United States securities and exchange commission logo
April 4, 2023
Gina Mastantuono
Chief Financial Officer
ServiceNow, Inc.
2225 Lawson Lane
Santa Clara, California 95054
Re: ServiceNow, Inc.
Form 10-K for the
Fiscal Year Ended December 31, 2022
Filed January 31,
2023
Form 8-K
Filed January 25,
2023
File No. 001-35580
Dear Gina Mastantuono:
We have reviewed your filings and have the following comments. In
some of our
comments, we may ask you to provide us with information so we may better
understand your
disclosure.
Please respond to these comments within ten business days by
providing the requested
information or advise us as soon as possible when you will respond. If
you do not believe our
comments apply to your facts and circumstances, please tell us why in
your response.
After reviewing your
response to these comments, we may have additional comments.
Form 10-K For the fiscal year ended December 31 , 2022
Consolidated Financial Statements
Notes to Consolidated Financial Statements
(16) Income Taxes, page 72
1. It is unclear why you
cite cumulative losses in the U.S. during the prior three years as a
justification for your
decision to continue to carry a full valuation allowance against your
U.S. deferred tax
assets as of December 31, 2022 when you report income before income
taxes in the U.S. in
each of the past three years. Please revise.
2. We note the disclosure
on page 73. However, you do not provide clear disclosure of the
objectively verifiable
negative evidence that reasonably offsets the positive evidence in
support of your
conclusion that it is more likely than not that the entire balance of deferred
Gina Mastantuono
FirstName LastNameGina Mastantuono
ServiceNow, Inc.
Comapany
April NameServiceNow, Inc.
4, 2023
April 24, 2023 Page 2
Page
FirstName LastName
tax assets will not be realized. Please identify for us all of the
objectively verifiable
negative evidence considered by management when determining that it is
more likely than
not that your U.S. deferred tax assets will not be realized as of
December 31, 2022. Tell us
where you disclosed this objectively verifiable negative evidence in
your Form 10-K
or revise as necessary.
3. With respect to tax deductible stock compensation, we note in the rate
reconciliation stock
based compensation had the effect of raising the tax rate in 2022.
Tell us the more likely
than not effect of stock based compensation on your income taxes in
2023 and your basis
for this conclusion.
4. With respect to positive evidence, in addition to income in the past
three years, please
explain how you considered management's guidance for 2023, which
presumably is
conservative. In this regard, we also note in the press release dated
January 25, 2023
several positive statements from management such as from your Chairman
and CEO,
William McDermott, who said ServiceNow continues to perform as a
beyond
expectations company and Our Q4 surge in new business shows that
the secular
tailwinds of digitization aren t going anywhere." Also, your CFO,
Gina Mastantuono, said
Q4 was another great quarter of execution as we exceeded our
subscription revenue and
profitability guidance and we outperformed our NNACV
expectations, driven by robust
net expansion and over 30% NNACV growth year-over-year from new logos.
What s
more, our results were generated with a lower mix of early renewals
from 2023, providing
us more opportunities to drive further expansion throughout the year.
With our strong
results it's clear that ServiceNow remains a strategic priority,
generating durable demand
that is positioning us well for 2023 and beyond.
Form 8-K filed on January 25, 2023
Exhibit 99.1, page 10
5. Your GAAP to Non-GAAP reconciliation on pages 10-12 appears to include
most of the
major captions of the consolidated statements of operations, which
gives undue
prominence to your Non-GAAP financial measures. Please revise your
presentation to
comply with Question 102.10(c) of the Compliance and Disclosure
Interpretations on
Non-GAAP Financial Measures.
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
You may contact Joseph Cascarano, Senior Staff Accountant, at (202)
551-3376
or Robert S. Littlepage, Accountant Branch Chief, at (202) 551-3361 with any
questions.
Gina Mastantuono
ServiceNow, Inc.
April 4, 2023
Page 3
FirstName LastNameGina Mastantuono Sincerely,
Comapany NameServiceNow, Inc.
Division of Corporation Finance
April 4, 2023 Page 3 Office of Technology
FirstName LastName