☒
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Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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☐
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Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Delaware
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20-2056195
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification Number)
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Title of each class
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Trading Symbol
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Name of each exchange on which registered
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Common stock, par value $0.001 per share
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NOW
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The New York Stock Exchange
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Large Accelerated Filer
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☒
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Accelerated Filer
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☐
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Non-Accelerated Filer
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☐
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Smaller Reporting Company
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☐
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Emerging Growth Company
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☐
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Page
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Item 1
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Item 1A
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Item 1B
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Item 2
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Item 3
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Item 4
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Item 5
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Item 6
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Item 7
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Item 7A
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Item 8
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Item 9
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Item 9A
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Item 9B
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Item 10
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Item 11
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Item 12
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Item 13
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Item 14
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Item 15
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Item 16
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Index to Exhibits
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ITEM 1.
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BUSINESS
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ITEM 1A.
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RISK FACTORS
|
•
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large, well-established, enterprise application software vendors and large integrated systems vendors;
|
•
|
new entrants to the market developing technologies to solve similar problems in different ways;
|
•
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solutions developed in-house by our potential customers or using integrations with other tools;
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•
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vendors of infrastructure-as-a-service, platform-as-a-service and development operations; and
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•
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established and emerging cloud vendors.
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•
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In 2016, the European Union (the EU) adopted the General Data Protection Regulation (the GDPR), which took effect in May 2018 and established new requirements applicable to the handling of personal data. The particular obligations imposed by GDPR are subject to interpretation, and different regulators may interpret requirements inconsistently. Further, laws such as the EU’s proposed e-Privacy Regulation are increasingly aimed at the use of personal information , the tracking of individuals’ online activities and the “right to be forgotten,” requiring a company to delete certain information about individuals upon their request in certain circumstances.
|
•
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In January 2020, Britain exited the EU (Brexit). Although we do not believe Brexit will require us to alter our operations in any material way to comply with privacy regulations in the EU and the United Kingdom (the UK), Brexit has and may continue to cause uncertainty for our customers.
|
•
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In early 2020, the European Court of Justice is expected to give its ruling on a case regarding the validity of the Privacy Shield framework and the Standard Contractual Clauses (the SCCs), which are lawful transfer mechanisms for transferring personal data from the EU to the US (under the Privacy Shield framework) and other third countries deemed to have inadequate protection by the European Commission (under the SCCs). While we do not believe there will be any material impact to our business if the Privacy Shield is invalidated, there may be an impact to our ability to process personal data in certain jurisdictions where we operate if the SCCs are invalidated by the European Court of Justice.
|
•
|
In January 2020,the California Consumer Privacy Act (the CCPA) in the US took effect and broadly defines personal information and provides California consumers increased privacy rights and protections. The CCPA, among other things, affords California consumers new abilities to opt out of certain sales of personal information. Legislators have amended the CCPA since it passed in 2018 and implementing regulations are yet to be finalized by the California Attorney General. In addition, other nations and U.S. states and the federal government have discussed, are passing or may pass, future legislation similar to the GDPR and/or the CCPA, or with other data localization or sovereignty requirements.
|
•
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Both US and non-US governments are considering the use of artificial intelligence and machine learning in both consumer and business contexts and whether there is any need for regulation in these areas.
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•
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compliance with multiple, conflicting and changing governmental laws and regulations, including employment, tax, competition, requirements to have local partner(s), local entity ownership limitations, technology transfer or sharing requirements, data residency and transfer laws and regulations, privacy and data protection laws and regulations, including the GDPR;
|
•
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compliance by us and our business partners with international bribery and anti-corruption laws, including the UK Bribery Act and the U.S. Foreign Corrupt Practices Act of 1977, as amended (the FCPA);
|
•
|
the risk that illegal or unethical activities of our local employees or business partners will be attributed to or result in liability to us or damage to our reputation;
|
•
|
longer and potentially more complex sales and accounts receivable payment cycles and other collection difficulties;
|
•
|
tax treatment of revenues from international sources and changes to tax codes, including being subject to foreign tax laws and being liable for paying withholding, income or other taxes in foreign jurisdictions;
|
•
|
different pricing and distribution environments;
|
•
|
foreign currency fluctuations, which may cause transactional and translational remeasurement losses;
|
•
|
potential changes in international trade policies, tariffs, agreements and practices, including the adoption and expansion of formal or informal trade restrictions or regulatory frameworks favoring local competitors;
|
•
|
potential threatening state-sponsored actions, including cybersecurity threats directed at local data centers, customers or end-users;
|
•
|
local business practices and cultural norms that may favor local competitors; and
|
•
|
localization of our services, including translation into foreign languages and associated expenses.
|
•
|
assimilating or integrating the businesses, technologies, products, personnel or operations of the acquired companies;
|
•
|
failing to achieve the expected benefits of the acquisition or investment;
|
•
|
potential loss of key employees of the acquired company;
|
•
|
inability to maintain relationships with customers and partners of the acquired business;
|
•
|
potential adverse tax consequences;
|
•
|
disruption to our business and diversion of management attention and other resources;
|
•
|
potential financial and credit risks associated with acquired customers;
|
•
|
dependence on acquired technologies or licenses for which alternatives may not be available to us without significant cost or complexity;
|
•
|
in the case of foreign acquisitions, the challenges associated with integrating operations across different cultures and languages and any currency and regulatory risks associated with specific countries;
|
•
|
increased data privacy or security compliance requirements resulting from integrating the acquired technology or company with ours; and
|
•
|
potential unknown liabilities associated with the acquired businesses.
|
•
|
our ability to attract new customers, retain and increase sales to existing customers, and satisfy our customers’ requirements;
|
•
|
changes in our mix of products and services, including changes in our mix of cloud and self-hosted offerings, market penetration of our products, or use of our products by our customers;
|
•
|
our ability to increase sales of certain emerging products;
|
•
|
volatility in foreign currency exchange rates and our ability to effectively hedge our foreign currency exposure;
|
•
|
the rate of expansion, retention and productivity of our sales force;
|
•
|
the number of new employees added;
|
•
|
the cost, timing and management effort for our development of new products and services;
|
•
|
general economic conditions that may adversely affect our customers’ or a prospective customers’ purchasing decisions;
|
•
|
the amount and timing of operating costs and capital expenditures related to the operation and expansion of our business;
|
•
|
seasonality in terms of when we enter into customer agreements;
|
•
|
the length and complexity of the sales cycle and certification process for our services, especially for sales to larger enterprises, government and regulated organizations;
|
•
|
changes in the size and complexity of our customer relationships;
|
•
|
changes to our management, sales and account management teams as we scale and as a result of evolving business priorities;
|
•
|
changes in our or our competitors’ pricing policies;
|
•
|
significant security breaches, technical difficulties or interruptions of our services;
|
•
|
new solutions or products introduced by our competitors;
|
•
|
changes in effective tax rates;
|
•
|
changes in the average contract term of our customer agreements, timing of renewals, renewal rates, expansion within our existing customers and billings duration;
|
•
|
the timing of customer payments and payment defaults by customers;
|
•
|
extraordinary expenses such as litigation costs or damages, including settlement payments;
|
•
|
the costs associated with acquiring new businesses and technologies and the follow-on costs of integration, including the tax effects of acquisitions;
|
•
|
changes in laws or regulations impacting the delivery of our services;
|
•
|
our ability to comply with privacy laws and regulations, including the GDPR and the CCPA;
|
•
|
significant litigation or regulatory actions relating to claims of intellectual property infringement, violation of privacy laws, employment matters or any other significant matter;
|
•
|
the amount and timing of equity awards and the related financial statement expenses;
|
•
|
the impact of new accounting pronouncements; and
|
•
|
our ability to accurately estimate the total addressable market for our products and services.
|
•
|
changes in the estimates of our operating results or changes in recommendations by securities analysts that elect to cover our common stock;
|
•
|
announcements of new products, services or technologies, new applications or enhancements to services, strategic alliances, acquisitions, or other significant events by us or by our competitors;
|
•
|
fluctuations in the valuation of companies, such as high-growth or cloud companies, investors perceive to be comparable to us;
|
•
|
changes to our management team;
|
•
|
trading activity by directors, executive officers and significant stockholders, or the market’s perception that large stockholders intend to sell their shares;
|
•
|
the inclusion, exclusion, or deletion of our stock from any trading indices, such as the S&P 500 Index;
|
•
|
the size of our market float;
|
•
|
the volume of trading in our common stock, including sales upon exercise of outstanding options or vesting of equity awards or sales and purchases of any common stock issued upon conversion of the 2022 Notes or in connection with the 2022 Note Hedge and 2022 Warrant transactions;
|
•
|
the economy as a whole, market conditions in our industry, and the industries of our customers; and
|
•
|
overall performance of the equity markets.
|
•
|
establish a classified board so that not all members of our board are elected at one time;
|
•
|
permit the board to establish the number of directors;
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•
|
provide that directors may only be removed “for cause” and only with the approval of 66 2/3% of our shareholders;
|
•
|
require super-majority voting to amend some provisions in our certificate of incorporation and bylaws;
|
•
|
authorize the issuance of “blank check” preferred stock that our board could use to implement a shareholder rights plan;
|
•
|
do not permit our shareholders to call special meetings of shareholders;
|
•
|
prohibit shareholder action by written consent, which requires all shareholder actions to be taken at a meeting;
|
•
|
provide that the board is expressly authorized to make, alter or repeal our bylaws; and
|
•
|
establish advance notice requirements for nominations for election to our board or proposing matters that can be acted upon by shareholders at annual shareholder meetings (though our bylaws have shareholder proxy access).
|
ITEM 1B.
|
UNRESOLVED STAFF COMMENTS
|
ITEM 2.
|
PROPERTIES
|
ITEM 3.
|
LEGAL PROCEEDINGS
|
ITEM 4.
|
MINE SAFETY DISCLOSURES
|
ITEM 5.
|
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|
|
Base Period
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Dec 31, 2014
|
|
Dec 31, 2015
|
|
Dec 31, 2016
|
|
Dec 31, 2017
|
|
Dec 31, 2018
|
|
Dec 31, 2019
|
||||||||||||
ServiceNow, Inc.
|
$
|
100.00
|
|
|
$
|
127.58
|
|
|
$
|
109.57
|
|
|
$
|
192.17
|
|
|
$
|
262.42
|
|
|
$
|
416.09
|
|
NYSE Composite
|
100.00
|
|
|
95.91
|
|
|
107.36
|
|
|
127.46
|
|
|
116.06
|
|
|
145.66
|
|
||||||
S&P Systems Software
|
100.00
|
|
|
110.47
|
|
|
125.09
|
|
|
171.85
|
|
|
200.00
|
|
|
302.76
|
|
ITEM 6.
|
SELECTED CONSOLIDATED FINANCIAL DATA
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
(in thousands, except per share data)
|
||||||||||||||||||
Consolidated Statements of Comprehensive Income (Loss) Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Total revenues (1)
|
$
|
3,460,437
|
|
|
$
|
2,608,816
|
|
|
$
|
1,918,494
|
|
|
$
|
1,390,985
|
|
|
$
|
1,005,480
|
|
Net income (loss) (1) (2) (3)
|
$
|
626,698
|
|
|
$
|
(26,704
|
)
|
|
$
|
(116,846
|
)
|
|
$
|
(414,249
|
)
|
|
$
|
(198,426
|
)
|
Net income (loss) per share - basic (1) (2) (3)
|
$
|
3.36
|
|
|
$
|
(0.15
|
)
|
|
$
|
(0.68
|
)
|
|
$
|
(2.52
|
)
|
|
$
|
(1.27
|
)
|
Net income (loss) per share - diluted (1) (2) (3)
|
$
|
3.18
|
|
|
$
|
(0.15
|
)
|
|
$
|
(0.68
|
)
|
|
$
|
(2.52
|
)
|
|
$
|
(1.27
|
)
|
Weighted-average shares used to compute net income (loss) per share - basic
|
186,466
|
|
|
177,846
|
|
|
171,176
|
|
|
164,534
|
|
|
155,707
|
|
|||||
Weighted-average shares used to compute net income (loss) per share - diluted
|
197,223
|
|
|
177,846
|
|
|
171,176
|
|
|
164,534
|
|
|
155,707
|
|
(1)
|
The amounts for the years ended December 31, 2019, 2018, 2017 and 2016 reflect the impact of the full retrospective adoption of Topic 606. The amounts for the year ended December 31, 2015 do not reflect the adoption of Topic 606.
|
(2)
|
The amount for the year ended December 31, 2016 includes legal settlements expenses of $270.0 million.
|
(3)
|
The amounts for the year ended December 31, 2019 reflect the impact of an income tax benefit of $574.2 million from the release of the valuation allowance on the Irish deferred tax assets. Refer to Note 17 in the notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further details.
|
|
As of December 31,
|
||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Consolidated Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Total assets (1) (2)
|
$
|
6,022,430
|
|
|
$
|
3,879,140
|
|
|
$
|
3,550,245
|
|
|
$
|
2,033,767
|
|
|
$
|
1,807,052
|
|
Deferred revenue, current and non-current portion (1)
|
$
|
2,225,792
|
|
|
$
|
1,690,191
|
|
|
$
|
1,246,815
|
|
|
$
|
895,101
|
|
|
$
|
603,754
|
|
Convertible senior notes, net, non-current portion
|
$
|
694,981
|
|
|
$
|
661,707
|
|
|
$
|
630,018
|
|
|
$
|
507,812
|
|
|
$
|
474,534
|
|
(1)
|
The amounts as of December 31, 2019, 2018 and 2017 reflect the impact of the full retrospective adoption of Topic 606. The amounts as of December 31, 2016 and 2015 do not reflect the adoption of Topic 606.
|
(2)
|
The amount as of December 31, 2019 reflects the impact of the adoption of Topic 842. The amounts as of December 31, 2018, 2017, 2016 and 2015 do not reflect the adoption of Topic 842. Refer to Note 2 in the notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further details.
|
ITEM 7.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
•
|
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
|
•
|
Contract duration. While we typically enter into multi-year subscription services, the duration of our contracts varies. 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.
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
|
|
|
|
||||||
|
(in thousands)
|
||||||||||
Free cash flow:
|
|
|
|
|
|
||||||
Net cash provided by operating activities
|
$
|
1,235,972
|
|
|
$
|
811,089
|
|
|
$
|
642,940
|
|
Purchases of property and equipment
|
(264,892
|
)
|
|
(224,462
|
)
|
|
(150,510
|
)
|
|||
Free cash flow (1)
|
$
|
971,080
|
|
|
$
|
586,627
|
|
|
$
|
492,430
|
|
(1)
|
Free cash flow for the year ended December 31, 2018 includes the effect of $145.3 million relating to the repayments of convertible senior notes attributable to debt discount. Refer to Note 11 in the notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further details.
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
|
|
|
|
||||||
|
(dollars in thousands)
|
||||||||||
Billings:
|
|
|
|
|
|
||||||
Total revenues
|
$
|
3,460,437
|
|
|
$
|
2,608,816
|
|
|
$
|
1,918,494
|
|
Change in deferred revenue, unbilled receivables and customer deposits(1)
|
541,776
|
|
|
480,019
|
|
|
381,160
|
|
|||
Total billings
|
$
|
4,002,213
|
|
|
$
|
3,088,835
|
|
|
$
|
2,299,654
|
|
Year-over-year percentage change in total billings
|
30
|
%
|
|
34
|
%
|
|
37
|
%
|
(1)
|
As presented on or derived from our consolidated statements of cash flows.
|
•
|
Billings duration. While we typically bill customers annually for our subscription services, customers sometimes request, and we accommodate, billings with durations less than or greater than the typical 12-month term.
|
•
|
Contract start date. From time to time, we enter into contracts with a contract start date in the future, and we exclude these amounts from billings as these amounts are not included in our consolidated balance sheets, unless such amounts have been paid as of the balance sheet date.
|
•
|
Foreign currency exchange rates. While a majority of our billings have historically been in U.S. Dollars, an increasing percentage of our billings in recent periods has been in foreign currencies, particularly the Euro and British Pound Sterling.
|
•
|
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.
|
|
Year Ended December 31,
|
|
% Change
|
|||||||
|
2019
|
|
2018
|
|
||||||
|
|
|
|
|
|
|||||
|
(dollars in thousands)
|
|
|
|||||||
Revenues:
|
|
|
|
|
|
|||||
Subscription
|
$
|
3,255,079
|
|
|
$
|
2,421,313
|
|
|
34
|
%
|
Professional services and other
|
205,358
|
|
|
187,503
|
|
|
10
|
%
|
||
Total revenues
|
$
|
3,460,437
|
|
|
$
|
2,608,816
|
|
|
33
|
%
|
Percentage of revenues:
|
|
|
|
|
|
|||||
Subscription
|
94
|
%
|
|
93
|
%
|
|
|
|||
Professional services and other
|
6
|
%
|
|
7
|
%
|
|
|
|||
Total
|
100
|
%
|
|
100
|
%
|
|
|
|
Year Ended December 31,
|
|
% Change
|
|||||||
|
2019
|
|
2018
|
|
||||||
|
|
|
|
|
|
|||||
|
(dollars in thousands)
|
|
|
|||||||
Digital workflow products(1)
|
$
|
2,810,887
|
|
|
$
|
2,111,702
|
|
|
33
|
%
|
ITOM products(1)
|
444,192
|
|
|
309,611
|
|
|
43
|
%
|
||
Total subscription revenues
|
$
|
3,255,079
|
|
|
$
|
2,421,313
|
|
|
34
|
%
|
(1)
|
As we have expanded the scope of IntegrationHub (formerly included within our ITOM offering) beyond ITOM to align more closely with our broader platform offering, revenues associated with IntegrationHub have been reclassified from ITOM products to platform, which is part of our digital workflow products. Revenues reclassified from ITOM product revenues to digital workflow products revenues were $60.9 million and $44.4 million for the years ended December 31, 2018 and 2017, respectively. These reclassifications did not result in a restatement of prior period financial statements.
|
|
Year Ended December 31,
|
|
% Change
|
|||||||
|
2019
|
|
2018
|
|
||||||
|
|
|
|
|
|
|||||
|
(dollars in thousands)
|
|
|
|||||||
Cost of revenues:
|
|
|
|
|
|
|||||
Subscription
|
$
|
549,642
|
|
|
$
|
417,421
|
|
|
32
|
%
|
Professional services and other
|
247,003
|
|
|
205,237
|
|
|
20
|
%
|
||
Total cost of revenues
|
$
|
796,645
|
|
|
$
|
622,658
|
|
|
28
|
%
|
Gross profit percentage:
|
|
|
|
|
|
|||||
Subscription
|
83
|
%
|
|
83
|
%
|
|
|
|||
Professional services and other
|
(20
|
%)
|
|
(9
|
%)
|
|
|
|||
Total gross profit percentage
|
77
|
%
|
|
76
|
%
|
|
|
|||
Gross profit:
|
$
|
2,663,792
|
|
|
$
|
1,986,158
|
|
|
34
|
%
|
|
Year Ended December 31
|
|
% Change
|
|||||||
|
2019
|
|
2018
|
|
||||||
|
|
|
|
|
|
|||||
|
(dollars in thousands)
|
|
|
|||||||
Sales and marketing
|
$
|
1,534,284
|
|
|
$
|
1,203,056
|
|
|
28
|
%
|
Percentage of revenues
|
44
|
%
|
|
46
|
%
|
|
|
|
Year Ended December 31
|
|
% Change
|
|||||||
|
2019
|
|
2018
|
|
||||||
|
|
|
|
|
|
|||||
|
(dollars in thousands)
|
|
|
|||||||
Research and development
|
$
|
748,369
|
|
|
$
|
529,501
|
|
|
41
|
%
|
Percentage of revenues
|
22
|
%
|
|
20
|
%
|
|
|
|
Year Ended December 31
|
|
% Change
|
|||||||
|
2019
|
|
2018
|
|
||||||
|
|
|
|
|
|
|||||
|
(dollars in thousands)
|
|
|
|||||||
General and administrative
|
$
|
339,016
|
|
|
$
|
296,027
|
|
|
15
|
%
|
Percentage of revenues
|
10
|
%
|
|
12
|
%
|
|
|
|
Year Ended December 31
|
|
% Change
|
|||||||
|
2019
|
|
2018
|
|
||||||
|
|
|
|
|
|
|||||
|
(dollars in thousands)
|
|
|
|||||||
Cost of revenues:
|
|
|
|
|
|
|||||
Subscription
|
$
|
72,728
|
|
|
$
|
48,738
|
|
|
49
|
%
|
Professional services and other
|
43,123
|
|
|
32,816
|
|
|
31
|
%
|
||
Sales and marketing
|
268,408
|
|
|
228,045
|
|
|
18
|
%
|
||
Research and development
|
194,821
|
|
|
135,203
|
|
|
44
|
%
|
||
General and administrative
|
83,115
|
|
|
99,151
|
|
|
(16
|
%)
|
||
Total stock-based compensation
|
$
|
662,195
|
|
|
$
|
543,953
|
|
|
22
|
%
|
Percentage of revenues
|
19
|
%
|
|
21
|
%
|
|
|
|
Year Ended December 31
|
|
% Change
|
|||||||
|
2019
|
|
2018
|
|
||||||
|
|
|
|
|
|
|||||
|
(dollars in thousands)
|
|
|
|||||||
Interest expense
|
$
|
(33,283
|
)
|
|
$
|
(52,733
|
)
|
|
(37
|
%)
|
Percentage of revenues
|
(1
|
%)
|
|
(2
|
%)
|
|
|
|
Year Ended December 31
|
|
% Change
|
|||||||
|
2019
|
|
2018
|
|
||||||
|
|
|
|
|
|
|||||
|
(dollars in thousands)
|
|
|
|||||||
Interest income
|
$
|
55,409
|
|
|
$
|
34,624
|
|
|
60
|
%
|
Foreign currency exchange gain (loss), net of derivative contracts
|
(594
|
)
|
|
6,632
|
|
|
NM
|
|
||
Realized gain on marketable equity securities
|
—
|
|
|
19,257
|
|
|
(100
|
%)
|
||
Loss on early note conversions
|
—
|
|
|
(4,063
|
)
|
|
100
|
%
|
||
Other
|
3,530
|
|
|
(314
|
)
|
|
NM
|
|
||
Interest income and other income (expense), net
|
$
|
58,345
|
|
|
$
|
56,135
|
|
|
4
|
%
|
|
Year Ended December 31
|
|
% Change
|
||||||
|
2019
|
|
2018
|
|
|||||
|
|
|
|
|
|
||||
|
(dollars in thousands)
|
|
|
||||||
Income (loss) before income taxes
|
$
|
67,185
|
|
|
$
|
(39,024
|
)
|
|
NM
|
Benefit from income taxes
|
(559,513
|
)
|
|
(12,320
|
)
|
|
NM
|
||
Effective tax rate
|
(833
|
%)
|
|
32
|
%
|
|
|
|
For the Three Months Ended
|
||||||||||||||||||||||||||||||
|
December 31, 2019
|
|
September 30, 2019
|
|
June 30, 2019
|
|
March 31, 2019
|
|
December 31, 2018
|
|
September 30, 2018
|
|
June 30, 2018
|
|
March 31, 2018
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
(in thousands, except per share data)
|
||||||||||||||||||||||||||||||
Total revenues
|
$
|
951,774
|
|
|
$
|
885,833
|
|
|
$
|
833,904
|
|
|
$
|
788,926
|
|
|
$
|
715,441
|
|
|
$
|
673,097
|
|
|
$
|
631,056
|
|
|
$
|
589,222
|
|
Gross profit
|
$
|
740,321
|
|
|
$
|
685,040
|
|
|
$
|
635,757
|
|
|
$
|
602,674
|
|
|
$
|
547,279
|
|
|
$
|
515,239
|
|
|
$
|
477,891
|
|
|
$
|
445,749
|
|
Net income (loss)(1)
|
$
|
598,724
|
|
|
$
|
40,598
|
|
|
$
|
(11,079
|
)
|
|
$
|
(1,545
|
)
|
|
$
|
7,015
|
|
|
$
|
8,405
|
|
|
$
|
(52,746
|
)
|
|
$
|
10,622
|
|
Net income (loss) per share - basic(1)
|
$
|
3.17
|
|
|
$
|
0.22
|
|
|
$
|
(0.06
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
0.04
|
|
|
$
|
0.05
|
|
|
$
|
(0.30
|
)
|
|
$
|
0.06
|
|
Net income (loss) per share - diluted(1)
|
$
|
3.03
|
|
|
$
|
0.21
|
|
|
$
|
(0.06
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
0.04
|
|
|
$
|
0.04
|
|
|
$
|
(0.30
|
)
|
|
$
|
0.06
|
|
Weighted-average shares used to compute net income (loss) per share - basic
|
189,042
|
|
|
188,074
|
|
|
186,678
|
|
|
182,062
|
|
|
179,764
|
|
|
178,720
|
|
|
177,343
|
|
|
175,483
|
|
||||||||
Weighted-average shares used to compute net income (loss) per share - diluted
|
197,843
|
|
|
197,878
|
|
|
186,678
|
|
|
182,062
|
|
|
190,662
|
|
|
192,191
|
|
|
177,343
|
|
|
190,250
|
|
(1)
|
The amounts for the three months ended December 31, 2019 reflect the impact of an income tax benefit of $574.2 million from the release of the valuation allowance on the Irish deferred tax assets. Refer to Note 17 in the notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further details.
|
|
Year Ended December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
|
|
|
||||
|
(in thousands)
|
||||||
Net cash provided by operating activities
|
$
|
1,235,972
|
|
|
$
|
811,089
|
|
Net cash used in investing activities
|
(724,477
|
)
|
|
(347,422
|
)
|
||
Net cash used in financing activities
|
(301,856
|
)
|
|
(607,428
|
)
|
||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
209,453
|
|
|
(159,291
|
)
|
|
Payments Due by Period
|
||||||||||||||||||
|
Total
|
|
Less
Than
1 Year
|
|
1 – 3
Years
|
|
3 – 5
Years
|
|
More
Than
5 Years
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Operating leases, including imputed interest (1)
|
$
|
530,699
|
|
|
$
|
67,629
|
|
|
$
|
128,688
|
|
|
$
|
103,777
|
|
|
$
|
230,605
|
|
Purchase obligations (2)
|
180,239
|
|
|
70,819
|
|
|
95,022
|
|
|
11,768
|
|
|
2,630
|
|
|||||
Principal amount payable on our convertible senior notes (3)
|
782,491
|
|
|
—
|
|
|
782,491
|
|
|
—
|
|
|
—
|
|
|||||
Total contractual obligations
|
$
|
1,493,429
|
|
|
$
|
138,448
|
|
|
$
|
1,006,201
|
|
|
$
|
115,545
|
|
|
$
|
233,235
|
|
(1)
|
Consists of future non-cancelable minimum rental payments under operating leases for some of our offices and data centers.
|
(2)
|
Consists of future minimum payments under non-cancelable purchase commitments related to our daily business operations. Not included in the table above are certain purchase commitments related to our future annual Knowledge user conferences and other customer or sales conferences to be held in 2021 and future years. If we were to cancel these contractual commitments as of December 31, 2019, we would have been obligated to pay cancellation penalties of approximately $16.3 million in aggregate.
|
(3)
|
For additional information regarding our convertible senior notes, refer to Note 11 in the notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
|
•
|
Identification of the contract, or contracts, with a customer;
|
•
|
Identification of the performance obligations in the contract;
|
•
|
Determination of the transaction price;
|
•
|
Allocation of the transaction price to the performance obligations in the contract; and
|
•
|
Recognition of revenue when, or as, we satisfy a performance obligation.
|
ITEM 7A.
|
QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 8.
|
CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
|
Page
|
|
|
Consolidated Financial Statements
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
775,778
|
|
|
$
|
566,204
|
|
Short-term investments
|
915,317
|
|
|
931,718
|
|
||
Accounts receivable, net
|
835,279
|
|
|
574,810
|
|
||
Current portion of deferred commissions
|
175,039
|
|
|
139,890
|
|
||
Prepaid expenses and other current assets
|
125,488
|
|
|
132,071
|
|
||
Total current assets
|
2,826,901
|
|
|
2,344,693
|
|
||
Deferred commissions, less current portion
|
333,448
|
|
|
282,490
|
|
||
Long-term investments
|
1,013,332
|
|
|
581,856
|
|
||
Property and equipment, net(1)
|
468,085
|
|
|
347,216
|
|
||
Operating lease right-of-use assets(1)
|
402,428
|
|
|
—
|
|
||
Intangible assets, net
|
143,850
|
|
|
100,582
|
|
||
Goodwill
|
156,756
|
|
|
148,845
|
|
||
Deferred tax assets
|
599,633
|
|
|
20,642
|
|
||
Other assets
|
77,997
|
|
|
52,816
|
|
||
Total assets
|
$
|
6,022,430
|
|
|
$
|
3,879,140
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
52,960
|
|
|
$
|
30,733
|
|
Accrued expenses and other current liabilities(1)
|
461,403
|
|
|
330,246
|
|
||
Current portion of deferred revenue
|
2,185,754
|
|
|
1,651,594
|
|
||
Current portion of operating lease liabilities(1)
|
52,668
|
|
|
—
|
|
||
Total current liabilities
|
2,752,785
|
|
|
2,012,573
|
|
||
Deferred revenue, less current portion
|
40,038
|
|
|
38,597
|
|
||
Operating lease liabilities, less current portion(1)
|
383,221
|
|
|
—
|
|
||
Convertible senior notes, net
|
694,981
|
|
|
661,707
|
|
||
Other long-term liabilities(1)
|
23,464
|
|
|
55,064
|
|
||
Total liabilities
|
3,894,489
|
|
|
2,767,941
|
|
||
Commitments and contingencies
|
|
|
|
|
|||
Stockholders’ equity:
|
|
|
|
||||
Preferred stock, $0.001 par value; 10,000 shares authorized; no shares issued or outstanding
|
—
|
|
|
—
|
|
||
Common stock $0.001 par value; 600,000 shares authorized; 189,461 and 180,175 shares issued and outstanding at December 31, 2019 and 2018, respectively
|
189
|
|
|
180
|
|
||
Additional paid-in capital
|
2,454,741
|
|
|
2,093,834
|
|
||
Accumulated other comprehensive income (loss)
|
25,255
|
|
|
(4,035
|
)
|
||
Accumulated deficit(1)
|
(352,244
|
)
|
|
(978,780
|
)
|
||
Total stockholders’ equity
|
2,127,941
|
|
|
1,111,199
|
|
||
Total liabilities and stockholders’ equity
|
$
|
6,022,430
|
|
|
$
|
3,879,140
|
|
(1)
|
We adopted Topic 842 using the modified retrospective method as of January 1, 2019 and elected the transition option that allows us not to restate the comparative periods in our consolidated financial statements in the year of adoption. Refer to Note 2 for further details.
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Revenues:
|
|
|
|
|
|
||||||
Subscription
|
$
|
3,255,079
|
|
|
$
|
2,421,313
|
|
|
$
|
1,739,500
|
|
Professional services and other
|
205,358
|
|
|
187,503
|
|
|
178,994
|
|
|||
Total revenues
|
3,460,437
|
|
|
2,608,816
|
|
|
1,918,494
|
|
|||
Cost of revenues (1):
|
|
|
|
|
|
||||||
Subscription
|
549,642
|
|
|
417,421
|
|
|
315,570
|
|
|||
Professional services and other
|
247,003
|
|
|
205,237
|
|
|
184,292
|
|
|||
Total cost of revenues
|
796,645
|
|
|
622,658
|
|
|
499,862
|
|
|||
Gross profit
|
2,663,792
|
|
|
1,986,158
|
|
|
1,418,632
|
|
|||
Operating expenses (1):
|
|
|
|
|
|
||||||
Sales and marketing
|
1,534,284
|
|
|
1,203,056
|
|
|
894,977
|
|
|||
Research and development
|
748,369
|
|
|
529,501
|
|
|
377,518
|
|
|||
General and administrative
|
339,016
|
|
|
296,027
|
|
|
210,533
|
|
|||
Total operating expenses
|
2,621,669
|
|
|
2,028,584
|
|
|
1,483,028
|
|
|||
Income (loss) from operations
|
42,123
|
|
|
(42,426
|
)
|
|
(64,396
|
)
|
|||
Interest expense
|
(33,283
|
)
|
|
(52,733
|
)
|
|
(53,394
|
)
|
|||
Interest income and other income (expense), net
|
58,345
|
|
|
56,135
|
|
|
4,384
|
|
|||
Income (loss) before income taxes
|
67,185
|
|
|
(39,024
|
)
|
|
(113,406
|
)
|
|||
(Benefit from) provision for income taxes
|
(559,513
|
)
|
|
(12,320
|
)
|
|
3,440
|
|
|||
Net income (loss)
|
$
|
626,698
|
|
|
$
|
(26,704
|
)
|
|
$
|
(116,846
|
)
|
Net income (loss) per share - basic
|
$
|
3.36
|
|
|
$
|
(0.15
|
)
|
|
$
|
(0.68
|
)
|
Net income (loss) per share - diluted
|
$
|
3.18
|
|
|
$
|
(0.15
|
)
|
|
$
|
(0.68
|
)
|
Weighted-average shares used to compute net income (loss) per share - basic
|
186,466
|
|
|
177,846
|
|
|
171,176
|
|
|||
Weighted-average shares used to compute net income (loss) per share - diluted
|
197,223
|
|
|
177,846
|
|
|
171,176
|
|
|||
Other comprehensive income (loss):
|
|
|
|
|
|
||||||
Foreign currency translation adjustments
|
$
|
20,539
|
|
|
$
|
(1,903
|
)
|
|
$
|
23,064
|
|
Unrealized gains (losses) on investments, net of tax
|
8,751
|
|
|
(665
|
)
|
|
5,376
|
|
|||
Other comprehensive income (loss)
|
29,290
|
|
|
(2,568
|
)
|
|
28,440
|
|
|||
Comprehensive income (loss)
|
$
|
655,988
|
|
|
$
|
(29,272
|
)
|
|
$
|
(88,406
|
)
|
(1)
|
Includes stock-based compensation as follows:
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Cost of revenues:
|
|
|
|
|
|
||||||
Subscription
|
$
|
72,728
|
|
|
$
|
48,738
|
|
|
$
|
35,334
|
|
Professional services and other
|
43,123
|
|
|
32,816
|
|
|
27,401
|
|
|||
Sales and marketing
|
268,408
|
|
|
228,045
|
|
|
170,527
|
|
|||
Research and development
|
194,821
|
|
|
135,203
|
|
|
92,025
|
|
|||
General and administrative
|
83,115
|
|
|
99,151
|
|
|
68,717
|
|
|
Common Stock
|
|
Additional
Paid-in
Capital
|
|
Accumulated
Deficit
|
|
Accumulated
Other
Comprehensive Income (Loss)
|
|
Total
Stockholders’
Equity
|
|||||||||||||
|
Shares
|
|
Amount
|
|
||||||||||||||||||
Balance at December 31, 2016
|
167,431
|
|
|
$
|
167
|
|
|
$
|
1,405,317
|
|
|
$
|
(841,718
|
)
|
|
$
|
(22,673
|
)
|
|
$
|
541,093
|
|
Common stock issued under employee stock plans
|
7,386
|
|
|
7
|
|
|
82,552
|
|
|
—
|
|
|
—
|
|
|
82,559
|
|
|||||
Repurchases and retirement of common stock
|
(541
|
)
|
|
—
|
|
|
(55,000
|
)
|
|
—
|
|
|
—
|
|
|
(55,000
|
)
|
|||||
Taxes paid related to net share settlement of equity awards
|
—
|
|
|
—
|
|
|
(182,127
|
)
|
|
—
|
|
|
—
|
|
|
(182,127
|
)
|
|||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
394,680
|
|
|
—
|
|
|
—
|
|
|
394,680
|
|
|||||
Equity component of the convertible notes, net
|
—
|
|
|
—
|
|
|
159,891
|
|
|
—
|
|
|
—
|
|
|
159,891
|
|
|||||
Purchase of convertible note hedge
|
—
|
|
|
—
|
|
|
(128,017
|
)
|
|
—
|
|
|
—
|
|
|
(128,017
|
)
|
|||||
Issuance of warrants
|
—
|
|
|
—
|
|
|
54,071
|
|
|
—
|
|
|
—
|
|
|
54,071
|
|
|||||
Other comprehensive income, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
28,440
|
|
|
28,440
|
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(116,846
|
)
|
|
—
|
|
|
(116,846
|
)
|
|||||
Balance at December 31, 2017
|
174,276
|
|
|
$
|
174
|
|
|
$
|
1,731,367
|
|
|
$
|
(958,564
|
)
|
|
$
|
5,767
|
|
|
$
|
778,744
|
|
Cumulative effect adjustment for ASU 2016-01 adoption
|
—
|
|
|
—
|
|
|
—
|
|
|
7,234
|
|
|
(7,234
|
)
|
|
—
|
|
|||||
Cumulative effect adjustment for ASU 2016-16 adoption
|
—
|
|
|
—
|
|
|
—
|
|
|
(746
|
)
|
|
—
|
|
|
(746
|
)
|
|||||
Common stock issued under employee stock plans
|
5,899
|
|
|
6
|
|
|
104,167
|
|
|
—
|
|
|
—
|
|
|
104,173
|
|
|||||
Taxes paid related to net share settlement of equity awards
|
—
|
|
|
—
|
|
|
(281,061
|
)
|
|
—
|
|
|
—
|
|
|
(281,061
|
)
|
|||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
545,805
|
|
|
—
|
|
|
—
|
|
|
545,805
|
|
|||||
Settlement of 2018 Notes conversion feature
|
1,314
|
|
|
1
|
|
|
(773,302
|
)
|
|
—
|
|
|
—
|
|
|
(773,301
|
)
|
|||||
Benefit from exercise of 2018 Note Hedges
|
(1,314
|
)
|
|
(1
|
)
|
|
766,858
|
|
|
—
|
|
|
—
|
|
|
766,857
|
|
|||||
Other comprehensive loss, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,568
|
)
|
|
(2,568
|
)
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(26,704
|
)
|
|
—
|
|
|
(26,704
|
)
|
|||||
Balance at December 31, 2018
|
180,175
|
|
|
$
|
180
|
|
|
$
|
2,093,834
|
|
|
$
|
(978,780
|
)
|
|
$
|
(4,035
|
)
|
|
$
|
1,111,199
|
|
Cumulative effect adjustment for Topic 842 adoption
|
—
|
|
|
—
|
|
|
—
|
|
|
(162
|
)
|
|
—
|
|
|
(162
|
)
|
|||||
Common stock issued under employee stock plans
|
5,003
|
|
|
4
|
|
|
107,905
|
|
|
—
|
|
|
—
|
|
|
107,909
|
|
|||||
Taxes paid related to net share settlement of equity awards
|
—
|
|
|
—
|
|
|
(409,703
|
)
|
|
—
|
|
|
—
|
|
|
(409,703
|
)
|
|||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
662,710
|
|
|
—
|
|
|
—
|
|
|
662,710
|
|
|||||
Settlement of 2018 Warrants
|
4,283
|
|
|
5
|
|
|
(5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Other comprehensive income, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
29,290
|
|
|
29,290
|
|
|||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
626,698
|
|
|
—
|
|
|
626,698
|
|
|||||
Balance at December 31, 2019
|
189,461
|
|
|
$
|
189
|
|
|
$
|
2,454,741
|
|
|
$
|
(352,244
|
)
|
|
$
|
25,255
|
|
|
$
|
2,127,941
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net income (loss)
|
$
|
626,698
|
|
|
$
|
(26,704
|
)
|
|
$
|
(116,846
|
)
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
252,114
|
|
|
149,604
|
|
|
113,875
|
|
|||
Amortization of deferred commissions
|
168,014
|
|
|
143,358
|
|
|
99,105
|
|
|||
Amortization of debt discount and issuance costs
|
33,283
|
|
|
52,733
|
|
|
53,394
|
|
|||
Stock-based compensation
|
662,195
|
|
|
543,953
|
|
|
394,004
|
|
|||
Deferred income taxes
|
(575,765
|
)
|
|
(34,180
|
)
|
|
(5,724
|
)
|
|||
Realized gain on marketable equity securities
|
—
|
|
|
(19,257
|
)
|
|
—
|
|
|||
Repayments of convertible senior notes attributable to debt discount
|
—
|
|
|
(145,349
|
)
|
|
—
|
|
|||
Other
|
(8,921
|
)
|
|
6,177
|
|
|
(905
|
)
|
|||
Changes in operating assets and liabilities, net of effect of business combinations:
|
|
|
|
|
|
||||||
Accounts receivable
|
(259,835
|
)
|
|
(146,148
|
)
|
|
(99,693
|
)
|
|||
Deferred commissions
|
(255,605
|
)
|
|
(239,382
|
)
|
|
(190,246
|
)
|
|||
Prepaid expenses and other assets
|
(29,907
|
)
|
|
(19,886
|
)
|
|
(34,288
|
)
|
|||
Accounts payable
|
21,355
|
|
|
(4,757
|
)
|
|
(5,504
|
)
|
|||
Deferred revenue
|
537,249
|
|
|
468,856
|
|
|
369,242
|
|
|||
Accrued expenses and other liabilities
|
65,097
|
|
|
82,071
|
|
|
66,526
|
|
|||
Net cash provided by operating activities
|
1,235,972
|
|
|
811,089
|
|
|
642,940
|
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Purchases of property and equipment
|
(264,892
|
)
|
|
(224,462
|
)
|
|
(150,510
|
)
|
|||
Business combinations, net of cash and restricted cash acquired
|
(7,414
|
)
|
|
(37,440
|
)
|
|
(58,203
|
)
|
|||
Purchases of other intangibles
|
(72,689
|
)
|
|
(24,400
|
)
|
|
(6,670
|
)
|
|||
Purchases of investments
|
(1,595,667
|
)
|
|
(1,295,782
|
)
|
|
(1,194,261
|
)
|
|||
Sales of investments
|
33,503
|
|
|
39,975
|
|
|
85,106
|
|
|||
Maturities of investments
|
1,159,247
|
|
|
1,194,687
|
|
|
440,590
|
|
|||
Realized gains on derivatives not designated as hedging instruments, net
|
23,435
|
|
|
—
|
|
|
—
|
|
|||
Net cash used in investing activities
|
(724,477
|
)
|
|
(347,422
|
)
|
|
(883,948
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Net proceeds from borrowings on convertible senior notes
|
—
|
|
|
—
|
|
|
772,127
|
|
|||
Repayments of convertible senior notes attributable to principal
|
(9
|
)
|
|
(429,645
|
)
|
|
(4
|
)
|
|||
Proceeds from issuance of warrants
|
—
|
|
|
—
|
|
|
54,071
|
|
|||
Purchases of convertible note hedges
|
—
|
|
|
—
|
|
|
(128,017
|
)
|
|||
Repurchases and retirement of common stock
|
—
|
|
|
—
|
|
|
(55,000
|
)
|
|||
Proceeds from employee stock plans
|
107,868
|
|
|
104,160
|
|
|
82,567
|
|
|||
Taxes paid related to net share settlement of equity awards
|
(409,715
|
)
|
|
(281,010
|
)
|
|
(181,938
|
)
|
|||
Payments on financing obligations
|
—
|
|
|
(933
|
)
|
|
(4,914
|
)
|
|||
Net cash (used in) provided by financing activities
|
(301,856
|
)
|
|
(607,428
|
)
|
|
538,892
|
|
|||
Foreign currency effect on cash, cash equivalents and restricted cash
|
(186
|
)
|
|
(15,530
|
)
|
|
28,013
|
|
|||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
209,453
|
|
|
(159,291
|
)
|
|
325,897
|
|
|||
Cash, cash equivalents and restricted cash at beginning of period
|
568,538
|
|
|
727,829
|
|
|
401,932
|
|
|||
Cash, cash equivalents and restricted cash at end of period
|
$
|
777,991
|
|
|
$
|
568,538
|
|
|
$
|
727,829
|
|
Cash, cash equivalents and restricted cash at end of period:
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
$
|
775,778
|
|
|
$
|
566,204
|
|
|
$
|
726,495
|
|
Current portion of restricted cash included in prepaid expenses and other current assets
|
2,213
|
|
|
2,334
|
|
|
1,301
|
|
|||
Non-current portion of restricted cash included in other assets
|
—
|
|
|
—
|
|
|
33
|
|
|||
Total cash, cash equivalents and restricted cash shown in the consolidated statement of cash flows
|
$
|
777,991
|
|
|
$
|
568,538
|
|
|
$
|
727,829
|
|
Supplemental disclosures of other cash flow information:
|
|
|
|
|
|
||||||
Income taxes paid, net of refunds
|
$
|
20,471
|
|
|
$
|
17,507
|
|
|
$
|
7,899
|
|
Non-cash investing and financing activities:
|
|
|
|
|
|
||||||
Settlement of 2018 Notes conversion feature
|
$
|
—
|
|
|
$
|
773,302
|
|
|
$
|
—
|
|
Benefit from exercise of 2018 Note Hedge
|
$
|
—
|
|
|
$
|
766,858
|
|
|
$
|
—
|
|
Property and equipment included in accounts payable and accrued expenses
|
$
|
56,966
|
|
|
$
|
25,767
|
|
|
$
|
15,007
|
|
Purchases of intangible assets included in accrued expenses and other liabilities
|
$
|
—
|
|
|
$
|
8,500
|
|
|
$
|
6,750
|
|
•
|
Identification of the contract, or contracts, with a customer
|
•
|
Identification of the performance obligations in the contract
|
•
|
Determination of the transaction price
|
•
|
Allocation of the transaction price to the performance obligations in the contract
|
•
|
Recognition of revenue when, or as, we satisfy a performance obligation
|
Building
|
|
39 years
|
Computer equipment and software
|
|
3-5 years
|
Furniture and fixtures
|
|
3-7 years
|
Leasehold and other improvements
|
|
shorter of the lease term or estimated useful life
|
|
Balance at Beginning of Year
|
|
Additions: Charged to Operations
|
|
Additions: Charged to Deferred Revenue
|
|
Less:
Write-offs
|
|
Balance at End of Year
|
|||||||
Year ended December 31, 2019
|
|
|
|
|
|
|
|
|
|
|||||||
Allowance for doubtful accounts
|
$
|
4,649
|
|
|
1,284
|
|
|
1,306
|
|
|
1,043
|
|
|
$
|
6,196
|
|
Year ended December 31, 2018
|
|
|
|
|
|
|
|
|
|
|||||||
Allowance for doubtful accounts
|
$
|
3,115
|
|
|
1,255
|
|
|
1,177
|
|
|
898
|
|
|
$
|
4,649
|
|
Year ended December 31, 2017
|
|
|
|
|
|
|
|
|
|
|||||||
Allowance for doubtful accounts
|
$
|
2,323
|
|
|
1,688
|
|
|
194
|
|
|
1,090
|
|
|
$
|
3,115
|
|
|
December 31, 2019
|
||||||||||||||
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Estimated
Fair Value
|
||||||||
Available-for-sale securities:
|
|
|
|
|
|
|
|
||||||||
Commercial paper
|
$
|
101,416
|
|
|
$
|
83
|
|
|
$
|
(9
|
)
|
|
$
|
101,490
|
|
Corporate notes and bonds
|
1,654,166
|
|
|
7,360
|
|
|
(196
|
)
|
|
1,661,330
|
|
||||
Certificates of deposit
|
38,007
|
|
|
38
|
|
|
—
|
|
|
38,045
|
|
||||
U.S. government and agency securities
|
127,544
|
|
|
254
|
|
|
(14
|
)
|
|
127,784
|
|
||||
Total available-for-sale securities
|
$
|
1,921,133
|
|
|
$
|
7,735
|
|
|
$
|
(219
|
)
|
|
$
|
1,928,649
|
|
|
December 31, 2018
|
||||||||||||||
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Estimated
Fair Value
|
||||||||
Available-for-sale securities:
|
|
|
|
|
|
|
|
||||||||
Commercial paper
|
$
|
108,061
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
108,061
|
|
Corporate notes and bonds
|
1,233,589
|
|
|
343
|
|
|
(4,218
|
)
|
|
1,229,714
|
|
||||
Certificates of deposit
|
73,584
|
|
|
1
|
|
|
—
|
|
|
73,585
|
|
||||
U.S. government and agency securities
|
102,549
|
|
|
23
|
|
|
(358
|
)
|
|
102,214
|
|
||||
Total available-for-sale securities
|
$
|
1,517,783
|
|
|
$
|
367
|
|
|
$
|
(4,576
|
)
|
|
$
|
1,513,574
|
|
|
December 31, 2019
|
||
Due within 1 year
|
$
|
915,317
|
|
Due in 1 year through 5 years
|
1,013,332
|
|
|
Total
|
$
|
1,928,649
|
|
|
December 31, 2019
|
||||||||||||||||||||||
|
Less than 12 Months
|
|
12 Months or Greater
|
|
Total
|
||||||||||||||||||
|
Fair Value
|
|
Gross
Unrealized
Losses
|
|
Fair Value
|
|
Gross
Unrealized
Losses
|
|
Fair Value
|
|
Gross
Unrealized
Losses
|
||||||||||||
Commercial paper
|
$
|
20,752
|
|
|
$
|
(9
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
20,752
|
|
|
$
|
(9
|
)
|
Corporate notes and bonds
|
242,012
|
|
|
(181
|
)
|
|
16,264
|
|
|
(15
|
)
|
|
258,276
|
|
|
(196
|
)
|
||||||
U.S. government and agency securities
|
17,806
|
|
|
(14
|
)
|
|
—
|
|
|
—
|
|
|
17,806
|
|
|
(14
|
)
|
||||||
Total
|
$
|
280,570
|
|
|
$
|
(204
|
)
|
|
$
|
16,264
|
|
|
$
|
(15
|
)
|
|
$
|
296,834
|
|
|
$
|
(219
|
)
|
|
December 31, 2018
|
||||||||||||||||||||||
|
Less than 12 Months
|
|
12 Months or Greater
|
|
Total
|
||||||||||||||||||
|
Fair Value
|
|
Gross
Unrealized
Losses
|
|
Fair Value
|
|
Gross
Unrealized
Losses
|
|
Fair Value
|
|
Gross
Unrealized
Losses
|
||||||||||||
Corporate notes and bonds
|
$
|
714,605
|
|
|
$
|
(2,603
|
)
|
|
$
|
294,956
|
|
|
$
|
(1,615
|
)
|
|
$
|
1,009,561
|
|
|
$
|
(4,218
|
)
|
Certificates of deposit
|
1,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,000
|
|
|
—
|
|
||||||
U.S. government and agency securities
|
11,756
|
|
|
(5
|
)
|
|
61,457
|
|
|
(353
|
)
|
|
73,213
|
|
|
(358
|
)
|
||||||
Total
|
$
|
727,361
|
|
|
$
|
(2,608
|
)
|
|
$
|
356,413
|
|
|
$
|
(1,968
|
)
|
|
$
|
1,083,774
|
|
|
$
|
(4,576
|
)
|
|
Level 1
|
|
Level 2
|
|
Total
|
||||||
Cash equivalents:
|
|
|
|
|
|
||||||
Money market funds
|
$
|
486,982
|
|
|
$
|
—
|
|
|
$
|
486,982
|
|
Commercial paper
|
—
|
|
|
86,388
|
|
|
86,388
|
|
|||
Marketable securities:
|
|
|
|
|
|
||||||
Commercial paper
|
—
|
|
|
101,490
|
|
|
101,490
|
|
|||
Corporate notes and bonds
|
—
|
|
|
1,661,330
|
|
|
1,661,330
|
|
|||
Certificates of deposit
|
—
|
|
|
38,045
|
|
|
38,045
|
|
|||
U.S. government and agency securities
|
—
|
|
|
127,784
|
|
|
127,784
|
|
|||
Total
|
$
|
486,982
|
|
|
$
|
2,015,037
|
|
|
$
|
2,502,019
|
|
|
Level 1
|
|
Level 2
|
|
Total
|
||||||
Cash equivalents:
|
|
|
|
|
|
||||||
Money market funds
|
$
|
229,047
|
|
|
$
|
—
|
|
|
$
|
229,047
|
|
Commercial paper
|
—
|
|
|
16,961
|
|
|
16,961
|
|
|||
Certificates of deposit
|
—
|
|
|
2,465
|
|
|
2,465
|
|
|||
Marketable securities:
|
|
|
|
|
|
||||||
Commercial paper
|
—
|
|
|
108,061
|
|
|
108,061
|
|
|||
Corporate notes and bonds
|
—
|
|
|
1,229,714
|
|
|
1,229,714
|
|
|||
Certificates of deposit
|
—
|
|
|
73,585
|
|
|
73,585
|
|
|||
U.S. government and agency securities
|
—
|
|
|
102,214
|
|
|
102,214
|
|
|||
Total
|
$
|
229,047
|
|
|
$
|
1,533,000
|
|
|
$
|
1,762,047
|
|
|
|
Carrying Amount
|
|||||
Balance as of December 31, 2017
|
|
$
|
128,728
|
|
|||
Goodwill acquired
|
|
26,063
|
|
||||
Foreign currency translation adjustments
|
|
(5,946
|
)
|
||||
Balance as of December 31, 2018
|
|
148,845
|
|
||||
Goodwill acquired
|
|
2,246
|
|
||||
Foreign currency translation adjustments
|
|
5,665
|
|
||||
Balance as of December 31, 2019
|
|
$
|
156,756
|
|
|
December 31,
|
|
December 31,
|
||||
|
2019
|
|
2018
|
||||
Developed technology
|
$
|
177,746
|
|
|
$
|
114,395
|
|
Patents
|
67,730
|
|
|
57,180
|
|
||
Other
|
3,594
|
|
|
650
|
|
||
Total intangible assets
|
249,070
|
|
|
172,225
|
|
||
Less: accumulated amortization
|
(105,220
|
)
|
|
(71,643
|
)
|
||
Net carrying amount
|
$
|
143,850
|
|
|
$
|
100,582
|
|
Years Ending December 31,
|
|||||||
2020
|
|
$
|
35,641
|
|
|||
2021
|
|
33,322
|
|
||||
2022
|
|
28,343
|
|
||||
2023
|
|
22,507
|
|
||||
2024
|
|
15,809
|
|
||||
Thereafter
|
|
8,228
|
|
||||
Total future amortization expense
|
|
$
|
143,850
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Computer equipment
|
$
|
680,160
|
|
|
$
|
493,536
|
|
Computer software
|
59,511
|
|
|
58,303
|
|
||
Leasehold and other improvements
|
125,299
|
|
|
74,721
|
|
||
Furniture and fixtures
|
53,651
|
|
|
42,551
|
|
||
Building(1)
|
—
|
|
|
6,551
|
|
||
Construction in progress(1)
|
6,830
|
|
|
10,167
|
|
||
Property and equipment, gross
|
925,451
|
|
|
685,829
|
|
||
Less: Accumulated depreciation
|
(457,366
|
)
|
|
(338,613
|
)
|
||
Property and equipment, net
|
$
|
468,085
|
|
|
$
|
347,216
|
|
(1)
|
We adopted Topic 842 using the modified retrospective method as of January 1, 2019 and derecognized $10.6 million in building and construction in progress assets that we were previously deemed to own under the prior lease accounting standards. These assets are recognized under our operating lease right-of-use assets under Topic 842 as of December 31, 2019.
|
|
Consolidated Balance Sheet Location
|
|
December 31, 2019
|
December 31, 2018
|
||||
Derivative Assets:
|
|
|
|
|
||||
Foreign currency derivative contracts
|
Prepaid expenses and other current assets
|
|
$
|
2,237
|
|
$
|
22,831
|
|
Derivative Liabilities
|
|
|
|
|
||||
Foreign currency derivative contracts
|
Accrued expenses and other current liabilities
|
|
$
|
1,362
|
|
$
|
2,441
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
|
|
|
||||
Accrued payroll
|
$
|
230,682
|
|
|
$
|
158,006
|
|
Taxes payable
|
38,326
|
|
|
35,122
|
|
||
Other employee related liabilities
|
74,853
|
|
|
60,889
|
|
||
Other
|
117,542
|
|
|
76,229
|
|
||
Total accrued expenses and other current liabilities
|
$
|
461,403
|
|
|
$
|
330,246
|
|
|
Convertible Date
|
|
Initial Conversion Price per Share
|
|
Initial Conversion Rate per $1,000 Par Value
|
|
Initial Number of Shares
|
|||
|
|
|
|
|
|
|
(in thousands)
|
|||
2022 Notes
|
February 1, 2022
|
|
$
|
134.75
|
|
|
7.42 shares
|
|
5,807
|
|
2018 Notes
|
July 1, 2018
|
|
$
|
73.88
|
|
|
13.54 shares
|
|
7,783
|
|
•
|
during any calendar quarter (and only during such calendar quarter) if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day (in each case, the Conversion Condition); or
|
•
|
during the five-business day period after any five-consecutive trading day period, or the measurement period, in which the trading price per $1,000 principal amount of the Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our common stock and the conversion rate on each such trading day; or
|
•
|
upon the occurrence of specified corporate events.
|
|
December 31, 2019
|
|
December 31, 2018
|
||||
Liability component:
|
|
|
|
||||
Principal:
|
|
|
|
||||
2022 Notes
|
$
|
782,491
|
|
|
$
|
782,500
|
|
Less: debt issuance cost and debt discount, net of amortization
|
|
|
|
||||
2022 Notes
|
(87,510
|
)
|
|
(120,793
|
)
|
||
Net carrying amount
|
$
|
694,981
|
|
|
$
|
661,707
|
|
|
2022 Notes
|
||
Equity component recorded at issuance:
|
|
||
Note
|
$
|
162,039
|
|
Issuance cost
|
(2,148
|
)
|
|
Net amount recorded in equity
|
$
|
159,891
|
|
|
December 31, 2019
|
|
December 31, 2018
|
||||
2022 Notes
|
$
|
1,645,970
|
|
|
$
|
1,105,281
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Amortization of debt issuance cost
|
|
|
|
|
|
||||||
2022 Notes
|
$
|
1,606
|
|
|
$
|
1,531
|
|
|
$
|
860
|
|
2018 Notes
|
—
|
|
|
1,131
|
|
|
1,911
|
|
|||
Amortization of debt discount
|
|
|
|
|
|
||||||
2022 Notes
|
31,677
|
|
|
30,159
|
|
|
16,921
|
|
|||
2018 Notes
|
—
|
|
|
19,912
|
|
|
33,702
|
|
|||
Total
|
$
|
33,283
|
|
|
$
|
52,733
|
|
|
$
|
53,394
|
|
Effective interest rate of the liability component
|
|
||||||||||
2022 Notes
|
4.75%
|
||||||||||
2018 Notes
|
6.50%
|
|
Purchase
|
|
Initial Shares
|
|
Shares as of
December 31, 2019
|
||||
|
|
|
|
|
|
||||
|
(in thousands)
|
||||||||
2022 Note Hedge
|
$
|
128,017
|
|
|
5,807
|
|
|
5,807
|
|
2018 Note Hedge
|
$
|
135,815
|
|
|
7,783
|
|
|
—
|
|
|
Proceeds
|
|
Shares
|
|
Strike Price
|
|
First Expiration Date
|
|
Shares as of
December 31, 2019
|
||||||
|
(in thousands)
|
|
(in thousands)
|
|
|
|
|
|
(in thousands)
|
||||||
2022 Warrants
|
$
|
54,071
|
|
|
5,807
|
|
|
$
|
203.40
|
|
|
September 1, 2022
|
|
5,807
|
|
2018 Warrants
|
$
|
84,525
|
|
|
7,783
|
|
|
$
|
107.46
|
|
|
February 1, 2019
|
|
—
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Foreign currency translation adjustment
|
$
|
20,884
|
|
|
$
|
344
|
|
Net unrealized gain (loss) on investments, net of tax
|
4,371
|
|
|
(4,379
|
)
|
||
Accumulated other comprehensive income (loss)
|
$
|
25,255
|
|
|
$
|
(4,035
|
)
|
|
|
December 31, 2019
|
||
|
|
(in thousands)
|
||
Stock plans:
|
|
|
||
Options outstanding
|
|
1,154
|
|
|
RSUs (1)
|
|
8,733
|
|
|
Shares of common stock available for future grants:
|
|
|
||
2012 Equity Incentive Plan (2)
|
|
29,641
|
|
|
2012 Employee Stock Purchase Plan (2)
|
|
10,196
|
|
|
Total shares of common stock reserved for future issuance
|
|
49,724
|
|
(1)
|
Represents the number of shares issuable upon settlement of outstanding RSUs and performance-based RSUs, as discussed under the section entitled “RSUs” in Note 14.
|
(2)
|
Refer to Note 14 for a description of these plans.
|
|
Number of
Shares
|
|
Weighted-
Average
Exercise
Price Per Share
|
|
Weighted-
Average
Remaining
Contractual
Term
|
|
Aggregate
Intrinsic Value
|
|||||
|
(in thousands)
|
|
|
|
(in years)
|
|
(in thousands)
|
|||||
Outstanding at December 31, 2017
|
3,370
|
|
|
$
|
38.43
|
|
|
|
|
|
||
Exercised
|
(1,462
|
)
|
|
$
|
26.23
|
|
|
|
|
$
|
204,337
|
|
Canceled
|
(97
|
)
|
|
$
|
70.52
|
|
|
|
|
|
||
Outstanding at December 31, 2018
|
1,811
|
|
|
$
|
46.55
|
|
|
|
|
|
||
Granted
|
161
|
|
|
$
|
266.31
|
|
|
|
|
|
||
Exercised
|
(640
|
)
|
|
$
|
34.61
|
|
|
|
|
$
|
138,389
|
|
Canceled
|
(178
|
)
|
|
$
|
86.02
|
|
|
|
|
|
||
Outstanding at December 31, 2019
|
1,154
|
|
|
$
|
77.70
|
|
|
5.1
|
|
$
|
236,055
|
|
Vested and expected to vest as of December 31, 2019
|
1,119
|
|
|
$
|
72.37
|
|
|
5.0
|
|
$
|
234,889
|
|
Vested and exercisable as of December 31, 2019
|
907
|
|
|
$
|
43.75
|
|
|
4.1
|
|
$
|
216,458
|
|
|
Number of
Shares
|
|
Weighted-Average Grant-Date Fair Value Per Share
|
|
Aggregate
Intrinsic Value
|
|||||
|
(in thousands)
|
|
|
|
(in thousands)
|
|||||
Outstanding at December 31, 2017
|
11,403
|
|
|
$
|
81.50
|
|
|
|
||
Granted
|
5,303
|
|
|
$
|
160.08
|
|
|
|
||
Vested
|
(5,486
|
)
|
|
$
|
77.38
|
|
|
$
|
931,848
|
|
Forfeited
|
(1,018
|
)
|
|
$
|
100.55
|
|
|
|
||
Outstanding at December 31, 2018
|
10,202
|
|
|
$
|
121.84
|
|
|
|
||
Granted
|
5,338
|
|
|
$
|
240.32
|
|
|
|
||
Vested
|
(5,487
|
)
|
|
$
|
126.85
|
|
|
$
|
1,369,918
|
|
Forfeited
|
(1,320
|
)
|
|
$
|
145.34
|
|
|
|
||
Outstanding at December 31, 2019
|
8,733
|
|
|
$
|
185.39
|
|
|
$
|
2,465,387
|
|
Expected to vest as of December 31, 2019
|
7,506
|
|
|
|
|
$
|
2,119,197
|
|
|
|
Year Ended
|
|
|
|
December 31, 2017
|
|
Stock Options with only service conditions:
|
|
|
|
Expected volatility
|
|
39% - 42%
|
|
Expected term (in years)
|
|
4.89
|
|
Risk-free interest rate
|
|
1.78% - 2.47%
|
|
Dividend yield
|
|
—
|
%
|
|
Year Ended December 31,
|
|||||||
|
2019
|
|
2018
|
|
2017
|
|||
ESPP:
|
|
|
|
|
|
|||
Expected volatility
|
30% - 49%
|
|
|
26% - 31%
|
|
|
28% - 49%
|
|
Expected term (in years)
|
0.50
|
|
|
0.50
|
|
|
0.50
|
|
Risk-free interest rate
|
2.04% - 2.46%
|
|
|
1.15% - 2.22%
|
|
|
0.40% - 1.15%
|
|
Dividend yield
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Numerator:
|
|
|
|
|
|
||||||
Net income (loss)
|
$
|
626,698
|
|
|
$
|
(26,704
|
)
|
|
$
|
(116,846
|
)
|
Denominator:
|
|
|
|
|
|
||||||
Weighted-average shares outstanding - basic
|
186,466
|
|
|
177,846
|
|
|
171,176
|
|
|||
Weighted-average effect of potentially dilutive securities:
|
|
|
|
|
|
||||||
Common stock options
|
1,109
|
|
|
—
|
|
|
—
|
|
|||
RSUs
|
4,897
|
|
|
—
|
|
|
—
|
|
|||
2018 Warrants
|
842
|
|
|
—
|
|
|
—
|
|
|||
In-the-money portion of 2022 Notes
|
2,737
|
|
|
—
|
|
|
—
|
|
|||
2022 Warrants
|
1,172
|
|
|
—
|
|
|
—
|
|
|||
Weighted-average shares outstanding - diluted
|
197,223
|
|
|
177,846
|
|
|
171,176
|
|
|||
Net income (loss) per share - basic
|
$
|
3.36
|
|
|
$
|
(0.15
|
)
|
|
$
|
(0.68
|
)
|
Net income (loss) per share - diluted
|
$
|
3.18
|
|
|
$
|
(0.15
|
)
|
|
$
|
(0.68
|
)
|
|
Year Ended December 31,
|
|||||||
|
2019
|
|
2018
|
|
2017
|
|||
Common stock options
|
161
|
|
|
1,811
|
|
|
3,370
|
|
Restricted stock units
|
413
|
|
|
10,202
|
|
|
11,403
|
|
ESPP obligations
|
273
|
|
|
318
|
|
|
362
|
|
2018 Notes
|
—
|
|
|
—
|
|
|
7,783
|
|
2018 Warrants
|
—
|
|
|
7,783
|
|
|
7,783
|
|
2022 Notes
|
—
|
|
|
5,807
|
|
|
5,807
|
|
2022 Warrants
|
—
|
|
|
5,807
|
|
|
5,807
|
|
Total potentially dilutive securities
|
847
|
|
|
31,728
|
|
|
42,315
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Current provision:
|
|
|
|
|
|
||||||
Federal
|
$
|
391
|
|
|
$
|
(336
|
)
|
|
$
|
(445
|
)
|
State
|
204
|
|
|
163
|
|
|
137
|
|
|||
Foreign
|
15,657
|
|
|
22,204
|
|
|
9,512
|
|
|||
|
16,252
|
|
|
22,031
|
|
|
9,204
|
|
|||
Deferred provision:
|
|
|
|
|
|
||||||
Federal
|
(3,481
|
)
|
|
(2,026
|
)
|
|
(5,934
|
)
|
|||
State
|
(882
|
)
|
|
(377
|
)
|
|
(886
|
)
|
|||
Foreign
|
(571,402
|
)
|
|
(31,948
|
)
|
|
1,056
|
|
|||
|
(575,765
|
)
|
|
(34,351
|
)
|
|
(5,764
|
)
|
|||
(Benefit from) provision for income taxes
|
$
|
(559,513
|
)
|
|
$
|
(12,320
|
)
|
|
$
|
3,440
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
United States
|
$
|
(48,558
|
)
|
|
$
|
(153,290
|
)
|
|
$
|
(61,259
|
)
|
Foreign
|
115,743
|
|
|
114,266
|
|
|
(52,147
|
)
|
|||
Total
|
$
|
67,185
|
|
|
$
|
(39,024
|
)
|
|
$
|
(113,406
|
)
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Tax computed at U.S. federal statutory rate
|
$
|
14,109
|
|
|
$
|
(8,195
|
)
|
|
$
|
(38,558
|
)
|
State taxes, net of federal benefit
|
122
|
|
|
98
|
|
|
64
|
|
|||
Tax rate differential for international subsidiaries
|
(5,005
|
)
|
|
(41,429
|
)
|
|
23,532
|
|
|||
Stock-based compensation
|
(108,023
|
)
|
|
(93,073
|
)
|
|
(116,953
|
)
|
|||
Tax credits
|
(51,237
|
)
|
|
(44,695
|
)
|
|
(21,038
|
)
|
|||
Foreign restructuring and amortization
|
—
|
|
|
(625,292
|
)
|
|
2,794
|
|
|||
Non-deductible expenses
|
21,953
|
|
|
9,657
|
|
|
2,833
|
|
|||
Tax effects associated with Topic 606
|
—
|
|
|
(23,073
|
)
|
|
3,314
|
|
|||
Other
|
448
|
|
|
408
|
|
|
607
|
|
|||
Valuation allowance
|
(431,880
|
)
|
|
813,274
|
|
|
146,845
|
|
|||
(Benefit from) provision for income taxes
|
$
|
(559,513
|
)
|
|
$
|
(12,320
|
)
|
|
$
|
3,440
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Deferred tax assets:
|
|
|
|
||||
Net operating loss carryforwards
|
$
|
734,755
|
|
|
$
|
610,314
|
|
Credit carryforwards
|
171,856
|
|
|
120,594
|
|
||
Lease liability
|
108,224
|
|
|
—
|
|
||
Depreciation and amortization
|
577,599
|
|
|
594,496
|
|
||
Other
|
96,535
|
|
|
103,917
|
|
||
Total deferred tax assets
|
1,688,969
|
|
|
1,429,321
|
|
||
Less valuation allowance
|
(918,596
|
)
|
|
(1,342,981
|
)
|
||
|
770,373
|
|
|
86,340
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
Right of use asset
|
(101,091
|
)
|
|
—
|
|
||
Other
|
(73,818
|
)
|
|
(67,686
|
)
|
||
Net deferred tax assets
|
$
|
595,464
|
|
|
$
|
18,654
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Balance, beginning period
|
$
|
27,591
|
|
|
$
|
27,648
|
|
|
$
|
18,440
|
|
Tax positions taken in prior period:
|
|
|
|
|
|
||||||
Gross increases
|
1,516
|
|
|
3,721
|
|
|
398
|
|
|||
Gross decreases
|
—
|
|
|
(2,896
|
)
|
|
—
|
|
|||
Tax positions taken in current period:
|
|
|
|
|
|
||||||
Gross increases
|
7,682
|
|
|
5,796
|
|
|
8,810
|
|
|||
Lapse of statute of limitations
|
—
|
|
|
(1,078
|
)
|
|
—
|
|
|||
Settlements
|
—
|
|
|
(5,600
|
)
|
|
—
|
|
|||
Balance, end of period
|
$
|
36,789
|
|
|
$
|
27,591
|
|
|
$
|
27,648
|
|
Years Ending December 31,
|
|||||||
2020
|
|
$
|
67,629
|
|
|||
2021
|
|
65,934
|
|
||||
2022
|
|
62,754
|
|
||||
2023
|
|
57,957
|
|
||||
2024
|
|
45,820
|
|
||||
Thereafter
|
|
230,605
|
|
||||
Total operating lease payments
|
|
530,699
|
|
||||
Less: imputed interest
|
|
(94,810
|
)
|
||||
Present value of operating lease liabilities
|
|
$
|
435,889
|
|
Years Ending December 31,
|
|||||||
2019
|
|
$
|
55,435
|
|
|||
2020
|
|
60,996
|
|
||||
2021
|
|
63,348
|
|
||||
2022
|
|
67,707
|
|
||||
2023
|
|
72,491
|
|
||||
Thereafter
|
|
578,874
|
|
||||
Total
|
|
$
|
898,851
|
|
|
|
Purchase Obligations (1)
|
|||||
Years Ending December 31,
|
|
|
|||||
2020
|
|
$
|
70,819
|
|
|||
2021
|
|
62,450
|
|
||||
2022
|
|
32,572
|
|
||||
2023
|
|
9,069
|
|
||||
2024
|
|
2,699
|
|
||||
Thereafter
|
|
2,630
|
|
||||
Total
|
|
$
|
180,239
|
|
(1)
|
Not included in the table above are certain purchase commitments related to our future annual Knowledge user conferences and other customer or sales conferences to be held in 2021 and future years. If we had canceled these contractual commitments as of December 31, 2019 we would have been obligated to pay cancellation penalties of approximately $16.3 million in aggregate.
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Revenues by geography
|
|
|
|
|
|
||||||
North America (1)
|
$
|
2,276,549
|
|
|
$
|
1,725,255
|
|
|
$
|
1,290,043
|
|
EMEA (2)
|
865,661
|
|
|
654,677
|
|
|
475,411
|
|
|||
Asia Pacific and other
|
318,227
|
|
|
228,884
|
|
|
153,040
|
|
|||
Total revenues
|
$
|
3,460,437
|
|
|
$
|
2,608,816
|
|
|
$
|
1,918,494
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Property and equipment, net:
|
|
|
|
||||
North America (3)
|
$
|
269,754
|
|
|
$
|
227,471
|
|
EMEA (2)
|
118,399
|
|
|
82,526
|
|
||
Asia Pacific and other
|
79,932
|
|
|
37,219
|
|
||
Total property and equipment, net
|
$
|
468,085
|
|
|
$
|
347,216
|
|
(1)
|
Revenues attributed to the United States were approximately 94% of North America revenues for each of the years ended December 31, 2019, 2018 and 2017.
|
(2)
|
Europe, the Middle East and Africa (EMEA)
|
(3)
|
Property and equipment, net attributed to the United States were approximately 73% and 76% of property and equipment, net attributable to North America as of December 31, 2019 and 2018, respectively.
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Digital workflow products(1)
|
$
|
2,810,887
|
|
|
$
|
2,111,702
|
|
|
$
|
1,534,591
|
|
ITOM products(1)
|
444,192
|
|
|
309,611
|
|
|
204,909
|
|
|||
Total subscription revenues
|
$
|
3,255,079
|
|
|
$
|
2,421,313
|
|
|
$
|
1,739,500
|
|
(1)
|
As we have expanded the scope of IntegrationHub (formerly included within our ITOM offering) beyond ITOM to align more closely with our broader platform offering, revenues associated with IntegrationHub have been reclassified from ITOM products to platform, which is part of our digital workflow products. Revenues reclassified from ITOM product revenues to digital workflow products revenues were $60.9 million and $44.4 million for the years ended December 31, 2018 and 2017, respectively.
|
ITEM 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINACIAL DISCLOSURE
|
ITEM 9A.
|
CONTROLS AND PROCEDURES
|
ITEM 9B.
|
OTHER INFORMATION
|
ITEM 10.
|
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
ITEM 11.
|
EXECUTIVE COMPENSATION
|
ITEM 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
ITEM 13.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
|
ITEM 14.
|
PRINCIPAL ACCOUNTING FEES AND SERVICES
|
ITEM 15.
|
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
|
ITEM 16.
|
FORM 10-K SUMMARY
|
Exhibit
Number
|
Description of Document
|
|
Incorporated by Reference
|
|
Filed
Herewith
|
||||||
Form
|
|
File No.
|
|
Exhibit
|
|
Filing Date
|
|
||||
|
10-Q
|
|
001-35580
|
|
3.1
|
|
8/10/2012
|
|
|
||
|
8-K
|
|
001-35580
|
|
3.1
|
|
10/25/2017
|
|
|
||
|
S-1/A
|
|
333-180486
|
|
4.1
|
|
6/19/2012
|
|
|
||
|
8-K
|
|
001-35580
|
|
4.1
|
|
11/13/2013
|
|
|
||
|
8-K
|
|
001-35580
|
|
4.1
|
|
5/30/2017
|
|
|
||
|
|
|
|
|
|
|
|
|
X
|
||
|
10-K
|
|
001-35580
|
|
10.1
|
|
2/27/2015
|
|
|
||
|
S-1
|
|
333-180486
|
|
10.2
|
|
3/30/2012
|
|
|
||
|
10-K
|
|
001-35580
|
|
10.3
|
|
2/27/2019
|
|
|
||
|
10-Q
|
|
001-35580
|
|
10.1
|
|
8/6/2019
|
|
|
||
|
10-Q
|
|
001-35580
|
|
10.2
|
|
8/6/2019
|
|
|
||
|
10-K
|
|
001-35580
|
|
10.4
|
|
3/8/2013
|
|
|
||
|
10-Q
|
|
001-35580
|
|
10.3
|
|
8/6/2019
|
|
|
||
|
8-K
|
|
001-35580
|
|
10.1
|
|
10/23/2019
|
|
|
||
|
8-K
|
|
001-35580
|
|
10.1
|
|
11/18/2019
|
|
|
||
|
S-1
|
|
333-180486
|
|
10.6
|
|
3/30/2012
|
|
|
||
|
10-Q
|
|
001-35580
|
|
10.2
|
|
11/5/2014
|
|
|
Exhibit
Number
|
Description of Document
|
|
Incorporated by Reference
|
|
Filed
Herewith
|
||||||
Form
|
|
File No.
|
|
Exhibit
|
|
Filing Date
|
|
||||
|
10-Q
|
|
001-35580
|
|
10.2
|
|
8/8/2017
|
|
|
||
|
S-1
|
|
333-180486
|
|
10.7
|
|
3/30/2012
|
|
|
||
|
10-Q
|
|
001-35580
|
|
10.1
|
|
11/5/2014
|
|
|
||
|
10-Q
|
|
001-35580
|
|
10.1
|
|
8/8/2017
|
|
|
||
|
8-K
|
|
001-35580
|
|
10.1
|
|
2/27/2017
|
|
|
||
|
10-Q
|
|
001-35580
|
|
10.1
|
|
11/6/2017
|
|
|
||
|
10-Q
|
|
001-35580
|
|
10.4
|
|
8/8/2018
|
|
|
||
|
10-K
|
|
001-35580
|
|
10.17
|
|
2/27/2019
|
|
|
||
|
S-1/A
|
|
333-184674
|
|
10.12
|
|
11/9/2012
|
|
|
||
|
8-K
|
|
001-35580
|
|
10.1
|
|
12/15/2014
|
|
|
||
|
10-Q
|
|
001-35580
|
|
10.1
|
|
5/8/2018
|
|
|
||
|
10-Q
|
|
001-35580
|
|
10.2
|
|
5/8/2018
|
|
|
||
|
10-Q
|
|
001-35580
|
|
10.3
|
|
5/8/2018
|
|
|
||
|
8-K
|
|
001-35580
|
|
99.1
|
|
11/13/2013
|
|
|
||
|
8-K
|
|
001-35580
|
|
99.1
|
|
5/30/2017
|
|
|
||
|
8-K
|
|
001-35580
|
|
99.2
|
|
11/13/2013
|
|
|
||
|
8-K
|
|
001-35580
|
|
99.2
|
|
5/30/2017
|
|
|
||
|
8-K
|
|
001-35580
|
|
99.3
|
|
11/13/2013
|
|
|
||
|
8-K
|
|
001-35580
|
|
99.1
|
|
6/22/2017
|
|
|
||
|
8-K
|
|
001-35580
|
|
99.4
|
|
11/13/2013
|
|
|
Exhibit
Number
|
Description of Document
|
|
Incorporated by Reference
|
|
Filed
Herewith
|
||||||
Form
|
|
File No.
|
|
Exhibit
|
|
Filing Date
|
|
||||
|
8-K
|
|
001-35580
|
|
99.2
|
|
6/22/2017
|
|
|
||
|
10-Q
|
|
001-35580
|
|
10.1
|
|
8/3/2016
|
|
|
||
|
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
|
X
|
||
101.INS
|
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
|
|
|
|
|
|
|
|
|
|
X
|
101.SCH
|
Inline XBRL Taxonomy Extension Schema Document
|
|
|
|
|
|
|
|
|
|
X
|
101.CAL
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
|
|
|
|
|
|
X
|
101.DEF
|
Inline XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
|
|
|
|
|
|
X
|
101.LAB
|
Inline XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
|
|
|
|
|
|
X
|
101.PRE
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
|
|
|
|
|
|
X
|
104
|
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
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|
X
|
|
SERVICENOW, INC.
|
||
|
|
|
|
|
By:
|
|
/s/ William R. McDermott
|
|
|
|
William R. McDermott
President and Chief Executive Officer
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ William R. McDermott
|
|
President, Chief Executive Officer and Director
(Principal Executive Officer)
|
|
February 20, 2020
|
William R. McDermott
|
|
|
|
|
|
|
|
|
|
/s/ Gina Mastantuono
|
|
Chief Financial Officer
(Principal Financial Officer)
|
|
February 20, 2020
|
Gina Mastantuono
|
|
|
|
|
|
|
|
|
|
/s/ Fay Sien Goon
|
|
Chief Accounting Officer
(Principal Accounting Officer)
|
|
February 20, 2020
|
Fay Sien Goon
|
|
|
|
|
|
|
|
|
|
/s/ Frederic B. Luddy
|
|
Chairman of the Board of Directors
|
|
February 20, 2020
|
Frederic B. Luddy
|
|
|
|
|
|
|
|
|
|
/s/ Susan L. Bostrom
|
|
Director
|
|
February 20, 2020
|
Susan L. Bostrom
|
|
|
|
|
|
|
|
|
|
/s/ Teresa Briggs
|
|
Director
|
|
February 20, 2020
|
Teresa Briggs
|
|
|
|
|
|
|
|
|
|
/s/ Jonathan C. Chadwick
|
|
Director
|
|
February 20, 2020
|
Jonathan C. Chadwick
|
|
|
|
|
|
|
|
|
|
/s/ Paul E. Chamberlain
|
|
Director
|
|
February 20, 2020
|
Paul E. Chamberlain
|
|
|
|
|
|
|
|
|
|
/s/ John J. Donahoe
|
|
Director
|
|
February 20, 2020
|
John J. Donahoe
|
|
|
|
|
|
|
|
|
|
/s/ Jeffrey A. Miller
|
|
Director
|
|
February 20, 2020
|
Jeffrey A. Miller
|
|
|
|
|
|
|
|
|
|
/s/ Anita M. Sands
|
|
Director
|
|
February 20, 2020
|
Anita M. Sands
|
|
|
|
|
|
|
|
|
|
/s/ Dennis M. Woodside
|
|
Director
|
|
February 20, 2020
|
Dennis M. Woodside
|
|
|
|
|
|
|
|
|
|
/s/ Tamar Yehoshua
|
|
Director
|
|
February 20, 2020
|
Tamar Yehoshua
|
|
|
|
|
•
|
the transaction is approved by the board of directors prior to the time that the interested stockholder became an interested stockholder;
|
•
|
upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced; or
|
•
|
at or subsequent to such time that the stockholder became an interested stockholder, the business combination is approved by the board of directors and authorized at an annual or special meeting of stockholders by at least two-thirds of the outstanding voting stock not owned by the interested stockholder.
|
•
|
Board of Directors Vacancies. Our Certificate of Incorporation and Bylaws authorize only our board of directors to fill vacant directorships. In addition, the number of directors constituting our board of directors is set only by resolution adopted by a majority vote of our entire board of directors. These provisions prevent a stockholder from increasing the size of our board of directors and gaining control of our board of directors by filling the resulting vacancies with its own nominees.
|
•
|
Classified Board. Our Certificate of Incorporation and Bylaws provide that our board of directors is classified into three classes of directors. The existence of a classified board could delay a successful tender offeror from obtaining majority control of our board of directors, and the prospect of that delay might deter a potential offeror.
|
•
|
Stockholder Action; Special Meeting of Stockholders. Our Certificate of Incorporation provides that our stockholders may not take action by written consent, but may only take action at annual or special meetings of our stockholders. Stockholders are not permitted to cumulate their votes for the election of directors. Our Bylaws further provide that special meetings of our stockholders may be called only by a majority of our board of directors, the chairman of our board of directors, our chief executive officer or our president.
|
◦
|
Advance Notice Requirements for Stockholder Proposals and Director Nominations. Our Bylaws provide advance notice procedures for stockholders seeking to bring business before our annual meeting of stockholders, or to nominate candidates for election as directors at our annual meeting of stockholders. Our Bylaws also specify certain requirements regarding the form and content of a stockholder’s notice. These provisions may preclude our stockholders from bringing matters before our annual meeting of stockholders or from making nominations for directors at our annual meeting of stockholders (though our Bylaws have implemented stockholder proxy access).
|
◦
|
Issuance of Undesignated Preferred Stock. Our board of directors has the authority, without further action by the stockholders, to issue up to 10,000,000 shares of undesignated preferred stock with rights and preferences, including voting rights, designated from time to time by the board of directors. The existence of authorized but unissued shares of preferred stock enables our board of directors to render more difficult or to discourage an attempt to obtain control of us by means of a merger, tender offer, proxy contest or otherwise.
|
◦
|
Super Majority Vote to Amend Certificate of Incorporation and Bylaws. Our Certificate of Incorporation provides that if two-thirds of our board of directors approves the amendment of our certificate of incorporation and bylaws, or any provisions thereof, then such amendment need only be approved by stockholders holding a majority of our outstanding shares of common stock entitled to vote. Otherwise, such amendment must be approved by stockholders holding two-thirds of our outstanding shares of common stock entitled to vote.
|
Name of Subsidiary
|
|
Jurisdiction of Incorporation or Organization
|
|
|
|
ServiceNow Australia Pty. Ltd.
|
|
Australia
|
ServiceNow GmbH
|
|
Austria
|
ServiceNow Belgium BVBA
|
|
Belgium
|
ServiceNow Brasil Gerenciamento de Servicos Ltda
|
|
Brazil
|
ServiceNow Canada Inc.
|
|
Canada
|
ITapp Inc.
|
|
Delaware
|
ServiceNow Delaware LLC
|
|
Delaware
|
ServiceNow Denmark ApS
|
|
Denmark
|
ServiceNow Finland Oy
|
|
Finland
|
ServiceNow France SAS
|
|
France
|
Service-now.com GmbH
|
|
Germany
|
ServiceNow Hong Kong Limited
|
|
Hong Kong
|
ServiceNow Software Development India Private Limited
|
|
India
|
ITapp Software Private Limited
|
|
India
|
ServiceNow Ireland Limited
|
|
Ireland
|
ServiceNow Israel A.B 2012 Ltd.
|
|
Israel
|
SkyGiraffe Ltd.
|
|
Israel
|
ServiceNow Italy S.R.L.
|
|
Italy
|
ServiceNow Japan K.K.
|
|
Japan
|
Fairchild Consulting Services LLC
|
|
Massachusetts
|
ServiceNow Operations Mexico S. de R.L. de C.V.
|
|
Mexico
|
ServiceNow Nederland B.V.
|
|
Netherlands
|
ServiceNow Norway AS
|
|
Norway
|
ServiceNow Portugal, Unipessoal LDA
|
|
Portugal
|
ServiceNow Pte. Ltd.
|
|
Singapore
|
ServiceNow South Africa (Pty) Ltd.
|
|
South Africa
|
ServiceNow Spain SL
|
|
Spain
|
ServiceNow Sweden AB
|
|
Sweden
|
ServiceNow Switzerland GmbH
|
|
Switzerland
|
ServiceNow Turkey Bilisim Sanayi Ve Ticaret Limited Sirketi
|
|
Turkey
|
ServiceNow UK Ltd.
|
|
United Kingdom
|
1.
|
I have reviewed this annual report on Form 10-K of ServiceNow, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date: February 20, 2020
|
|
|
/s/ William R. McDermott
|
|
William R. McDermott
President, Chief Executive Officer and Director
(Principal Executive Officer)
|
1.
|
I have reviewed this annual report on Form 10-K of ServiceNow, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date: February 20, 2020
|
|
|
/s/ Gina Mastantuono
|
|
Gina Mastantuono
Chief Financial Officer
(Principal Financial Officer)
|
•
|
the Annual Report on Form 10-K of the Company for the period ended December 31, 2019 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
•
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods presented therein.
|
Date: February 20, 2020
|
|
|
/s/ William R. McDermott
|
|
William R. McDermott
President, Chief Executive Officer and Director
(Principal Executive Officer)
|
•
|
the Annual Report on Form 10-K of the Company for the period ended December 31, 2019 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
•
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods presented therein.
|
Date: February 20, 2020
|
|
|
/s/ Gina Mastantuono
|
|
Gina Mastantuono
Chief Financial Officer
(Principal Financial Officer)
|