ServiceNow Inc

Previous wording

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

Current wording

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

Previous wording

As of March 31, 2024, our RPO was $17.7 billion, of which 48% represented cRPO. RPO and cRPO increased by 26% and 21%, respectively, compared to March 31, 2023. Factors that may cause our RPO to vary from period to period include the following:

Current wording

As of June 30, 2024, our RPO was $18.6 billion, of which 47% represented cRPO. RPO and cRPO increased by 31% and 22%, respectively, compared to June 30, 2023. Factors that may cause our RPO to vary from period to period include the following:

Previous wording

Number of customers with ACV greater than $1 million. We count the total number of customers with annual contract value (“ACV”) greater than $1 million as of the end of the period. We had 1,933 and 1,687 customers with ACV greater than $1 million as of March 31, 2024 and 2023, respectively. For purposes of customer count, a customer is defined as an entity that has a unique Dunn & Bradstreet Global Ultimate (“GULT”) Data Universal Numbering System (“DUNS”) number and an active subscription contract as of the measurement date. The DUNS number is a global standard for business identification and tracking. We make exceptions for holding companies, government entities and other organizations for which the GULT, in our judgment, does not accurately represent the ServiceNow customer. For example, while all U.S. government agencies roll up to “Government of the United States” under the GULT, we count each government agency that we contract with as a separate customer. Our customer count is subject to adjustments for acquisitions, spin-offs and other market activity; accordingly, we restate previously disclosed number of customers with ACV greater than $1 million calculations to allow for comparability. ACV is calculated based on the foreign exchange rate in effect at the time the contract was signed. Foreign exchange rate fluctuations could cause some variability in the number of customers with ACV greater than $1 million. We believe information regarding the total number of customers with ACV greater than $1 million provides useful information to investors because it is an indicator of our growing customer base and demonstrates the value customers are receiving from the Now Platform.

Current wording

Number of customers with ACV greater than $1 million. We count the total number of customers with annual contract value (“ACV”) greater than $1 million as of the end of the period. We had 1,988 and 1,724 customers with ACV greater than $1 million as of June 30, 2024 and 2023, respectively. For purposes of customer count, a customer is defined as an entity that has a unique Dunn & Bradstreet Global Ultimate (“GULT”) Data Universal Numbering System (“DUNS”) number and an active subscription contract as of the measurement date. The DUNS number is a global standard for business identification and tracking. We make exceptions for holding companies, government entities and other organizations for which the GULT, in our judgment, does not accurately represent the ServiceNow customer. For example, while all U.S. government agencies roll up to “Government of the United States” under the GULT, we count each government agency that we contract with as a separate customer. Our customer count is subject to adjustments for acquisitions, spin-offs and other market activity; accordingly, we restate previously disclosed number of customers with ACV greater than $1 million calculations to allow for comparability. ACV is calculated based on the foreign exchange rate in effect at the time the contract was signed. Foreign exchange rate fluctuations could cause some variability in the number of customers with ACV greater than $1 million. We believe information regarding the total number of customers with ACV greater than $1 million provides useful information to investors because it is an indicator of our growing customer base and demonstrates the value customers are receiving from the Now Platform.

Previous wording

Renewal rate. We calculate our renewal rate by subtracting our attrition rate from 100%. Our attrition rate for a period is equal to the ACV from customers lost during the period, divided by the sum of (i) the total ACV from all customers that renewed during the period, excluding changes in price or users, and (ii) the total ACV from all customers lost during the period. Accordingly, our renewal rate is calculated based on ACV and is not based on the number of customers that have renewed. Further, our renewal rate does not reflect increased or decreased purchases from our customers to the extent such customers are not lost customers or lapsed renewals. A lost customer is a customer that did not renew an expiring contract and that, in our judgment, will not be renewed. Typically, a customer that reduces its subscription upon renewal is not considered a lost customer. However, in instances where the subscription decrease represents the majority of the customer’s ACV, we may deem the renewal as a lost customer. For our renewal rate calculation, we define a customer as an entity with a separate production instance of our service and an active subscription contract as of the measurement date, instead of an entity with a unique GULT or DUNS number. We adjust our renewal rate for acquisitions, consolidations and other customer events that cause the merging of two or more accounts occurring at the time of renewal. Our renewal rate was 98% for each of the three months ended March 31, 2024 and 2023. As our renewal rate is impacted by the timing of renewals, which could occur in advance of, or subsequent to the original contract end date, period-to-period comparison of renewal rates may not be meaningful.

Current wording

Renewal rate. We calculate our renewal rate by subtracting our attrition rate from 100%. Our attrition rate for a period is equal to the ACV from customers lost during the period, divided by the sum of (i) the total ACV from all customers that renewed during the period, excluding changes in price or users, and (ii) the total ACV from all customers lost during the period. Accordingly, our renewal rate is calculated based on ACV and is not based on the number of customers that have renewed. Further, our renewal rate does not reflect increased or decreased purchases from our customers to the extent such customers are not lost customers or lapsed renewals. A lost customer is a customer that did not renew an expiring contract and that, in our judgment, will not be renewed. Typically, a customer that reduces its subscription upon renewal is not considered a lost customer. However, in instances where the subscription decrease represents the majority of the customer’s ACV, we may deem the renewal as a lost customer. For our renewal rate calculation, we define a customer as an entity with a separate production instance of our service and an active subscription contract as of the measurement date, instead of an entity with a unique GULT or DUNS number. We adjust our renewal rate for acquisitions, consolidations and other customer events that cause the merging of two or more accounts occurring at the time of renewal. Our renewal rate was 98% and 99% for the three months ended June 30, 2024 and 2023, respectively, and 98% for each of the six months ended June 30, 2024 and 2023. As our renewal rate is impacted by the timing of renewals, which could occur in advance of, or subsequent to the original contract end date, period-to-period comparison of renewal rates may not be meaningful.

Previous wording

We sell our subscription services primarily through our direct sales organization. We also sell services through managed service providers and resale partners. We also generate revenues from certain professional services and from training of customers and partner personnel, through both our direct team and indirect channel sales. Revenues from our direct sales organization represented 78% and 79% of our total revenues for the three months ended March 31, 2024 and 2023, respectively. For purposes of calculating revenues from our direct sales organization, revenues from systems integrators and managed services providers are included as part of the direct sales organization.

Current wording

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

Previous wording

Professional services are performed directly by our services team, as well as by contracted third-party partners. Fees paid by us to third-party partners are primarily recognized as cost of revenues as the professional services are delivered. Cost of revenues associated with our professional services engagements contracted with third-party partners as a percentage of professional services and other revenues was 15% and 11% for the three months ended March 31, 2024 and 2023, respectively.

Current wording

Professional services are performed directly by our services team, as well as by contracted third-party partners. Fees paid by us to third-party partners are primarily recognized as cost of revenues as the professional services are delivered. Cost of revenues associated with our professional services engagements contracted with third-party partners as a percentage of professional services and other revenues was 21% and 18% for the three and six months ended June 30, 2024, respectively, and 9% and 10% for the three and six months ended June 30, 2023, respectively.

Previous wording

Provision for income taxes consists of federal, state and foreign income taxes. Our income tax provision for the three months ended March 31, 2024 is primarily attributable to the mix of earnings and losses in countries with differing statutory tax rates, offset by excess tax benefits of stock-based compensation. We continue to maintain a valuation allowance against our California deferred tax assets due to the uncertainty regarding realizability of these deferred tax assets as they have not met the “more likely than not” realization criteria, particularly as we expect research and development tax credit generation to exceed our ability to use the credits in future years.

Current wording

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

Previous wording

Comparison of the Three Months Ended March 31, 2024 and 2023

Current wording

Comparison of the Three and Six Months Ended June 30, 2024 and 2023

Previous wording

Subscription revenues increased by $499 million for the three months ended March 31, 2024 compared to the three months ended March 31, 2023, primarily driven by increased purchases by new and existing customers. Included in subscription revenues is $126 million and $95 million of revenues recognized upfront from the delivery of software associated with self-hosted offerings during the three months ended March 31, 2024 and 2023, respectively.

Current wording

Subscription revenues increased by $467 million and $966 million for the three and six months ended June 30, 2024, respectively, compared to the three and six months ended June 30, 2023, primarily driven by increased purchases by new and existing customers. Included in subscription revenues is $68 million and $48 million of revenues recognized upfront from the delivery of software associated with self-hosted offerings during the three months ended June 30, 2024 and 2023, respectively, and $194 million and $143 million during the six months ended June 30, 2024 and 2023, respectively.

Previous wording

Our expectations for revenues, cost of revenues and operating expenses for the remainder of 2024 are based on the 31-day average of foreign exchange rates for March 31, 2024.

Current wording

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

Previous wording

Professional services and other revenues increased by $8 million during the three months ended March 31, 2024 compared to the three months ended March 31, 2023, primarily due to an increase in services and trainings provided to new and existing customers.

Current wording

Professional services and other revenues increased by $10 million and $18 million during the three and six months ended June 30, 2024, respectively, compared to the three and six months ended June 30, 2023, primarily due to an increase in services and trainings provided to new and existing customers.

Previous wording

Cost of subscription revenues increased by $87 million for the three months ended March 31, 2024 compared to the three months ended March 31, 2023, primarily due to increased headcount and increased costs to support the growth of our subscription offerings including costs to support customers in regulated markets. Personnel-related costs including stock-based compensation and overhead expenses increased by $59 million for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. Expenses associated with software, maintenance, and other costs to support the expansion of our data center capacity increased by $22 million for the three months ended March 31, 2024 compared to the three months ended March 31, 2023.

Current wording

Cost of subscription revenues increased by $80 million and $167 million for the three and six months ended June 30, 2024, respectively, compared to the three and six months ended June 30, 2023, primarily due to increased headcount and increased costs to support the growth of our subscription offerings including costs to support customers in regulated markets. Personnel-related costs, including stock-based compensation and overhead expenses, increased by $56 million and $115 million for the three and six months ended June 30, 2024, respectively, compared to the three and six months ended June 30, 2023. Expenses associated with software, maintenance, and other costs to support the expansion of our data center capacity increased by $21 million and $43 million for the three and six months ended June 30, 2024, respectively, compared to the three and six months ended June 30, 2023.

Previous wording

Our subscription gross profit percentage was 83% for each of the three months ended March 31, 2024 and 2023. We expect our subscription gross profit percentage to remain relatively flat for the year ending December 31, 2024 compared to the year ended December 31, 2023.

Current wording

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

Previous wording

Cost of professional services and other revenues decreased by $5 million for the three months ended March 31, 2024 compared to the three months ended March 31, 2023, primarily due to decreased internal headcount resulting in a decrease in fixed personnel-related costs including stock-based compensation, partially offset by an increase in variable contracted third-party partner spend.

Current wording

Cost of professional services and other revenues increased by $1 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. Cost of professional services and other revenues decreased by $4 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 primarily due to decreased internal headcount resulting in a decrease in fixed personnel-related costs including stock-based compensation, partially offset by an increase in variable spending with strategic third-party partners.

Previous wording

Our professional services and other gross profit percentage improved to 1% for the three months ended March 31, 2024 compared to a gross loss percentage of 17% for the three months ended March 31, 2023, primarily due to an increase in revenue and a decrease in fixed personnel-related costs including stock-based compensation, as we execute our strategy to shift a portion of professional services to variable spending with strategic partners. We expect our professional services and other gross profit percentage to improve for the year ending December 31, 2024 compared to the year ended December 31, 2023.

Current wording

Our professional services and other gross profit percentage improved to 2% for each of the three and six months ended June 30, 2024 compared to a gross loss percentage of 9% and 13% for the three and six months ended June 30, 2023, respectively, primarily due to an increase in revenue and a decrease in fixed personnel-related costs including stock-based compensation, as we execute our strategy to shift a portion of professional services to variable spending with strategic third-party partners. We expect our professional services and other gross profit percentage to improve for the year ending December 31, 2024 compared to the year ended December 31, 2023.

Previous wording

Sales and marketing expenses increased by $100 million for the three months ended March 31, 2024 compared to the three months ended March 31, 2023, primarily due to increased headcount resulting in an increase in personnel-related costs including stock-based compensation and overhead expenses of $61 million. Amortization expenses associated with deferred commissions increased $22 million for the three months ended March 31, 2024 compared to the three months ended March 31, 2023, primarily due to an increase in contracts with new customers, expansion and renewal contracts. Other sales and marketing program expenses, which include branding, costs associated with purchasing advertising, marketing events and market data, increased by $11 million compared to the prior year, primarily due to increased program costs and travel for our annual Sales Kickoff.

Current wording

Sales and marketing expenses increased by $128 million and $228 million for the three and six months ended June 30, 2024, respectively, compared to the three and six months ended June 30, 2023, primarily due to increased headcount resulting in an increase in personnel-related costs including stock-based compensation and overhead expenses of $80 million and $141 million for the three and six months ended June 30, 2024, respectively, compared to the three and six months ended June 30, 2023. Amortization expenses associated with deferred commissions increased $20 million and $42 million for the three and six months ended June 30, 2024, respectively, compared to the three and six months ended June 30, 2023, primarily due to an increase in contracts with new customers, expansion and renewal contracts. Other sales and marketing program expenses, which include branding, costs associated with purchasing advertising, marketing events and market data, increased by $19 million and $30 million for the three and six months ended June 30, 2024, respectively, compared to the three and six months ended June 30, 2023, primarily due to increased program costs and travel for our annual Sales Kickoff and Knowledge user conference.

Previous wording

Research and development (“R&D”) expenses increased by $114 million for the three months ended March 31, 2024 compared to the three months ended March 31, 2023, primarily due to increased headcount, resulting in an increase in personnel-related costs including stock-based compensation and overhead expenses of $98 million. The remaining increase was primarily due to an increase in data center capacity costs and depreciation of infrastructure hardware equipment that is used solely for R&D purposes of $7 million for the three months ended March 31, 2024 compared to the three months ended March 31, 2023.

Current wording

Research and development (“R&D”) expenses increased by $122 million and $236 million for the three and six months ended June 30, 2024, respectively, compared to the three and six months ended June 30, 2023, primarily due to increased headcount, resulting in an increase in personnel-related costs including stock-based compensation and overhead expenses of $100 million and $198 million for the three and six months ended June 30, 2024, respectively, compared to the three and six months ended June 30, 2023. Outside services increased $15 million and $21 million for the three and six months ended June 30, 2024, respectively, compared to the three and six months ended June 30, 2023. The remaining increase was primarily due to expenses associated with software, maintenance and other costs to support the expansion of our data center capacity of $7 million and $16 million for the three and six months ended June 30, 2024, respectively, compared to the three and six months ended June 30, 2023.

Previous wording

General and administrative (“G&A”) expenses increased by $23 million for the three months ended March 31, 2024 compared to the three months ended March 31, 2023, primarily due to an increase in non personnel-related costs and outside services of $15 million. The remaining increase was primarily due to increased headcount, resulting in an increase in personnel-related costs including stock-based compensation of $5 million for the three months ended March 31, 2024 compared to the three months ended March 31, 2023.

Current wording

General and administrative (“G&A”) expenses increased by $23 million and $46 million for the three and six months ended June 30, 2024, respectively, compared to the three and six months ended June 30, 2023, primarily due to an increase in non personnel-related costs and outside services of $18 million and $33 million for the three and six months ended June 30, 2024, respectively, compared to the three and six months ended June 30, 2023. The remaining increase was primarily due to increased headcount, resulting in an increase in personnel-related costs including stock-based compensation of $3 million and $8 million for the three and six months ended June 30, 2024, respectively, compared to the three and six months ended June 30, 2023.

Previous wording

Stock-based compensation increased by $41 million for the three months ended March 31, 2024, compared to the three months ended March 31, 2023, primarily due to additional grants to current and new employees.

Current wording

Stock-based compensation increased by $47 million and $88 million for the three and six months ended June 30, 2024, respectively, compared to the three and six months ended June 30, 2023, primarily due to additional grants to current and new employees.

Previous wording

Our international operations have provided and will continue to provide a significant portion of our total revenues. Revenues outside North America represented 37% and 36% of total revenues for the three months ended March 31, 2024 and 2023, respectively.

Current wording

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

Previous wording

We primarily transact in certain foreign currencies for sales outside of the United States. The general weakening of the U.S. Dollar relative to certain major foreign currencies (primarily the Euro and British Pound Sterling) had an immaterial favorable impact on our revenues for the three months ended March 31, 2024.

Current wording

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

Previous wording

In addition, because we primarily transact in several foreign currencies for cost of revenues and operating expenses outside of the United States, the general weakening of the U.S. Dollar relative to certain major foreign currencies had an immaterial unfavorable impact on our expenses for the three months ended March 31, 2024.

Current wording

In addition, because we primarily transact in several foreign currencies for cost of revenues and operating expenses outside of the United States, the general strengthening of the U.S. Dollar relative to certain major foreign currencies had an immaterial favorable impact on our expenses for the three and six months ended June 30, 2024.

Previous wording

Interest income increased by $41 million for the three months ended March 31, 2024 compared to the three months ended March 31, 2023, primarily driven by an increase in investment income from our managed portfolio resulting from higher portfolio balances and an increase in interest rates.

Current wording

Interest income increased by $30 million and $71 million for the three and six months ended June 30, 2024, respectively, compared to the three and six months ended June 30, 2023, primarily driven by an increase in investment income from our managed portfolio resulting from higher portfolio balances and an increase in interest rates.

Previous wording

Other expense, net decreased by $8 million for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 primarily due to lower losses on equity investments.

Current wording

Other expense, net decreased by $7 million and $15 million for the three and six months ended June 30, 2024, respectively, compared to the three and six months ended June 30, 2023 primarily due to gains on equity investments.

Previous wording

To mitigate our risks associated with fluctuations in foreign currency exchange rates, we enter into foreign currency forward contracts with maturities of 12 months or less to hedge a portion of our net outstanding monetary assets and liabilities. These hedging contracts may reduce, but cannot entirely eliminate, the impact of adverse currency exchange rate movements. The gains (losses) recognized for these foreign currency forward contracts in other expense, net were immaterial for the three months ended March 31, 2024 and 2023.

Current wording

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

Previous wording

The income tax provision was $78 million for the three months ended March 31, 2024. The income tax provision was primarily attributable to the mix of earnings and losses in countries with differing statutory tax rates, offset by excess tax benefits of stock-based compensation.

Current wording

The income tax provision was $72 million and $150 million for the three and six months ended June 30, 2024, respectively. The income tax provision was primarily attributable to the mix of earnings and losses in countries with differing statutory tax rates, offset by excess tax benefits of stock-based compensation.

Previous wording

Our income tax provision was $38 million for the three months ended March 31, 2023. The income tax provision was primarily attributable to the mix of earnings and losses in countries with differing statutory tax rates and the valuation allowance in the United States.

Current wording

The income tax benefit was $870 million and $832 million for the three and six months ended June 30, 2023, respectively. The income tax benefit was primarily attributable to the release of the valuation allowance of certain U.S. federal and state deferred tax assets.

Previous wording

We regularly assess the need for a valuation allowance against our deferred tax assets. In making that assessment, we consider both positive and negative evidence related to the likelihood of realization of the deferred tax assets to determine, based on the weight of available evidence, whether it is more likely than not that some or all of the deferred tax assets will not be realized. As of June 30, 2023, we achieved cumulative U.S. income during the prior twelve quarters when considering pre-tax income adjusted for permanent differences and other comprehensive losses. Based on all available positive and negative evidence, having demonstrated sustained profitability which is objective and verifiable, and taking into account anticipated future earnings, we concluded it is more likely than not that our U.S. federal and state deferred tax assets will be realizable, with the exception of California. As of March 31, 2024, we continue to maintain a valuation allowance against our California deferred tax assets due to the uncertainty regarding realizability of these deferred tax assets as they have not met the “more likely than not” realization criteria, particularly as we expect research and development tax credit generation to exceed our ability to use the credits in future years. We will continue to monitor the need for a valuation allowance against our deferred tax assets on a quarterly basis.

Current wording

We regularly assess the need for a valuation allowance against our deferred tax assets. In making that assessment, we consider both positive and negative evidence related to the likelihood of realization of the deferred tax assets to determine, based on the weight of available evidence, whether it is more likely than not that some or all of the deferred tax assets will not be realized. As of June 30, 2023, we achieved cumulative U.S. income during the prior twelve quarters when considering pre-tax income adjusted for permanent differences and other comprehensive losses. Based on all available positive and negative evidence, having demonstrated sustained profitability which is objective and verifiable, and taking into account anticipated future earnings, we concluded it is more likely than not that our U.S. federal and state deferred tax assets will be realizable, with the exception of California. We released $965 million of our valuation allowance during the three months ended June 30, 2023. As of June 30, 2024, we continue to maintain a valuation allowance against our California deferred tax assets due to the uncertainty regarding realizability of these deferred tax assets as they have not met the “more likely than not” realization criteria, particularly as we expect R&D tax credit generation to exceed our ability to use the credits in future years. We will continue to monitor the need for a valuation allowance against our deferred tax assets on a quarterly basis.

Previous wording

We generate cash inflows from operations primarily from selling subscription services which are generally paid in advance of provisioning services, and cash outflows to develop new services and core technologies that further enhance the Now Platform, engage our customer and enhance their experience, and enable and transform our business operations. Subscription services arrangements typically have a three-year duration, and we have experienced a renewal rate of 98% over the last three years. Cash outflows from operations are principally comprised of the salaries, bonuses, commissions, and benefits for our workforce, licenses and services arrangements that are integral to our business operations and data centers; and operating lease arrangements that underlie our facilities. We have generated positive operating cash flows for more than ten years as we continue to grow our business in pursuit of our business strategy, and we expect to grow our business and generate positive cash flows from operations during 2024. When assessing sources of liquidity, we also include cash and cash equivalents, short-term investments and long-term investments totaling $8.8 billion as of March 31, 2024.

Current wording

We generate cash inflows from operations primarily from selling subscription services which are generally paid in advance of provisioning services, and cash outflows to develop new services and core technologies that further enhance the Now Platform, engage our customer and enhance their experience, and enable and transform our business operations. Subscription services arrangements typically have a three-year duration, and we have experienced a renewal rate of 98% over the last three years. Cash outflows from operations are principally comprised of the salaries, bonuses, commissions, and benefits for our workforce, licenses and services arrangements that are integral to our business operations and data centers and operating lease arrangements that underlie our facilities. We have generated positive operating cash flows for more than ten years as we continue to grow our business in pursuit of our business strategy, and we expect to grow our business and generate positive cash flows from operations during 2024. When assessing sources of liquidity, we also include cash and cash equivalents, short-term investments and long-term investments totaling $8.9 billion as of June 30, 2024.

Previous wording

Our working capital requirements are principally comprised of non-contract workforce salaries, bonuses, commissions and benefits and, to a lesser extent, cancellable and non-cancellable licenses and services arrangements that are integral to our business operations and operating lease obligations. Operating lease obligations totaling $923 million are principally associated with leased facilities and have varying maturities with $501 million due over the next five years.

Current wording

Our working capital requirements are principally comprised of non-contract workforce salaries, bonuses, commissions and benefits and, to a lesser extent, cancellable and non-cancellable licenses and services arrangements that are integral to our business operations and operating lease obligations. Operating lease obligations totaling $891 million are principally associated with leased facilities and have varying maturities with $511 million due over the next five years.

Previous wording

We may repurchase our shares of common stock in the open market, in privately negotiated transactions or by other means, with the objective to return value to our stockholders and manage the dilution from future employee equity grants and employee stock purchase programs. In May 2023, our board of directors authorized a program to repurchase up to $1.5 billion of our common stock. During the quarter ended March 31, 2024, the Company repurchased 0.2 million shares of its common stock for $175 million. All repurchases were made in open market transactions. Repurchases of common stock are recognized as treasury stock and held for future issuance. As of March 31, 2024, approximately $787 million of the originally authorized amount under the Share Repurchase Program remained available for future repurchases.

Current wording

We may repurchase our shares of common stock in the open market, in privately negotiated transactions or by other means, with the objective to return value to our stockholders and manage the dilution from future employee equity grants and employee stock purchase programs. In May 2023, our board of directors authorized a program to repurchase up to $1.5 billion of our common stock. During the six months ended June 30, 2024, the Company repurchased 0.2 million shares of its common stock for $175 million. There were no share repurchases during the three months ended June 30, 2024. All repurchases were made in open market transactions. Repurchases of common stock are recognized as treasury stock and held for future issuance. As of June 30, 2024, approximately $787 million of the originally authorized amount under the Share Repurchase Program remained available for future repurchases.

Previous wording

Net cash provided by operating activities was $1,341 million for the three months ended March 31, 2024 compared to $902 million for the three months ended March 31, 2023. The net increase in operating cash flows was primarily due to higher collections driven by revenue growth.

Current wording

Net cash provided by operating activities was $1,961 million for the six months ended June 30, 2024 compared to $1,482 million for the six months ended June 30, 2023. The net increase in operating cash flows was primarily due to higher collections driven by revenue growth.

Previous wording

Net cash used in investing activities for the three months ended March 31, 2024 was $918 million compared to $524 million for the three months ended March 31, 2023. The net increase in cash used in investing activities was primarily due to a $194 million increase in business combinations, a $190 million increase in net purchases of investments and a $21 million increase in purchases of other intangible assets, partially offset by a $30 million decrease in purchases of property and equipment.

Current wording

Net cash used in investing activities was $1,105 million for the six months ended June 30, 2024 compared to $1,198 million for the six months ended June 30, 2023. The net decrease in cash used in investing activities was primarily due to a $321 million decrease in net purchases of investments, partially offset by a $100 million increase in purchases of property and equipment, a $42 million increase in purchases of non-marketable investments, a $41 million increase in business combinations and a $30 million increase in purchases of other intangible assets.

Previous wording

Net cash used in financing activities was $259 million for the three months ended March 31, 2024 compared to net cash provided by financing activities of $5 million for the three months ended March 31, 2023. The increase in cash used in financing activities was due to repurchases of common stock of $175 million and a $103 million increase in taxes paid related to net share settlement of equity awards, partially offset by a $14 million increase in proceeds from employee stock plans.

Current wording

Net cash used in financing activities was $580 million for the six months ended June 30, 2024 compared to $89 million for the six months ended June 30, 2023. The increase in cash used in financing activities was due to a $184 million increase in business combination related to the second installment payment in the acquisition of G2K Group GmbH, repurchases of common stock of $175 million and a $146 million increase in taxes paid related to net share settlement of equity awards, partially offset by a $14 million increase in proceeds from employee stock plans.