317		255		24%	903		728		24%
Total subscription revenues	$	2,715	$	2,216	23%	$	7,780	$	6,315	23%

Professional services and other revenues increased by $10 million and $28 million during the three and nine months ended September 30, 2024, respectively, compared to the three and nine months ended September 30, 2023, primarily due to an increase in services and trainings provided to new and existing customers.

We expect professional services and other revenues for the year ending December 31, 2024 to increase in absolute dollars and remain relatively flat as a percentage of revenue compared to the year ended December 31, 2023.

Cost of Revenues and Gross Profit Percentage


	Three Months Ended September 30,				% Change	Nine Months Ended September 30,				% Change
	2024		2023			2024		2023

	(dollars in millions)					(dollars in millions)
Cost of revenues:
Subscription	$	496	$	420	18%	$	1,406	$	1,163	21%
Professional services and other	88		76		16%	250		242		3%
Total cost of revenues	$	584	$	496	18%	$	1,656	$	1,405	18%
Gross profit (loss) percentage:
Subscription	82%		81%			82%		82%
Professional services and other	(7%)		(6%)			(1%)		(11%)
Total gross profit percentage	79%		78%			79%		79%
Gross profit	$	2,213	$	1,792		$	6,371	$	5,129

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Cost of subscription revenues increased by $76 million and $243 million for the three and nine months ended September 30, 2024, respectively, compared to the three and nine months ended September 30, 2023, primarily due to increased headcount and increased costs to support the growth of our subscription offerings including costs to support customers in regulated markets. Personnel-related costs, including stock-based compensation and overhead expenses, increased by $57 million and $172 million for the three and nine months ended September 30, 2024, respectively, compared to the three and nine months ended September 30, 2023. Expenses associated with software, maintenance, and other costs to support the expansion of our data center capacity increased by $19 million and $62 million for the three and nine months ended September 30, 2024, respectively, compared to the three and nine months ended September 30, 2023.

We expect our cost of subscription revenues for the year ending December 31, 2024 to increase in absolute dollars as we provide subscription services to more customers and increase usage within our customer instances but remain relatively flat as a percentage of revenue compared to the year ended December 31, 2023. We will continue to incur incremental costs to attract customers in regulated markets by adopting public cloud offerings as well as increased support for customers impacted by new and evolving data residency requirements. To the extent future acquisitions are consummated, our cost of subscription revenues may increase due to additional non-cash charges associated with the amortization of intangible assets acquired.

Our subscription gross profit percentage was 82% for each of the three and nine months ended September 30, 2024 and 81% and 82% for the three and nine months ended September 30, 2023, respectively. We expect our subscription gross profit percentage to remain relatively flat for the year ending December 31, 2024 compared to the year ended December 31, 2023.

Cost of professional services and other revenues increased by $12 million and $8 million for the three and nine months ended September 30, 2024, respectively, compared to the three and nine months ended September 30, 2023, primarily due to an increase in partner ecosystem investments to further accelerate customer value realization, partially offset by a decrease in fixed personnel-related costs including stock-based compensation due to decreased internal headcount.

Our professional services and other gross loss percentage increased to 7% for the three months ended September 30, 2024 compared to 6% for the three months ended September 30, 2023 primarily driven by an increase in partner ecosystem investments to further accelerate customer value realization. Professional services and other gross loss percentage improved to 1% for the nine months ended September 30, 2024 compared to 11% for the nine months ended September 30, 2023, primarily due to an increase in revenue and a decrease in fixed personnel-related costs including stock-based compensation, as we execute our strategy to shift a portion of professional services to variable spending with strategic third-party partners. We expect our professional services and other gross loss percentage to improve for the year ending December 31, 2024 compared to the year ended December 31, 2023.

Sales and Marketing


	Three Months Ended September 30,				% Change	Nine Months Ended September 30,				% Change
	2024		2023			2024		2023

	(dollars in millions)					(dollars in millions)
Sales and marketing	$	944	$	799	18%	$	2,827	$	2,454	15%
Percentage of revenues	34%		35%			35%		38%

Sales and marketing expenses increased by $145 million and $373 million for the three and nine months ended September 30, 2024, respectively, compared to the three and nine months ended September 30, 2023, primarily due to increased headcount resulting in an increase in personnel-related costs including stock-based compensation and overhead expenses of $89 million and $230 million for the three and nine months ended September 30, 2024, respectively, compared to the three and nine months ended September 30, 2023. Amortization expenses associated with deferred commissions increased $26 million and $68 million for the three and nine months ended September 30, 2024, respectively, compared to the three and nine months ended September 30, 2023, primarily due to an increase in contracts with new customers, expansion and renewal contracts. Other sales and marketing program expenses, which include branding, costs associated with purchasing advertising, marketing events and market data, increased by $21 million and $51 million for the three and nine months ended September 30, 2024, respectively, compared to the three and nine months ended September 30, 2023, primarily due to increased program costs and travel for our annual Sales Kickoff and Knowledge user conference.

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We expect sales and marketing expenses for the year ending December 31, 2024 to increase in absolute dollars and to decrease as a percentage of revenue compared to the year ended December 31, 2023, as we continue to see leverage from increased sales productivity and marketing efficiencies.

Research and Development


	Three Months Ended September 30,				% Change	Nine Months Ended September 30,				% Change
	2024		2023			2024		2023

	(dollars in millions)					(dollars in millions)
Research and development	$	626	$	549	14%	$	1,875	$	1,562	20%
Percentage of revenues	22%		24%			23%		24%

Research and development (“R&D”) expenses increased by $77 million and $313 million for the three and nine months ended September 30, 2024, respectively, compared to the three and nine months ended September 30, 2023, primarily due to increased headcount, resulting in an increase in personnel-related costs including stock-based compensation and overhead expenses of $68 million and $266 million for the three and nine months ended September 30, 2024, respectively, compared to the three and nine months ended September 30, 2023. Outside services increased $12 million and $33 million for the three and nine months ended September 30, 2024, respectively, compared to the three and nine months ended September 30, 2023. The remaining increase was primarily due to expenses associated with software, maintenance and other costs to support the expansion of our data center capacity of $5 million and $21 million for the three and nine months ended September 30, 2024, respectively, compared to the three and nine months ended September 30, 2023. These costs were partially offset by a decrease in program spend of $9 million and $11 million for the three and nine months ended September 30, 2024, respectively, compared to the three and nine months ended September 30, 2023.

We expect R&D expenses for the year ending December 31, 2024 to increase in absolute dollars but remain relatively flat as a percentage of revenue compared to the year ended December 31, 2023, as we continue to improve the existing functionality of our services, develop new applications to fill market needs and enhance our core platform.

General and Administrative


	Three Months Ended September 30,				% Change	Nine Months Ended September 30,				% Change
	2024		2023			2024		2023

	(dollars in millions)					(dollars in millions)
General and administrative	$	225	$	213	6%	$	679	$	621	9%
Percentage of revenues	8%		9%			8%		10%

General and administrative (“G&A”) expenses increased by $12 million and $58 million for the three and nine months ended September 30, 2024, respectively, compared to the three and nine months ended September 30, 2023, primarily due to increased headcount, resulting in an increase in personnel-related costs, excluding stock-based compensation, of $9 million and $27 million. The remaining increase was primarily due to an increase in other corporate expenses and outside services of $13 million and $50 million for the three and nine months ended September 30, 2024, respectively, compared to the three and nine months ended September 30, 2023. These costs were partially offset by a decrease in stock-based compensation of $11 million and $20 million for the three and nine months ended September 30, 2024, respectively, compared to the three and nine months ended September 30, 2023, primarily due to the requisite service period of certain performance awards being met.

We expect G&A expenses for the year ending December 31, 2024 to increase in absolute dollars but decrease slightly as a percentage of revenue compared to the year ended December 31, 2023, as we continue to see leverage from continued G&A productivity.

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Stock-based Compensation


	Three Months Ended September 30,				% Change	Nine Months Ended September 30,				% Change
	2024		2023			2024		2023

	(dollars in millions)					(dollars in millions)
Cost of revenues:
Subscription	$	64	$	52	23%	$	184	$	148	24%
Professional services and other	11		11		—%	35		40		(13%)
Operating expenses:
Sales and marketing	144		132		9%	419		378		11%
Research and development	150		150		—%	479		430		11%
General and administrative	57		68		(16%)	175		195		(10%)
Total stock-based compensation	$	426	$	413	3%	$	1,292	$	1,191	8%
Percentage of revenues	15%		18%			16%		18%

Stock-based compensation increased by $13 million and $101 million for the three and nine months ended September 30, 2024, respectively, compared to the three and nine months ended September 30, 2023, primarily due to additional grants to current and new employees, partially offset by the forfeiture of unvested stock-based awards of the Company’s former President and Chief Operating Officer and the requisite service period of certain performance awards being met.

Stock-based compensation is inherently difficult to forecast due to fluctuations in our stock price. Based upon our stock price as of September 30, 2024, we expect stock-based compensation to continue to increase in absolute dollars for the year ending December 31, 2024 as we continue to issue stock-based awards to our employees, but decrease as a percentage of revenue compared to the year ended December 31, 2023. We expect stock-based compensation as a percentage of revenue to decline over time as we continue to grow.

Foreign Currency Exchange

Our international operations have provided and will continue to provide a significant portion of our total revenues. Revenues outside North America represented 36% and 37% of total revenues for the three and nine months ended September 30, 2024, respectively, and 37% and 36% for the three and nine months ended September 30, 2023, respectively.

We primarily transact in certain foreign currencies for sales outside of the United States. The general weakening of the U.S. Dollar relative to certain major foreign currencies had an immaterial favorable impact on our revenues for the three and nine months ended September 30, 2024.

In addition, we primarily transact in several foreign currencies for cost of revenues and operating expenses outside of the United States. The movement of the U.S. Dollar had an immaterial impact on our expenses for the three and nine months ended September 30, 2024.

Interest Income


	Three Months Ended September 30,					% Change	Nine Months Ended September 30,					% Change
	2024			2023			2024			2023

	(dollars in millions)						(dollars in millions)
Interest income	$	108		$	82	32%	$	313		$	216	45%
Percentage of revenues	4		%	4%			4		%	3%

Interest income increased by $26 million and $97 million for the three and nine months ended September 30, 2024, respectively, compared to the three and nine months ended September 30, 2023, primarily driven by an increase in investment income from our managed portfolio resulting from higher portfolio balances and an increase in interest rates.

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Other Expense, net


	Three Months Ended September 30,				% Change	Nine Months Ended September 30,				% Change
	2024		2023			2024		2023
	(dollars in millions)					(dollars in millions)
Interest expense	$	(6)	$	(6)	—%	$	(18)	$	(18)	—%
Other	(4)		(8)		(50%)	(10)		(29)		(66%)
Other expense, net	$	(10)	$	(14)	(29%)	$	(28)	$	(47)	(40%)
Percentage of revenues	—%		(1%)			—%		(1)%

Other expense, net decreased by $4 million and $19 million for the three and nine months ended September 30, 2024, respectively, compared to the three and nine months ended September 30, 2023 primarily due to gains on equity investments.

To mitigate our risks associated with fluctuations in foreign currency exchange rates, we enter into foreign currency forward contracts with maturities of 12 months or less to hedge a portion of our net outstanding monetary assets and liabilities. These hedging contracts may reduce, but cannot entirely eliminate, the impact of adverse currency exchange rate movements. The gains (losses) recognized for these foreign currency forward contracts in other expense, net were immaterial for the three and nine months ended September 30, 2024 and 2023.

Provision for (Benefit from) Income Taxes


	Three Months Ended September 30,				% Change	Nine Months Ended September 30,				% Change
	2024		2023			2024		2023

	(dollars in millions)					(dollars in millions)
Income before income taxes	$	516	$	299	73%	$	1,275	$	661	93%
Provision for (benefit from) income taxes	$	84	$	57	47%	$	234	$	(775)	NM
Effective tax rate	16%		19%			18%		(117%)

NM - Not meaningful

The income tax provision was $84 million and $234 million for the three and nine months ended September 30, 2024, respectively. The income tax provision was primarily attributable to the mix of earnings and losses in countries with differing statutory tax rates, offset by excess tax benefits of stock-based compensation.

The income tax provision was $57 million for the three months ended September 30, 2023 and our income tax benefit was $775 million for the nine months ended September 30, 2023. The income tax provision was primarily attributable to the mix of earnings and losses in countries with differing statutory tax rates, tax deductible R&D costs and the valuation allowance release through the effective tax rate. The income tax benefit was primarily attributable to the release of the valuation allowance of certain U.S. federal and state deferred tax assets.

We regularly assess the need for a valuation allowance against our deferred tax assets. In making that assessment, we consider both positive and negative evidence related to the likelihood of realization of the deferred tax assets to determine, based on the weight of available evidence, whether it is more likely than not that some or all of the deferred tax assets will not be realized. As of June 30, 2023, we achieved cumulative U.S. income during the prior twelve quarters when considering pre-tax income adjusted for permanent differences and other comprehensive losses. Based on all available positive and negative evidence, having demonstrated sustained profitability which is objective and verifiable, and taking into account anticipated future earnings, we concluded it is more likely than not that our U.S. federal and state deferred tax assets will be realizable, with the exception of California. We released $985 million of our valuation allowance during the nine months ended September 30, 2023. As of September 30, 2024, we continue to maintain a valuation allowance against our California deferred tax assets due to the uncertainty regarding realizability of these deferred tax assets as they have not met the “more likely than not” realization criteria, particularly as we expect R&D tax credit generation to exceed our ability to use the credits in future years. We will continue to monitor the need for a valuation allowance against our deferred tax assets on a quarterly basis.

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Liquidity and Capital Resources

We generate cash inflows from operations primarily from selling subscription services which are generally paid in advance of provisioning services, and cash outflows to develop new services and core technologies that further enhance the Now Platform, engage our customer and enhance their experience, and enable and transform our business operations. Subscription services arrangements typically have a three-year duration, and we have experienced a renewal rate of 98% over the last three years. Cash outflows from operations are principally comprised of the salaries, bonuses, commissions, and benefits for our workforce, licenses and services arrangements that are integral to our business operations and data centers and operating lease arrangements that underlie our facilities. We have generated positive operating cash flows for more than ten years as we continue to grow our business in pursuit of our business strategy, and we expect to grow our business and generate positive cash flows from operations during 2024. When assessing sources of liquidity, we also include cash and cash equivalents, short-term investments and long-term investments totaling $9.1 billion as of September 30, 2024.

Our working capital requirements are principally comprised of non-contract workforce salaries, bonuses, commissions and benefits and, to a lesser extent, cancellable and non-cancellable licenses and services arrangements that are integral to our business operations and operating lease obligations. Operating lease obligations totaling $894 million are principally associated with leased facilities and have varying maturities with $529 million due over the next five years.

We may repurchase our shares of common stock in the open market, in privately negotiated transactions or by other means, with the objective to return value to our stockholders and manage the dilution from future employee equity grants and employee stock purchase programs. In May 2023, our board of directors authorized a program to repurchase up to $1.5 billion of our common stock. During the nine months ended September 30, 2024, the Company repurchased 0.5 million shares of its common stock for $400 million. All repurchases were made in open market transactions. Repurchases of common stock are recognized as treasury stock and held for future issuance. As of September 30, 2024, approximately $562 million of the originally authorized amount under the Share Repurchase Program remained available for future repurchases.

To grow our business, we also invest in capital and other resources to expand our data centers and enable our workforce, and we acquire technology and businesses to supplement our technology portfolio. Our capital expenditures are typically under cancellable arrangements primarily used to support the installed base and growth of our hosted business. We have also issued long-term debt to finance our business. In August 2020, we issued 1.40% fixed rate ten-year notes with an aggregate principal amount of $1.5 billion due on September 1, 2030 (the “2030 Notes”).

Our free cash flows, together with our other sources of liquidity, are available to service our liabilities as well as our cancellable and non-cancellable arrangements. We anticipate cash flows generated from operations, cash, cash equivalents and investments will be sufficient to meet our liquidity needs for at least the next 12 months. As we look beyond the next 12 months, we seek to continue to grow free cash flows necessary to fund our operations and grow our business. If we require additional capital resources, we may seek to finance our operations from the current funds available or additional equity or debt financing.


	Nine Months Ended September 30,
	2024		2023

	(dollars in millions)
Net cash provided by operating activities	$	2,632	$	1,793
Net cash used in investing activities	$	(1,763)	$	(1,723)
Net cash used in financing activities	$	(872)	$	(422)
Net decrease in cash, cash equivalents and restricted cash	$	(11)	$	(356)

Operating Activities

Net cash provided by operating activities was $2,632 million for the nine months ended September 30, 2024 compared to $1,793 million for the nine months ended September 30, 2023. The net increase in operating cash flows was primarily due to higher collections driven by revenue growth.

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Investing Activities

Net cash used in investing activities was $1,763 million for the nine months ended September 30, 2024 compared to $1,723 million for the nine months ended September 30, 2023. The net increase in cash used in investing activities was primarily due to a $166 million increase in purchases of property and equipment, a $93 million increase in purchases of non-marketable investments and a $27 million increase in purchases of other intangible assets, partially offset by a $197 million decrease in business combinations and a $9 million decrease in net purchases of investments.

Financing Activities

Net cash used in financing activities was $872 million for the nine months ended September 30, 2024 compared to $422 million for the nine months ended September 30, 2023. The net increase in cash used in financing activities was due to a $192 million increase in taxes paid related to net share settlement of equity awards, a $184 million increase in business combination related to the second installment payment in the acquisition of G2K Group GmbH and an increase in repurchases of common stock of $118 million, partially offset by a $44 million increase in proceeds from employee stock plans.

Critical Accounting Policies and Significant Judgments and Estimates

There have been no significant changes to our critical accounting policies and estimates as described in our Annual Report on Form 10-K for the year ended December 31, 2023, which was filed with the SEC on January 25, 2024.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Except for the cash flow hedging program initiated during the three months ended March 31, 2024 discussed below, there have been no other changes to our quantitative and qualitative disclosures set forth in Part II, Item 7A in our Annual Report on Form 10-K for the year ended December 31, 2023, which was filed with the SEC on January 25, 2024.

Foreign Currency Exchange Risk

To mitigate our risks associated with fluctuations in foreign currency exchange rates, we enter into foreign currency forward contracts to hedge a portion of our net outstanding monetary assets, liabilities and forecasted foreign currency denominated revenues. These foreign currency forward contracts are intended to offset gains or losses related to remeasuring monetary assets and liabilities and to reduce foreign exchange impact on our forecasted revenues. Derivative contracts related to hedging of forecasted revenues are designated as cash flow hedges for accounting purposes. For contracts qualifying as cash flow hedges, the derivative’s gain or loss is initially reported as a component of accumulated other comprehensive income (loss) and subsequently reclassified into earnings in the same period the forecasted transaction affects earnings. For contracts not designated as cash flow hedges for accounting purposes, the derivative’s gain or loss is recognized immediately in earnings within our condensed consolidated statements of comprehensive income.

These foreign currency forward contracts expose us to credit risk to the extent that the counterparties may be unable to meet the terms of the agreement. We mitigate this credit risk by transacting with major financial institutions with high credit ratings. While the contract or notional amount is often used to express the volume of foreign currency forward contracts, the amounts potentially subject to credit risk are generally limited to the amounts, if any, by which the counterparties’ obligations under the agreements exceed our obligations to the counterparties. We are not required to pledge, and are not entitled to receive, cash collateral related to these derivative instruments. We do not enter into foreign currency forward contracts for trading or speculative purposes. Refer to Note 8 in the notes to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for additional information.

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ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Regulations under the Exchange Act require public companies, including our Company, to maintain “disclosure controls and procedures,” which are defined in Rule 13a-15(e) and Rule 15d-15(e) to mean a company’s controls and other procedures that are designed to ensure that information required to be disclosed in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our principal executive officer and principal financial officer, or persons performing similar functions, as appropriate, to allow timely decisions regarding required or necessary disclosures. In designing and evaluating our disclosure controls and procedures, management recognizes that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. Our Chief Executive Officer and Chief Financial Officer have concluded, based on the evaluation of the effectiveness of the disclosure controls and procedures by our management as of September 30, 2024, that our disclosure controls and procedures were effective at the reasonable assurance level for this purpose.

Changes in Internal Control over Financial Reporting

There were no changes to our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended September 30, 2024 that have materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II

ITEM 1. LEGAL PROCEEDINGS

We are party to certain litigation and other legal proceedings. While legal proceedings are inherently unpredictable and subject to uncertainties, we do not believe that the ultimate resolution of any such proceedings, whether taken individually or in the aggregate, is likely to have a material adverse effect on our business, financial position, results of operations or cash flows.

For additional information regarding legal proceedings, see Note 16 in the notes to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q.

ITEM 1A. RISK FACTORS

The Company’s business, financial condition, results of operations and stock price can be affected by a number of factors, whether currently known or unknown, including those described under the section “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2023 and Part II, Item 1A of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2024. When any one or more of these risks materialize from time to time, the Company’s business, financial condition, results of operations and stock price can be materially adversely affected. There have been no material changes to the Company’s risk factors since our previous Quarterly Report on Form 10-Q.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Share repurchases of the Company’s common stock for the three months ended September 30, 2024 were as follows:


Issuer Purchases of Equity Securities				Total Number of Shares Purchased as Part of Publicly Announced Program (in thousands)	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program(1) (in millions)
Period	Total Number of Shares Purchased (in thousands)	Average Price Paid Per Share
July 1 - 31	26	$	807.21	26	$	767
August 1 - 31	189	817.88		189	$	612
September 1 - 30	57	876.56		57	$	562
Third Quarter 2024	272	$	829.16	272	$	562

(1) On May 16, 2023, the Board of Directors authorized a program to repurchase up to $1.5 billion of the Company’s common stock.

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ITEM 5. OTHER INFORMATION

Rule 10b5-1 Trading Plans

During the quarter ended September 30, 2024, the following directors and Section 16 officers adopted or terminated trading plans intended to satisfy the affirmative defense of Rule 10b5-1(c):

•Russell Elmer, our General Counsel, adopted a trading plan on August 13, 2024. The plan, which expires May 20, 2025, provides for the sale of 2,511 shares of our common stock during the plan period. The plan also provides for the sale of up to 100% of the net vested shares resulting from the vesting of 9,149 restricted stock units and performance stock units during the plan period and subject to certain vesting conditions. Net vested shares are net of tax withholding.

•Paul Smith, our Chief Commercial Officer, adopted a trading plan on August 13, 2024. The plan, which expires May 20, 2025, provides for the sale of 1,153 shares of our common stock during the plan period. The plan also provides for the sale of (i) up to 50% of the net vested shares resulting from the vesting of 10,757 restricted stock units and performance stock units, (ii) up to 15% of the gross vested shares resulting from the vesting of 1,019 restricted stock units and (iii) up to 100% of the net vested shares resulting from the vesting of 7,902 restricted stock units and performance stock units, in each case, during the plan period and subject to certain vesting conditions. Net vested shares are net of tax withholding.

•William R. McDermott, our Chief Executive Officer, adopted a trading plan on August 19, 2024. The plan, which expires August 7, 2025, provides for the sale of up to 21,972 shares of our common stock during the plan period. The plan also provides for the sale of up to 100% of the net vested shares resulting from the vesting of 15,892 restricted stock units and performance stock units during the plan period and subject to certain vesting conditions. Net vested shares are net of tax withholding.

•Anita Sands, a member of our board of directors, adopted a trading plan on August 26, 2024. The plan, which expires May 30, 2025, provides for the sale of (i) 2,229 shares of our common stock, (ii) up to 50% of the net vested shares from the vesting of 428 restricted stock units and (iii) up to 100% of the net vested shares resulting from the vesting of 214 restricted stock units, in each case, during the plan period and subject to certain vesting conditions.

•Paul Chamberlain, a member of our board of directors, adopted a trading plan on August 30, 2024. The plan, which expires August 30, 2025, provides for the sale of (i) 900 shares of our common stock and (ii) 100% of the net vested shares resulting from the vesting of 300 restricted stock units during the plan period and subject to certain vesting conditions.

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ITEM 6. EXHIBITS

EXHIBIT INDEX

Exhibit Number

Description of Document

Incorporated by Reference

Filed
Herewith

Form

File No.

Exhibit

Filing Date

3.1

Restated Certificate of Incorporation of Registrant, as amended

8-K

001-35580

3.1

6/9/2021

3.2

Restated Bylaws of Registrant

8-K

001-35580

3.2

6/9/2021

10.1*

Mutual Separation and Release Agreement dated July 24, 2024, between the Company and Chirantan J. ("CJ") Desai

8-K

001-35580

10.1

7/24/2024

31.1

Certification of Periodic Report by Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002

31.2

Certification of Periodic Report by Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002

32.1**

Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2**

Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS

Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH

Inline XBRL Taxonomy Extension Schema Document.

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document.

104

Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

* Indicates a management contract, compensatory plan or arrangement.

** The certifications on Exhibit 32 hereto are deemed not “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that Section. Such certifications will not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	SERVICENOW, INC.

Date: October 23, 2024	By:	/s/ William R. McDermott
		William R. McDermott
		Chief Executive Officer
		(Principal Executive Officer)

Date: October 23, 2024	By:	/s/ Gina Mastantuono
		Gina Mastantuono
		Chief Financial Officer
		(Principal Financial Officer)

Date: October 23, 2024	By:	/s/ Kevin McBride
		Kevin McBride
		Chief Accounting Officer
		(Principal Accounting Officer)

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Date	Price Target	Rating	Analyst
11/19/2024	$1230.00	Sector Outperform	Scotiabank
10/21/2024	$900.00 → $960.00	Overweight → Equal-Weight	Morgan Stanley
10/10/2024	$860.00 → $1025.00	Outperform	BMO Capital Markets
10/8/2024	$900.00 → $1055.00	Buy	UBS
7/8/2024	$640.00	Neutral → Sell	Guggenheim
4/25/2024	$850.00 → $830.00	Outperform	BMO Capital Markets
4/15/2024		Buy → Neutral	Guggenheim
3/21/2024	$1000.00	Overweight	KeyBanc Capital Markets

SEC Form 10-Q filed by ServiceNow Inc.

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