ServiceNow, Inc. (NYSE:NOW) announced the financial results for its first quarter 2016.
First Quarter 2016 Results:
- Total revenues of $305.9 million, an increase of 44% year-over-year.
- GAAP net loss of $333.3 million, or loss of $2.06 per basic and diluted share, compared to a GAAP net loss of $58.1 million, or loss of $0.38 per basic and diluted share, in the first quarter of 2015.
- Non-GAAP net income of $14.5 million, or income of $0.09 per basic and diluted share, compared to a non-GAAP net income of $2.5 million, or income of $0.02 per basic share and $0.01 per diluted share, in the first quarter of 2015 (see the table entitled “Results of Operations GAAP to Non-GAAP Reconciliation” for a reconciliation of these GAAP and non-GAAP financial measures).
- Billings were $376.7 million, an increase of 41% year-over-year (see the table entitled “Results of Operations GAAP to Non-GAAP Reconciliation” for a reconciliation of non-GAAP billings to GAAP revenues).
- Free cash flow was $67.1 million, or 22% of revenue (see the table entitled “Results of Operations GAAP to Non-GAAP Reconciliation” for a reconciliation of these GAAP and non-GAAP financial measures).
- Foreign exchange rate fluctuations did not significantly impact our actual year-over-year revenue or billings growth.
“We’re off to a strong start with our best first quarter ever,” said Frank Slootman, president and chief executive officer, ServiceNow. “Strong upsells and traction with our emerging products were two key growth vectors during the quarter.”
Financial Outlook
The financial guidance discussed below is on a non-GAAP basis, except for revenues, and excludes stock-based compensation expense, amortization of purchased intangibles, amortization of debt discount and issuance costs related to the convertible senior notes, legal settlement expense and business combination related expenses (see table which reconciles these non-GAAP financial measures to the related GAAP measures).
Based on foreign exchange rates at the end of the first quarter, we are not forecasting a significant impact to our expected year-over-year revenue or billings growth due to foreign exchange rate fluctuations.
For the second quarter of 2016, we expect:
- Subscription revenues between $284 and $286 million, representing year-over-year growth between 42% and 43%.
- Professional services and other revenues between $48 and $49 million, representing year-over-year growth between 4% and 6%.
- Total revenues between $332 and $335 million, representing year-over-year growth between 35% and 36%.
- Subscription billings between $330 and $335 million, representing year-over-year growth between 37% and 39%, and 43% and 45% in constant average billings duration.
- Professional services and other billings of $40 million, flat year-over-year.
- Total billings between $370 and $375 million, representing year-over-year growth between 31% and 33%, and 36% and 38% in constant average billings duration.
- Subscription gross margin of approximately 83%, professional services and other gross margin, excluding Knowledge16 revenue, of approximately 11%, and overall gross margin, excluding Knowledge16 revenue, of approximately 75%. We expect Knowledge16 revenue to be approximately $11 million.
ServiceNow, Inc. earnings per share showed a decreasing trend of -3.3% for the current fiscal year. The company’s expected EPS growth rate for next fiscal year is 103%.Analysts project EPS growth over the next 5 years at 45.85%. It has EPS annual decline over the past 5 fiscal years of 0% when sales grew 61.1. It reported 44.3% sales growth, and -436.7% EPS decline in the last quarter.
The stock is trading at $71.63, up 55.72% from 52-week low of $46. The stock trades down -21.53% from its peak of $91.28 and 15.45% above the consensus price target of $82.7. Its volume clocked up at 2.3 million shares which is higher than the average volume of 1.93 million shares. Its market capitalization currently stands at $11.52B.
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