Dear Shareholders,
When Fred Luddy founded ServiceNow, he dreamed that this platform would become the foundation for a different kind of software company. It’s no coincidence that we framed our purpose in this spirit: to make the world work better for everyone. We also set a bold ambition: to be the Defining Enterprise Software Company of the 21st Century.
These principles are more than words on a page. They directly fuel our passion to build great products, deliver an amazing service, tell a differentiated story and inspire a proud team. Looking back on our business performance over the past year, it’s clear that our resolve delivers significant value for our customers, our partners, our colleagues, and for you, our shareholders.
ServiceNow’s position as the intelligent platform for end-to-end digital transformation is stronger than ever. The one constant in this world is change. The world’s challenges are well-known. We at ServiceNow have always looked at the greatest challenges as the biggest opportunities. This is how we compose our strategy. This is how we motivate the best product and engineering team in enterprise software.
If there’s one takeaway, it’s that ServiceNow is on the move. We are delivering net-new innovation and profitable revenue growth. We are building a global workforce and partner ecosystem to capture this digital transformation market opportunity. We are demonstrating that a fast-growth, highly profitable software company, consistently operating above the “rule of 50,” is best in class.
We take nothing for granted, least of all the confidence you have in this company. Thank you for sharing in our belief that the best is yet to come.
Results Summary
ServiceNow again proven itself a beyond expectations company, with $7.538 billion in total revenues. We ended 2022 having met or exceeded our aggressive goals across the top and bottom line, with subscription revenue growing 28.5% year-over-year in constant currency, and non-GAAP operating margin of 26%.
At a time when many other companies struggled, our speed of innovation became the differentiator in this tech-to-compete era.
A main factor driving this track record is our hungry and humble culture. We continue to be recognized as a world-class place to work. Glassdoor ranked us #9 Best Large Workplace in the U.S. and #2 in the U.K. Fortune again named us to its World’s Most Admired Companies and 100 Best Companies to Work For lists.
When Hurricane Ian struck, ServiceNow’s platform demonstrated its mission-critical capabilities. The State of Florida understood speed was everything. With the Now Platform, they were live with a crisis response application in a matter of hours. When people needed help escaping conflict, ServiceNow employees built an app to match Ukrainian refugees with U.S. sponsors. We also worked with German NGO Blue Yellow Cross to connect medical supply depots to hospitals in Ukraine.
Financially, ServiceNow is an unmatched combination of organic growth and profitability at scale. Socially, we create a more hopeful future for all.
Organic Innovation Summary
The need for speed is driving the shift from operating systems, databases, and on-premise applications — to cloud platforms. This “Great Reprioritization” demands time to value in days and weeks, not months and years.
The world of technology is fragmented. Lack of integration is why only one in five companies see ROI from digital transformation. Herein lies the unique differentiation for ServiceNow: We are the only born-in-the-cloud platform that orchestrates work across all departments and tech silos.
Our platform releases demonstrate the power of our organic innovation engine. In 2022 alone, we delivered more than 4,000 innovations to customers. When every industry and buyer persona is looking for fast time-to-value, ServiceNow is consistently expanding our addressable market by helping to digitize mission critical business processes. From better customer service and employee engagement to procurement and technology access management, ServiceNow’s strategic relevance is second to none.
“San Diego,” our spring 2022 platform release — named after our founding city — and “Tokyo,” our fall 2022 platform release, named for a region where we see incredible opportunity — established new benchmarks for innovation in the digital economy. New digital-first, fully integrated workflow automation solutions in each release were designed to address the most pressing challenges facing every industry, in every region.
In 2022, we accelerated hyper-automation with Automation Engine, introduced Next Experience, delivered new, out-of-the-box industry solutions, created Manager Hub, launched Vault, and automated Supplier Lifecycle Management and Procurement Service Management. These are a few highlights amongst thousands that showcase ServiceNow’s innovation engine. It also underscores our customer mandate as the intelligent platform for end-to-end digital transformation.
And we’re just getting started! You can expect even more from us in 2023 including significant investment in the new frontier of Generative Artificial Intelligence (AI).
Closing
Since late 2019, ServiceNow has more than doubled annual revenues and created more than $50 billion in shareholder value. We’re the only ones who do what we do, the way we do it — driving net-new innovation, fast growth, operating leverage, and value-creation.
We are here to show our customers they can say YES to business growth and cost efficiencies, YES to innovation and great experiences, YES to serving customers and their employees. ServiceNow helps them do it all.
We are a uniquely resilient company, driven by a once-in-a-generation platform. The public markets will continue to challenge companies who over-indexed on “growth at all costs” and lack a durable growth business model with strong unit economics. We are still investing for growth to meet the exponential demand for digital transformation — not pulling back.
What the market lacks in stability, we make up in relentless execution. If we don’t do it, it won’t get done. That’s why we’re investing in our RiseUp program to skill 1 million people on ServiceNow by 2024. We’ll fuel a new economy of in-demand, job-ready talent with an emphasis on faster, more equitable career paths in the high-growth ServiceNow ecosystem.
I’ll leave you with words I used to rally 20,000+ ServiceNow employees this year: Success is a choice, not a given. We worked hard to get here. We’re going to work hard to stay here. We’re going to work harder still to get to the next level.
Together, we make the world work. For our customers. Our people. And for you. Thank you for your enduring trust in ServiceNow.
Sincerely,
Bill McDermott
Chairman and Chief Executive Officer
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