ServiceNow
Annual Report 2015

Plain-text annual report

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549 FORM 10-KxAnnual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934For the fiscal year ended December 31, 2015OR ¨Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934Commission File Number: 001-35580SERVICENOW, INC.(Exact name of registrant as specified in its charter) Delaware 20-2056195(State or other jurisdiction ofincorporation or organization) (I.R.S. EmployerIdentification Number)ServiceNow, Inc.2225 Lawson LaneSanta Clara, California 95054(408) 501-8550(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices) Securities registered pursuant to Section 12(b) of the Act:Title of each class Name of each exchange on which registeredCommon stock, par value $0.001 per share New York Stock Exchange, Inc.Securities registered pursuant to Section 12(g) of the Act:Not applicable__________________________Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x No ¨Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of Act. Yes ¨ No xIndicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes x No ¨Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and postedpursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post suchfiles). Yes x No ¨Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to thebest of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “largeaccelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):Large accelerated filer x Accelerated filer ¨ Non-accelerated filer ¨ Smaller reporting company ¨Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No xBased on the closing price of the Registrant’s Common Stock on the last business day of the Registrant’s most recently completed second fiscal quarter, which was June 30, 2015, theaggregate market value of its shares (based on a closing price of $74.31 per share on June 30, 2015 as reported on the New York Stock Exchange) held by non-affiliates wasapproximately $8.5 billion.As of January 31, 2016, there were approximately 161.4 million shares of the Registrant’s Common Stock outstanding.DOCUMENTS INCORPORATED BY REFERENCEPortions of the Registrant’s definitive proxy statement for its 2016 Annual Meeting of Stockholders (the “Proxy Statement”), to be filed within 120 days of the Registrant’s fiscal yearended December 31, 2015, are incorporated by reference in Part III of this Report on Form 10-K. Except with respect to information specifically incorporated by reference in thisForm 10-K, the Proxy Statement is not deemed to be filed as part of this Form 10-K.TABLE OF CONTENTS Page PART I Item 1Business1Item 1ARisk Factors9Item 1BUnresolved Staff Comments28Item 2Properties28Item 3Legal Proceedings28Item 4Mine Safety Disclosures29 PART II Item 5Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities30Item 6Selected Consolidated Financial Data32Item 7Management’s Discussion and Analysis of Financial Condition and Results of Operations35Item 7AQuantitative and Qualitative Disclosures About Market Risk61Item 8Consolidated Financial Statements and Supplementary Data62Item 9Changes in and Disagreements with Accountants on Accounting and Financial Disclosure91Item 9AControls and Procedures92Item 9BOther Information92 PART III Item 10Directors, Executive Officers and Corporate Governance92Item 11Executive Compensation93Item 12Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters93Item 13Certain Relationships and Related Party Transactions and Director Independence93Item 14Principal Accounting Fees and Services93 PART IV Item 15Exhibits and Financial Statement Schedules93Signatures 94Index to Exhibits 95 PART IFORWARD-LOOKING STATEMENTSThis Annual Report on Form 10-K, including the “Management's Discussion and Analysis of Financial Condition and Results of Operations,” containsforward-looking statements regarding future events and our future results that are based on our current expectations, estimates, forecasts, and projectionsabout our business, our results of operations, the industry in which we operate and the beliefs and assumptions of our management. Words such as“believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “would,” “could,” “should,” “intend” and “expect,” variations of these words, and similarexpressions are intended to identify those forward-looking statements. These forward-looking statements are only predictions and are subject to risks,uncertainties and assumptions that are difficult to predict. Therefore, actual results may differ materially and adversely from those expressed in anyforward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed in this Report underthe section entitled “Risk Factors” in Item 1A of Part I and elsewhere herein, and in other reports we file with the Securities and Exchange Commission(SEC). While forward-looking statements are based on the reasonable expectations of our management at the time that they are made, you should not relyon them. We undertake no obligation to revise or update publicly any forward-looking statements for any reason, whether as a result of new information,future events or otherwise, except as may be required by law. ITEM 1. BUSINESSOverviewServiceNow is a leading provider of enterprise cloud computing solutions that define, structure, manage and automate services across the globalenterprise. Our mission is to help the modern enterprise operate faster and be more scalable by applying a service-oriented lens to the activities, tasks andprocesses that comprise day-to-day work life. Our solutions, and the custom solutions built by our customers and partners, all of which are delivered throughour highly flexible and scalable platform, are empowering enterprises to change the way people work.In 2004, ServiceNow pioneered the cloud-based delivery of information technology (IT) service management applications that helped enterprises defineand structure services and workflows, provide an intuitive user experience and knowledge base, implement service delivery, establish service levelagreements and provide analytics. Today, we provide cloud-based service management and business management solutions that address the needs of manydepartments within an enterprise, including IT, human resources (HR), facilities, field service, marketing, customer service, security, legal and finance. Ourservice management solutions are built on our proprietary platform that also allows customers to easily create, by themselves or with our partners, their ownservice-oriented applications for use in departments across the enterprise.We also provide a suite of IT operations management (ITOM) solutions that enhance visibility of business services and infrastructure with a singlesystem of record, increase service availability and maximize operational agility. By capturing and correlating service and infrastructure events acrossmultiple IT systems and monitoring tools, our ITOM solutions help enterprises easily detect and diagnose service issues and restore services more quickly.Through the use of predictive analytics, our ITOM solutions can also predict infrastructure and business service issues, resulting in a less reactive and moreproactive IT organization.We deliver our software applications via the Internet as a service, through an easy-to-use, consumer-like interface, which means they can be rapidlydeployed and easily configured.We market our services to enterprises in a wide variety of industries, including financial services, consumer products, IT services, health care andtechnology. We sell our solutions primarily through direct sales and to a lesser extent through indirect channel sales. We also provide a portfolio ofcomprehensive professional services to customers through our professional services experts and a network of partners.We were incorporated as Glidesoft, Inc. in California in June 2004 and changed our name to Service-now.com in February 2006. In May 2012, wereincorporated into Delaware as ServiceNow, Inc.Key Business BenefitsKey customer benefits of our services include:•Availability, security and scalability. Our service is designed to provide our customers with the highest level of performance and security. Oursingle-instance application architecture, customer-dedicated databases and advanced high1availability infrastructure reduces maintenance windows, isolates customer impact and allows for high scalability. We further provide a level oftransparency by providing our customers with the real availability of their ServiceNow instance.•Automation. Our platform facilitates the implementation of work through standardized and automated workflows that improve the speed andaccuracy of service delivery within the enterprise and decrease inefficiencies.•Extensibility. Our common data model and ease of customization and development enable customers to leverage their existing ServiceNowimplementations to expand into additional service management applications and functionality across the enterprise.•Speed and ease of implementation. We offer a comprehensive set of feature-rich service management applications delivered via the cloud thatenable rapid and cost-effective implementation of solutions.•Governance and compliance. Our solutions facilitate the consolidation of previously disparate applications thereby enabling integrated auditing,governance, transparency and reporting. Our powerful reporting features deliver visibility into key costs and service performance, includingaccess to key performance indicators (KPIs), benchmarking and executive dashboards.•User satisfaction. Through a mobile-enabled, consumerized storefront with personalized dashboards and reporting and embedded user self-helpand collaboration features, we can increase user satisfaction and use of service management applications.•Expertise. We provide access to highly skilled professional services, training, technical support, and dedicated peer support engagementprograms, including annual user conferences, local user groups, special interest groups, online forums and blogs, collaboration and knowledgesharing for end users, partners and application developers.Our Strategy ServiceNow is changing the way people work by removing dependencies on inefficient manual processes to manage the flow of work within thecorporate environment. Our goal is to be the recognized leader of cloud computing solutions to automate service management across the enterprise. Keyelements of our growth strategy include:Enhancing our solutions. We intend to continue to enhance our solutions with new features and functions through our own development, acquisitionsand partnerships. We have made, and will continue to make, significant investments in research and development to strengthen our existing applications,expand the number of applications on our platform and develop additional automation technologies. We typically offer multiple upgrades each year thatallow our customers to benefit from ongoing innovation.Expanding into new categories. As part of our growth strategy, we are delivering our service management solutions in new categories, including mostrecently security and customer service.Expanding our customer base. We believe the global market for next-generation service management is underserved, and we will continue to makeinvestments to capture market share. To expand our customer base, we will invest in our direct sales force and strategic resellers as well as our infrastructureand capacity, including our data center footprint.Extending our relationships with existing customers. We intend to increase the number of subscription licenses purchased by our current customers asthey expand their use of the ServiceNow solution and deploy additional purchased and custom-built applications to manage more services across theirenterprise.Expanding internationally. We have eight paired data centers on five continents. We are investing in new geographies, including investment in directand indirect sales channels, data centers, professional services, customer support and implementation partners. We also plan to increase investment in ourexisting international locations in order to achieve scale efficiencies in our sales and marketing efforts.Strengthening our customer community. Our customer community contributes to our success through their willingness to share their ServiceNowexperiences with other potential customers. We host our annual user conference, Knowledge, to support our customer community and encouragecollaboration. Also, our ServiceNow Community and Share websites provide an online forum for customers, partners and ServiceNow employees to interactand collaborate, as well as share custom applications and other ServiceNow platform content. We will continue to leverage our customer community toexpose our existing customers to new use cases and increase awareness of our service management solutions.2Developing our partner ecosystem. We intend to further develop our existing partner ecosystem by establishing agreements with strategic resellers,system integrators, global service providers and independent software vendors to provide broader customer coverage, access to senior executives andsolution delivery capabilities, as well as extending the breadth of application coverage through complementary partner offerings.Encouraging development on our extensible platform. Our platform is currently being used by customers to address the needs of various departmentswithin an organization, including IT, HR, customer service, security, facilities, field service, marketing, legal and finance organizations. We plan to continueto enhance our platform to enable the creation of business applications by customers and partners. In addition, we have provided independent softwarevendors and other partners with the ServiceNow Store to market and sell any applications they develop for current and future customers.Enterprise Service Management SolutionsService ManagementOur service management solutions help enterprises define and deliver services through an intuitive service experience while ensuring serviceavailability and providing critical service metrics. Although we provide applications specific to IT, HR, customer service, security, facilities and fieldservices, our service management solutions are also adopted by marketing, legal and finance departments looking to manage services in the contemporaryworkplace. Each of these solutions includes the foundational capabilities of Incident Management, Problem Management, Change Management, RequestManagement, Service Catalog and Knowledge Base, allowing organizations to offer their employees a familiar user experience consistent with that ofconsumer applications typically encountered outside of the enterprise.Our core service management solutions are as follows:IT Service Management solutions give IT managers and administrators end-to-end visibility into processes and infrastructure through a single systemof record for IT, provided by our configuration management database (CMDB) that forms the core of all of our solutions. This enables IT to consolidate andautomate service management processes, increase efficiency, lower costs and devote more time to creating and delivering the consumer-like experiences thatusers expect.HR Service Management solutions help transform HR service delivery through a modernized employee experience, greater productivity for HR andimprovement in overall quality of service. Our solution enables organizations to provide a unified view of all HR services through easy to use portals, helpsHR teams effectively address questions and manage requests from employees through HR case management and knowledge management, and automatesemployee lifecycle events such as onboarding, transfers and off-boarding.Customer Service Management solutions apply service management discipline to customer service and support for external customers and partners. Our solutions provide a single system to manage the customer service and support relationship from initial engagement through final resolution, therebyhelping to improve customer satisfaction and to build loyalty through complete service transparency and consistent service delivery. This acceleratesresolution through a single view of the entire service lifecycle.Security Operations solutions use the advanced workflow and systems management inherent in the ServiceNow platform and seamlessly integrate withother ServiceNow solutions such as ServiceWatch Mapping and ServiceNow Performance Analytics. The result is a single-source-of-truth response platformthat connects disparate sources of security alerts from applications and services provided by leading vendors and helps security organizations prioritizevulnerabilities, systematically manage security incidents, adapt to changing conditions in threat behavior and automate remediation.Facilities Service Management solutions help facilities teams prioritize, standardize and manage their tasks, thereby reducing the burden of reactive,day-to-day operations and increasing productivity, optimizing resource utilization and reducing costs.Field Service Management solutions ensure that work orders are dispatched to the right person, with the right inventory and tools, at the right time. Business ManagementOur Business Management solutions help enterprises manage costs, projects, compliance and vendors. Our solutions consolidate business data into asingle system of record, enabling enterprises to more effectively align investments, utilize resources, automate management of projects, ensure regulatorycompliance and manage business relationships.3Our core business management solutions are as follows:Financial Management provides a way for IT to gain insight into spending by mapping actual costs to consumption or usage across business services,applications, projects and infrastructure. It allows chief information officers (CIOs) to ensure IT costs are correctly aligned to business goals.Project Portfolio Suite provides the capabilities to plan, organize and manage projects, including associated tasks and resources. Demand Managementcentralizes strategic requests from the business and streamlines the investment decision process for new products and services. Software DevelopmentLifecycle provides the capabilities to manage the software development and maintenance process, from product inception to deployment.Governance, Risk and Compliance (GRC) provides clarity into compliance and audit initiatives, helps companies mitigate compliance exposure, andautomates the work of organizations rising to the challenge of complex regulatory environments.Performance Analytics drives continual service improvement across the enterprise by helping organizations analyze process performance and discovertrends in service management. By leveraging trusted, in-platform data, our solution gives companies the real-time, actionable insights needed to makebusiness decisions resulting in higher service quality and reduced service delivery cost.ServiceNow PlatformThe ServiceNow platform is the foundation of all of our solutions, integrating all business applications leveraging one user interface, one code base andone data model to create a single system of record. It provides core capabilities to both ServiceNow developed applications and to third-party applicationsdeveloped on the platform. These capabilities include the critical differentiators of our offerings such as workflow, configuration management database(CMDB), service catalog, knowledge management, reporting, visual task boards, collaboration tools, security, and developer tools.The Platform Runtime developer tools reduce the complexities and inefficiencies of developing applications for our customers’ business. Utilizinga comprehensive set of platform services, developers in IT and departments across the enterprise, such as legal, marketing, HR and finance, can quickly build,test and deploy customer-specific applications for every department in the enterprise. ServiceNow Store is an enterprise application marketplace forServiceNow certified third party business applications built on the ServiceNow platform to help customers optimize business and IT operations.ServiceNow Studio is the Integrated Development Environment for the ServiceNow platform that brings all required tooling into a single familiarenvironment, enabling rapid business application development, scoping and deployment, all from within the browser and without the need for a clientapplication. Features such as a script editor with intelligent code assist, quick file search, application file explorer, and code search speed applicationdevelopment and increase developer productivity on the platform.ServiceNow Edge Encryption provides customers peace-of-mind making their sensitive data unreadable by encrypting and decrypting data sent to andfrom the ServiceNow data center through an on-premises proxy. Customers retain control of their encryption keys used to encrypt data sent to, and stored in,the ServiceNow data center.IT Operations Management SolutionsOur ITOM solutions allow our customers to connect their physical infrastructure as well as their public and private clouds more directly with theServiceNow platform. By applying these solutions, our customers gain greater visibility into their infrastructure and are able to more effectively manage theservices they are delivering to the business. The result is increased service availability and reduced operational costs. The ITOM products are soldindividually as well as in the following logical bundles:ServiceWatch Mapping includes our Service Mapping and Discovery solutions which accurately discover and map the relationships between ITinfrastructure components (e.g. servers) and business services. This allows our customers to create a "service-aware" CMDB so that their IT organizations havegreater visibility into their infrastructure and its relationship with the services used by the business.ServiceWatch Insight adds Event Management to the ServiceWatch Mapping bundle and is designed to provide rapid insight into the issues affectingservice availability and performance. The solution accomplishes this by providing a single interface for collecting, filtering, and correlating event datacaptured by existing third-party monitoring tools. In addition to rapidly identifying root causes of service issues, ServiceWatch Insight allows customers toautomate remedial actions by leveraging relevant IT service management processes, such as incident and change management.4ServiceWatch Suite adds Orchestration and Cloud Management to the ServiceNow ITOM products described above, offering the highest level of IToperational effectiveness. Through Orchestration, IT can automate key processes and tasks associated with common use cases, such as password reset,employee onboarding, client software distribution, provisioning and management of cloud resources, server configuration and provisioning, system resetsand more. Cloud Management provides enterprises with the ability to create virtualized infrastructure offerings that can be published to the Service Catalog,requested by business end-users through self-service, and automatically provisioned using ServiceNow Orchestration. Requesters receive infrastructure “on-demand” while IT is able to standardize cloud resources and minimize the time spent managing cloud infrastructure, resulting in controlled costs andincreased compliance.Comprehensive Services We offer a portfolio of comprehensive services that help ensure customer success. These offerings include Professional Services, Education Services andCustomer Support.Professional Services. Through an ecosystem of ServiceNow and partner resources, we provide professional services that advise and assist customerswith implementation and drive value realization of the ServiceNow platform.Education Services. We offer extensive training services and certification programs for different levels of ServiceNow expertise. Our training portfoliois customized for various skill levels and individual schedules.Customer Support. Customers receive free support 24 hours a day, seven days a week, from technical resources located in Orlando, San Diego and SantaClara in the United States, as well as internationally in Amsterdam, London, and Sydney. We also offer self-service technical support through our supportportal, which provides access to documentation, knowledge base, online support forums and online incident filing. Our Technology and OperationsWe designed our cloud computing service to support global enterprises. The architecture, design, deployment and management of our services arefocused on security, availability and scalability.Unlike many cloud vendors where customers run in multi-tenant environments on shared infrastructure servers and databases, we operate a uniquesingle-instance architecture that provides each customer with their own dedicated application and database processes. This reduces the risk associated withinfrastructure outages, improves system scalability and security, and allows for flexibility in deployment location and version upgrading. We are also able toprocess billions of record-producing transactions per month and manage multiple petabytes of data across our customer base while optimizing transaction-processing time. We will continue to invest in enhancements to our cloud infrastructure, which are designed to provide all our customers with increased datareliability and availability. We have a standardized Java-based development environment with the majority of our software written in industry standardsoftware programming languages. We also use Web2.0 technologies like HTTPS and XML that give users an intuitive and familiar experience. Ourinfrastructure primarily consists of industry standard servers and network components. Our standard operating system and database are Linux and MySQL,respectively. The system is also highly portable and has been deployed across multiple environments including Microsoft Windows and Oracle databases.Our data centers operate in a mirrored configuration to provide high availability and are located in Australia, Brazil, Canada, Hong Kong, theNetherlands, Singapore, Switzerland, the United Kingdom, and the United States.We employ a number of technologies, policies and procedures designed to protect customer data. We offer services that have received SSAE 16 (SOC 1Type 1 and Type 2), SOC 2 and ISO 27001 third-party attestation. Our U.S. federal services have received a FISMA Moderate Authorization (ATO) attestationthat can be used by our U.S. federal customer base. Additionally, our data center providers have received an ISO27001 or SSAE 16 attestation or equivalent.For an increased subscription fee, we offer our customers the option to be deployed on dedicated hardware in our data centers. Our architecture alsogives us the added flexibility to deploy our service on-premises at a customer data center in order to support regulatory or security requirements. When oursoftware is installed on-premises, we define the hardware requirements that the customers must install and manage. We then work with the customers toremotely install the service and provide ongoing customer support similar to the way we support customer instances deployed in our own managed datacenters.5Sales and Marketing We sell our services primarily through our global direct sales organization. We also sell our services indirectly through third- party channels bypartnering with systems integrators, managed services providers and resale partners, particularly in less developed markets.Our marketing efforts and lead generation activities consist primarily of customer referrals, Internet advertising, trade shows, industry events and pressreleases. We also host our annual Knowledge global user conference, webinars and other customer forums where customers and partners both participate inand present on a variety of programs designed to help accelerate marketing success with our services and platform.We are investing in new geographies, including investment in direct and indirect sales channels, professional services capabilities, customer supportresources and implementation partners. In addition to adding new geographies, we also plan to increase our investment in our existing locations in order toachieve scale efficiencies in our sales and marketing efforts.Customers We primarily market our services to large enterprise customers. We have proven scalability supporting large enterprise-wide deployments. As ofDecember 31, 2015, we had approximately 3,000 enterprise customers, including more than 30% of the Global 2000, an annual ranking of the top 2000public companies in the world by Forbes magazine. In addition, as of December 31, 2015, we had approximately 400 customers that have purchased ourExpress product offering, which is our entry-level IT service management solution. Our customers operate in a wide variety of industries, including financialservices, consumer products, IT services, health care and technology. No single customer accounted for more than 10% of our revenue for any of the periodspresented.In the first quarter of 2015, we changed our definition of customer count to better align to a global standard for business identification and tracking.Refer to the “Total customers” paragraph section in Item 7 of Part II of this Annual Report on Form 10-K for further details of the change. BacklogBacklog represents future amounts to be invoiced under our existing agreements and is not included in the deferred revenue on our consolidatedbalance sheets. As of December 31, 2015 and 2014, we had backlog of approximately $1.3 billion and $1.0 billion, respectively. We expect backlog willchange from period to period for several reasons, including the timing and duration of customer subscription and professional services agreements, varyingbilling cycles of subscription agreements, and the timing of customer renewals.Financial Information about Segments and Geographic AreasWe manage our operations and allocate resources as a single reporting segment. For information regarding our revenue, revenue by geographic area andlong-lived assets by geographic area, please refer to Note 2 and Note 17 in the notes to our consolidated financial statements included elsewhere in thisAnnual Report on Form 10-K. For financial information about our segment, please refer to the section entitled “Management's Discussion and Analysis ofFinancial Condition and Results of Operations” in Item 7 of Part II and to our consolidated financial statements and the related notes thereto includedelsewhere in this Annual Report on Form 10-K. For information regarding risks associated with our international operations, please refer to the sectionentitled “Risk Factors” in Item 1A of Part I in this Annual Report on Form 10-K.Research and Development Our research and development organization is responsible for the design, development, testing and certification of our software solutions. We focus ondeveloping new services and core technologies and further enhancing the functionality, reliability, performance and flexibility of existing solutions. Wefocus our efforts on anticipating customer demand and then bringing new services and new versions of existing services to market quickly in order to remaincompetitive in the marketplace. We have made, and will continue to make, significant investments in research and development to strengthen our existingapplications, expand the number of applications on our platform and develop additional automation technologies. Total research and development expensewas $217.4 million, $148.3 million and $78.7 million for the years ended December 31, 2015, 2014 and 2013, respectively.6Competition The markets in which we compete to manage service across the enterprise are fragmented, rapidly evolving and highly competitive, with relatively lowbarriers to entry. As the market for service management matures, we expect competition to intensify. We face competition from in-house solutions, largeintegrated systems vendors, and established and emerging cloud and software vendors. Our competitors vary in size and in the breadth and scope of theproducts and services offered. Our primary competitors include BMC Software, Inc., CA, Inc., Hewlett-Packard Company, International Business MachinesCorporation and Salesforce.com. Further, other potential competitors not currently offering competitive products may expand their services to compete withour services. As we expand the breadth of our services to include offerings for service domains outside of IT, and offerings for small and medium sizedbusinesses, we expect increasing competition from platform vendors and from application development vendors focused on these other markets.The principal competitive factors in our industry include total cost of ownership, product functionality, breadth of offerings, security, flexibility andperformance. We believe that we compete favorably with our competitors on each of these factors. However, our competitors may be able to respond morequickly and effectively than we can to new or changing opportunities, technologies, standards and customer requirements. An existing competitor or newentrant could introduce new technology that reduces demand for our services. In addition, some of our competitors offer their products or services at a lowerprice, which has resulted in pricing pressures. Some of our larger competitors have the operating flexibility to bundle competing products and services withother software offerings, including offering them at a lower price as part of a larger sale.Intellectual Property We rely upon a combination of copyright, trade secret, patent and trademark laws in the United States and other jurisdictions as well as and contractualrestrictions, such as confidentiality and license agreements, to establish, protect and grow our proprietary rights. We also enter into confidentiality andproprietary rights agreements with our employees, consultants and other third parties and control access to our proprietary information.Despite our efforts to protect our proprietary rights, unauthorized parties may attempt to copy or obtain and use our technology to develop products andservices that provide features and functionality that are similar to our solutions. Policing unauthorized use of our technology is difficult. The laws of thecountries in which we market our services may offer little or no effective protection of our proprietary technology. Our competitors could also independentlydevelop services equivalent to ours, and our intellectual property rights may not be broad enough for us to prevent competitors from doing so. Reverseengineering, unauthorized copying or other misappropriation of our proprietary technology could enable third parties to benefit from our technology withoutpaying us for it, which would significantly harm our business.Companies in our industry own large numbers of patents, copyrights, trademarks, and trade secrets and frequently enter into litigation based onallegations of infringement, misappropriation or other violations of intellectual property or other rights. We currently face, and we expect we will face in thefuture, allegations that we have infringed the trademarks, copyrights, patents, trade secrets and other intellectual property rights of third parties, including ourcompetitors and non-practicing entities. As we face increasing competition and as our business grows, we will likely face more claims of infringement. Forexample, on February 6, 2014, Hewlett-Packard Company (“Hewlett-Packard”) filed a lawsuit against us in the U.S. District Court for the Northern District ofCalifornia that alleges that some of our services infringe the claims of eight of Hewlett-Packard's patents. Hewlett-Packard is seeking unspecified damagesand an injunction. On September 23, 2014, BMC Software, Inc. (“BMC”) filed a lawsuit against us in the U.S. District Court for the Eastern District of Texasalleging that some of our services willfully infringe the claims of seven BMC patents. On February 12, 2016, BMC filed a second lawsuit against us in theU.S. District Court for the Eastern District of Texas alleging that some of our services willfully infringe the claims of five BMC patents. BMC is seekingdamages and an injunction. For additional information, see the sections entitled "Risk Factors" in Item 1A and "Legal Proceedings" in Item 3 of Part I of thisAnnual Report on Form 10-K. Employees As of December 31, 2015, we had 3,686 full-time employees worldwide, including 1,065 in operations, professional services, training and customersupport, 1,416 in sales and marketing, 756 in research and development and 449 in general and administrative roles. None of our U.S. employees isrepresented by a labor union with respect to his or her employment. Employees in certain European countries have the benefits of collective bargainingarrangements at the national level. We have not experienced any work stoppages and we believe our relations with our employees to be good.7Available InformationYou can obtain copies of our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and other filings with theSEC, and all amendments to these filings, free of charge from our website at www.servicenow.com as soon as reasonably practicable following our filing ofany of these reports with the SEC. The public may read and copy any materials we have filed with the SEC at the SEC’s Public Reference Room at 100 FStreet, NE, Room 1580, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and information statements and other information regarding issuers that fileelectronically with the SEC at www.sec.gov. The contents of these websites are not incorporated into this filing and our references to the URLs for thesewebsites are intended to be inactive textual references only.8ITEM 1A. RISK FACTORS Investing in our securities involves a high degree of risk. You should consider carefully the risks and uncertainties described below, together with allof the other information in this Annual Report on Form 10-K, including our consolidated financial statements and related notes report, before making aninvestment decision. We have identified the following risks and uncertainties that may have a material adverse effect on our business, financial condition,results of operations and future prospects. Our business could be adversely affected by any of these risks. The trading price of our common stock coulddecline due to any of these risks, and you may lose all or part of your investment. Risks Related to Our Business and IndustryWe expect our revenue growth rate to continue to decline, and we expect to continue to incur losses in accordance with U.S. Generally AcceptedAccounting Principles, or GAAP.From the year ended June 30, 2009 to the year ended December 31, 2015, our revenues grew from $19.3 million to $1.0 billion. Although weexperienced revenue growth in prior periods, our revenue growth rate is declining and we expect that it will continue to decline into the foreseeable future.We also expect our costs to increase in future periods as we continue to invest in our capacity to support anticipated growth. These investments may notresult in increased revenues or growth in our business. Even if our revenues continue to increase, we expect to continue to incur a loss in accordance withGAAP during future periods due to increased costs such as non-cash charges associated with equity awards, business combinations and otherexpenses. Additionally, we may encounter unforeseen operating expenses, difficulties, complications, delays and other unforeseen or unpredictable factorsthat may result in increased costs. Furthermore, it is difficult to predict the size and growth rate of our market, customer demand for our products, customeradoption and renewal rates, and the entry of competitive products or the success of existing competitive products. As a result, we may not achieve or maintainprofitability in the future, our gross margins may be negatively impacted, and our ability to generate cash flow from operations may be negatively impacted.If we fail to grow our revenues sufficiently to keep pace with our growing investments and other expenses, our business operations, operating results andgrowth prospects will be adversely affected.We have recently introduced products in new markets that are important to our growth prospects and for which we do not have an operating history. If weare unsuccessful in competing in these new markets, our revenue growth rate, business and operating results will be adversely affected.We have recently introduced products in the markets for IT operations management, customer service, security incident management and use of ourplatform for service management outside of enterprise IT. Our successful entry into these and other new markets is important to our revenue growth prospects.We do not have a substantial operating history with these products, which limits our ability to forecast operating results, and the success of our efforts toaddress these markets depends on many factors, including: the degree of differentiation of our products and services from those offered by more establishedcompetitors in these markets; whether our product and services offer compelling benefits and value to customers; the time-frame and quality of our researchand development efforts; the rigor and effectiveness of our quality testing and controls; and our ability to successfully market and sell into new markets withwhich our marketing and sales personnel are less experienced. We may not have the necessary resources, including employees with the required productmanagement, engineering, marketing and sales expertise, to compete effectively in these markets. Any new service that we develop may not be introduced ina timely or cost-effective manner, may not be priced appropriately, may not offer compelling customer benefits compared to competing products and services,and may not achieve the broad market acceptance necessary to generate significant revenues. If we are not able to successfully develop, market and sell theseand other newly introduced products and services to our existing customers and prospective new customers our revenue growth rate, business and operatingresults will be adversely affected.9If we are unsuccessful in increasing our rate of growth in new geographic markets, our revenue growth rate, business and operating results will beadversely affected.Sales outside of North America represented approximately 30% of our total revenues for the year ended December 31, 2015. Our business and futureprospects depend on increasing our international sales as a percentage of our total revenues, and the failure to grow internationally will harm our business.Additionally, operating in international markets requires significant investment and management attention and will subject us to regulatory and economicrisks that are different from those in the United States. We have made, and will continue to make, substantial investments in data centers and cloudcomputing infrastructure, sales, marketing, personnel and facilities as we enter and expand in new geographic markets, such as Brazil and various countrieswithin Asia. When we make these investments it is typically unclear whether, and when, sales in the new market will justify our investments, and we maysignificantly underestimate the level of investment and time required to be successful, or whether we will be successful. For example, our rate of acquisitionof new Global 2000 customers, a key factor effecting our growth, has generally been greater in North America, Australia and in areas within Europe than it hasbeen in Africa, Asia, Eastern Europe, South America and other markets in which we are less established. Accordingly, if we continue to further penetrate theGlobal 2000 at a higher rate in our established markets than in our emerging markets, over time an increasing percentage of the overall Global 2000enterprises that are not yet our customers are in markets in which we have generally had a lower rate of customer acquisition or in which we are not yetcompeting. Additionally, currency fluctuations in certain countries and regions may negatively impact actual prices that partners and customers are willingto pay in those countries and regions, or the effective prices we realize in our reporting currency. We have experienced, and may continue to experience,difficulties in some of our investments in geographic expansion, including in hiring qualified sales management personnel. If we are unsuccessful in makingthese investments, or if our required investments are greater than anticipated, our revenue growth rate, business and operating results will be adverselyaffected.We expect competition to cause the sales prices of our products to decline, which may harm our financial results.The sales prices for our products, subscriptions and services may decline for a variety of reasons, including competitive pricing pressures, discounts, achange in our mix of products and subscriptions, anticipation of the introduction of new products or subscriptions, or promotional programs. Competitioncontinues to increase in the market segments in which we participate, and we expect competition to further increase in the future, thereby leading to increasedpricing pressures. Larger competitors with more diverse product and service offerings may reduce the price of products or subscriptions that compete withours or may bundle them with other products and subscriptions. In addition, we expect that smaller competitors and new entrants may accelerate the declineof prices in the IT service management market, which is our more mature offering from which we derive the substantial majority of our revenues and willcontinue to do so for the foreseeable future. Furthermore, we anticipate that the sales prices and gross profits for our products will decrease over product lifecycles. We may not be successful in developing and introducing new offerings on a timely basis, and any new product and subscription offerings, ifintroduced, may not enable us to maintain our prices and gross profits at levels that will allow us to maintain positive gross margins.If we fail to meet the financial performance expectations of investors or securities analysts, the price of our common stock could decline substantially.For any quarterly or annual period there is a risk that our financial performance will not meet the financial guidance we have previously given for thatperiod, or that we may otherwise fail to meet the financial performance expectations of the securities analysts who issue reports on our company and ourcommon stock price, or of investors in our common stock. There is also a risk that we may issue forward-looking financial guidance for a quarterly or annualperiod that fails to meet the expectations of such securities analysts or investors. If any of the foregoing occurs, for any reason either within or outside of ourcontrol, the price of our common stock could decline substantially and investors in our common stock could incur substantial losses. Some of the importantfactors that may cause our revenues, operating results and cash flows, or our forward-looking financial guidance, to fall below the expectations of suchsecurities analysts or investors include:•our ability to retain and increase sales to existing customers, attract new customers and satisfy our customers’ requirements;•changes in foreign currency exchange rates;•the rate of expansion and productivity of our sales force;•the number of new employees added;•the cost, timing and management effort for our development of new services;•general economic conditions that may adversely affect either our customers’ ability or willingness to purchase additional subscriptions, delay aprospective customer’s purchasing decision, reduce the value of new subscription contracts or affect renewal rates;•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 for our services;10•the length of the sales cycle for our services;•changes in our pricing policies, whether initiated by us or as a result of competition;•significant security breaches, technical difficulties or interruptions of our services;•new solutions, products or changes in pricing policies introduced by our competitors;•changes in effective tax rates;•changes in the average duration of our customer agreements and changes in billing cycle;•changes in our renewal and upsell rates;•the timing of customer payments and payment defaults by customers;•extraordinary expenses such as litigation costs or damages, including settlement payments;•the impact of new accounting pronouncements;•changes in laws or regulations impacting the delivery of our services;•the amount and timing of stock awards and the related financial statement expenses; and•our ability to accurately estimate the total addressable market for our products and services.Lawsuits against us by third-parties that allege we infringe their intellectual property rights could harm our business and operating results.There is considerable patent and other intellectual property development activity in our industry. Our success depends in part on not infringing uponthe intellectual property rights of others. We may be unaware of the intellectual property rights of others that may cover some or all of our technology orservices. From time to time, our competitors or other third parties, including patent holding companies seeking to monetize patents they have purchased orotherwise obtained, may claim that we are infringing upon their intellectual property rights, and we may be found to be infringing upon such rights. For example, on February 6, 2014, Hewlett-Packard Company (“Hewlett-Packard”) filed a lawsuit against us in the U.S. District Court for the NorthernDistrict of California that alleges that some of our services infringe the claims of U.S. Patent Nos. 6,331,229 (the “’229 patent”), 7,027,411 (the “’411patent”), 7,392,300 (the “’300 patent”), 7,610,512 (the “’512 patent”), 7,890,802 (the “’802 patent”), 7,925,981 (the “’981 patent”), 7,945,860 (the “’860patent”) and 8,224,683 (the “’683 patent”). Hewlett-Packard is seeking unspecified damages and an injunction. We filed an answer to the complaint onMarch 28, 2014 denying the allegations and asserting various affirmative defenses. The parties are currently conducting discovery. Hewlett-Packard servedinfringement contentions on July 3, 2014 and November 18, 2014. We served invalidity contentions on January 9, 2015. On March 10, 2015, the courtgranted our motion for summary judgment, finding that the asserted claims of four of the eight asserted Hewlett-Packard patents are invalid for failing toclaim patentable subject matter. On October 13, 2015, the court granted in part our renewed motion for a stay of litigation, staying all proceedings as to twoof the four remaining asserted patents pending final decisions from the United States Patent and Trademark Office on our petitions for inter partes review. Aclaim construction hearing for the two asserted patents not subject to the court’s stay is scheduled for April 29, 2016. The trial is currently scheduled to beginon May 22, 2017. We filed petitions for inter partes review with the United States Patent Trial and Appeal Board (“PTAB”) seeking to invalidate all eightHewlett Packard patents. The PTAB granted our petitions for inter partes review of the ‘229, ‘411, ‘300 and ‘683 patents and denied our petitions of theremaining four patents. We also filed petitions for covered business method (“CBM”) review with the PTAB seeking to invalidate the ‘981 and ‘860 patents.The PTAB denied our petitions for CBM review of the ‘981 and ‘860 patents.On or about November 1, 2015, Hewlett-Packard separated into two independently publicly traded companies: (i) Hewlett Packard Enterprise Company(“HPE”); and (ii) HP, Inc. As part of this separation, Hewlett-Packard assigned to HPE all right, title, and interest in the eight Hewlett-Packard patents in suit.On or about November 4, 2015, Hewlett-Packard filed a stipulated request to substitute HPE for Hewlett-Packard and the Court granted the stipulated request,substituting HPE for Hewlett-Packard as plaintiff in the litigation.11On September 23, 2014, BMC Software, Inc. (“BMC”) filed a lawsuit against us in the U.S. District Court for the Eastern District of Texas alleging thatsome of our services willfully infringe the claims of U.S. Patent Nos. 5,978,594 (the “‘594 patent”), 6,816,898 (the “‘898 patent”), 6,895,586 (the “‘586patent”), 7,062,683 (the “‘683 patent”), 7,617,073 (the “‘073 patent”), 8,646,093 (the “‘093 patent”) and 8,674,992 (the “‘992 patent”). BMC is seekingdamages and an injunction. BMC served infringement contentions on January 6, 2015. We served invalidity contentions on March 3, 2015. We filed ananswer to the complaint on June 1, 2015 denying the allegations and asserting various affirmative defenses. A claim construction hearing occurred on July10, 2015, followed by the court's claim construction order on August 13, 2015. On January 25, 2016, the court issued an order dismissing all of BMC’s claimsrelated to the ‘594 and ‘093 patents without prejudice. On February 23, 2016, BMC voluntarily withdrew all claims related to the ‘073 patent. The trial iscurrently scheduled to begin on March 11, 2016. We filed petitions for inter partes review with the PTAB seeking to invalidate the ‘594, ‘073, ‘898, ‘586,‘093 and ‘992 patents. The PTAB granted our petitions for inter partes review of the ‘594, ‘073 and ‘992 patents and denied our petitions of the ‘586, ‘093and ‘898 patents. We also filed petitions for CBM review with the PTAB seeking to invalidate the ‘683 and ‘093 patents. The PTAB granted our petition forCBM review of the ‘093 patent and denied our petition for CBM review of the ‘683 patent.On February 12, 2016, BMC filed an additional lawsuit against us in the U.S. District Court for the Eastern District of Texas alleging that some of ourservices willfully infringe the claims of U.S. Patent Nos. 7,877,783 (the “‘783 patent”), 7,966,398 (the “‘398 patent”), 8,554,750 (the “‘750 patent”), the ‘586patent and the ‘898 patent. BMC is seeking damages and an injunction. The court has not yet set a schedule for this lawsuit.We intend to vigorously defend against HPE’s and BMC's lawsuits. The final outcome with respect to the claims in the lawsuits, including our liability,if any, is uncertain. Furthermore, we cannot be certain that any claims by HPE or BMC would be resolved in our favor. For example, an adverse litigationruling could result in a significant damages award against us, could result in injunctive relief, could result in a requirement that we make substantial royaltypayments, and could require that we modify our products to the extent that we are found to infringe any valid claims asserted against us. Moreover, to theextent we are found to infringe on any valid claims asserted against us, our attempt to modify our products so that they are no longer infringing may beunsuccessful, could cause us to incur substantial expense, could be a distraction to management, and any such modified products may not be well received inthe market. To the extent that we reach a negotiated settlement, the settlement could require that we pay substantial royalties and could require that we makemodifications to our products that may not be well received in the market.At this stage in these litigation matters, any possible monetary loss or range of monetary loss cannot be estimated. The outcome of litigation isinherently uncertain. If one or more of these legal matters were resolved against us in a reporting period, or settled on unfavorable terms, our consolidatedfinancial statements for that reporting period could be materially adversely affected.In any intellectual property litigation, regardless of the scope or merits of the claims at issue, we may incur substantial attorney’s fees and otherlitigation expenses and, if the claims are successfully asserted against us, we could be required to: pay substantial damages and make substantial ongoingroyalty payments; cease offering our products and services; modify our products and services; comply with other unfavorable terms, including settlementterms; and indemnify our customers and business partners and obtain costly licenses on their behalf and refund fees or other payments previously paid to us.Moreover, the mere existence of any lawsuit, or any interim or final outcomes, and the course of its conduct and the public statements related to it (or absenceof such statements) by the courts, press, analysts and litigants, could be unsettling to our customers and prospective customers and could cause an adverseimpact to our customer satisfaction and related renewal rates and cause us to lose potential sales, and could also be unsettling to investors or prospectiveinvestors in our common stock and could cause a substantial decline in the price of our common stock.. Accordingly, any claim or litigation against us couldbe costly, time-consuming and divert the attention of our management and key personnel from our business operations and harm our financial condition andoperating results.If we suffer a cyber-security event we may lose customers, lose future sales, experience business interruption and injury to our competitive position, andincur significant liabilities, any of which would harm our business and operating results.Our operations involve the storage, transmission and processing of our customers’ confidential, proprietary and sensitive information, including in somecases personally identifiable information, protected health information, proprietary information and credit card and other sensitive financial information.While we have security measures in place designed to protect customer information and prevent data loss, they may be breached as a result of third-partyaction, including intentional misconduct by computer hackers, employee error, malfeasance or otherwise, and result in someone obtaining unauthorizedaccess to our customers’ data or our data, including our intellectual property and other confidential business information. A security breach or unauthorizedaccess could result in the loss or exposure of this data, litigation, indemnity and other contractual obligations, government fines and penalties, mitigationexpenses and other liabilities. Additionally, the cost and operational consequences of responding to breaches and implementing remediation measures couldbe significant.12Computer malware, viruses and hacking and phishing attacks by third parties have become more prevalent in our industry, have occurred on oursystems in the past and may occur on our systems in the future. Because techniques used to obtain unauthorized access to or sabotage systems changefrequently and generally are not recognized until successfully launched against a target, we may be unable to anticipate these techniques or to implementadequate preventative measures. As cyber-security threats develop and grow, it may be necessary to make significant further investments to protect data andinfrastructure. If an actual or perceived breach of our security occurs, we could suffer severe reputational damage adversely affecting customer or investorconfidence, the market perception of the effectiveness of our security measures could be harmed, we could lose potential sales and existing customers, ourability to deliver our services or operate our business may be impaired, we may be subject to litigation or regulatory investigations or orders, and we mayincur significant liabilities. We do not have insurance sufficient to compensate us for the potentially significant losses that may result from security breaches.Disruptions in our services could damage our customers’ businesses, subject us to substantial liability and harm our reputation and financial results.Our customers use our services to manage important aspects of their businesses, and any disruptions in our services could damage our customers'businesses, subject us to substantial liability, and harm our reputation and financial results. From time to time, we experience defects in our services, and newdefects may be detected in the future. We provide regular updates to our services, which frequently contain undetected defects when first introduced orreleased. Defects may also be introduced by our use of third-party software, including open source software. Disruptions may also result from errors we makein delivering, configuring, or hosting our services, or designing, installing, expanding or maintaining our cloud infrastructure. Disruptions in service can alsoresult from incidents that are outside of our control. We currently serve our customers primarily using equipment managed by us and co-located in third-partydata center facilities operated by several different providers located around the world. These centers are vulnerable to damage or interruption fromearthquakes, floods, fires, power loss and similar events. They may also be subject to break-ins, sabotage, intentional acts of vandalism and similarmisconduct, equipment failure and adverse events caused by operator error. We cannot rapidly switch to new data centers or move customers from one datacenter to another in the event of any such adverse event. Despite precautions taken at these facilities, problems at these facilities could result in lengthyinterruptions in our services and the loss of customer data. In addition, our customers may use our services in ways that cause disruptions in service for othercustomers. Our reputation and business will be adversely affected if our customers and potential customers believe our services are unreliable. Disruptions inour services may reduce our revenues, cause us to issue credits or pay penalties, subject us to claims and litigation, cause our customers to delay payment orterminate or fail to renew their subscriptions, and adversely affect our ability to attract new customers. The occurrence of payment delays, or service credit,warranty, termination for material breach or other claims against us, could result in an increase in our bad debt expense, an increase in collection cycles foraccounts receivable, an increase to our warranty provisions or service level credit accruals or other increased expenses or risks of litigation. We do not haveinsurance sufficient to compensate us for the potentially significant losses that may result from claims arising from disruptions in our services.If we are unable to continuously enhance our products and services to deliver consumer product-like experiences, mobility, messaging and ease of use, theycould become less competitive or obsolete and our business and operating results will be adversely affected.We believe that enterprises are increasingly focused on delivering a consumer-like technology experience to users within the enterprise, such asemployees, and to individuals interacting with the enterprise, such as customers, partners and suppliers. Accordingly, our ability to attract new customers andto renew and increase revenues from existing customers depends on our ability to continuously enhance our products and services and provide them in waysthat are broadly accepted. In particular, we need to continuously modify and improve our products and services to keep pace with changes in userexpectations, including intuitive and attractive user interfaces, use and mobility features, messaging, social networking, and communication, database,hardware and security technologies. If we are unable to consistently and timely meet these requirements, our products and services may become lessmarketable and less competitive or obsolete and our business and operating results will be adversely affected.13The markets in which we participate are intensely competitive, and if we do not compete effectively our business and operating results will be adverselyaffected.The markets in which we compete to manage services across the enterprise are fragmented, rapidly evolving and highly competitive, with relatively lowbarriers to entry. As the market for service management matures, we expect competition to intensify. We face competition from in-house solutions, largeintegrated systems vendors, and established and emerging cloud and software vendors. Our competitors vary in size and in the breadth and scope of theproducts and services offered. Many of our competitors and potential competitors are larger, have greater name recognition, longer operating histories, moreestablished customer relationships, larger marketing budgets and greater resources than we do. Furthermore, third parties with greater available resources andthe ability to initiate or withstand substantial price competition may acquire our current or potential competitors. Our primary competitors include BMCSoftware, Inc., CA, Inc., Hewlett-Packard Company, International Business Machines Corporation and Salesforce.com. Further, other potential competitorsnot currently offering competitive products may expand their services to compete with our services. As we expand the breadth of our services to includeofferings in the markets for IT operations management, customer service, security incident management and use of our platform for service managementoutside of enterprise IT, we expect increasing competition from platform vendors and from application development vendors focused on these other markets.Our competitors may be able to respond more quickly and effectively than we can to new or changing opportunities, technologies, standards and customerrequirements. An existing competitor or new entrant could introduce new technology that reduces demand for our services. In addition to product andtechnology competition, we face pricing competition. Some of our competitors offer their products or services at a lower price, which has resulted in pricingpressures. Some of our larger competitors have the operating flexibility to bundle competing products and services with other software offerings, includingoffering them at a lower price as part of a larger sale. For all of these reasons, we may not be able to compete successfully and competition could result inreduced sales, reduced margins, losses or the failure of our services to achieve or maintain market acceptance, any of which could harm our business.If we lose key employees or are unable to attract and retain the employees we need, our business and operating results will be adversely affected.Our success depends largely upon the continued services of our management team and many key individual contributors. From time to time, there maybe changes in our management team resulting from the hiring or departure of employees, which could disrupt our business. Our employees are generallyemployed on an at-will basis, which means that our employees could terminate their employment with us at any time. The loss of one or more members of ourmanagement team or other key employees could have a serious impact on our business. In the technology industry, there is substantial and continuouscompetition for engineers with high levels of experience in designing, developing and managing software and Internet-related solutions, as well ascompetition for sales executives and operations personnel. We may not be successful in attracting and retaining qualified personnel. We have from time totime experienced, and we may continue to experience, difficulty in hiring and retaining highly skilled employees with appropriate qualifications. Inparticular, competition for experienced software and cloud computing infrastructure engineers in the San Francisco Bay area, San Diego, Seattle, London andAmsterdam, our primary operating locations, is intense. If we fail to attract new personnel or fail to retain and motivate our current personnel, our businessand future growth prospects could be adversely affected.Our revenue growth rate, business and operating results will be adversely affected if we fail to effectively expand our sales and marketing capabilities.Increasing our customer base and achieving broader market acceptance of our services will depend, to a significant extent, on our ability to effectivelyexpand our sales and marketing operations and activities. We are substantially dependent on our direct sales force to obtain new customers. During the yearended December 31, 2015, our sales and marketing organization increased from 1,011 to 1,416 employees. We plan to continue to expand our direct salesforce both domestically and internationally. There is significant competition for direct sales personnel with the sales skills and technical knowledge that werequire. Our ability to achieve significant revenue growth in the future will depend, in large part, on our success in recruiting, training and retaining asufficient number of direct sales personnel and we may be unable to hire or retain sufficient numbers of qualified individuals. Newly hired employees requiresignificant training and time before they achieve full productivity, particularly in new sales territories, and our recent hires and planned hires may notbecome as productive as quickly as we plan, or at all. Further, in our less established markets such as in Brazil and various countries within Asia, we do nothave significant experience as an organization developing and implementing sales and marketing campaigns, and such campaigns may be expensive anddifficult to implement, and we may be unable to attract and retain qualified personnel to conduct such campaigns. Our business will be adversely affected ifour sales and marketing expansion efforts do not generate a significant increase in revenues.14Our business depends substantially on our existing customers purchasing additional subscriptions from us and renewing their subscriptions uponexpiration of their subscription term. Any decline in customer additional purchases or renewals would harm our business and operating results.In order for us to maintain or improve our operating results, it is important that our existing customers expand their use of our services by adding newusers and applying our products and services in new ways across the enterprise, and renew their subscriptions upon expiration of the subscription contractterm. Our customers have no obligation to renew their subscriptions, and our customers may not renew subscriptions with a similar contract period or with thesame or a greater number of users. Although our renewal rates have historically been high, some of our customers have elected not to renew their agreementswith us and we cannot accurately predict renewal rates. Moreover, in some cases, some of our customers have the right to cancel their agreements prior to theexpiration of the term. Our renewal rates may decline or fluctuate as a result of a number of factors, including: our customers' satisfaction with our productsand services and customer support; our prices and pricing policies and the prices of competing products and services; mergers and acquisitions affecting ourcustomer base; customer personnel changes; global economic conditions; or reductions in our customers’ spending levels. Our renewal rates may also declinebased on our customers’ satisfaction with the implementation and other professional services of our partners, or the quality of implementations by ourcustomers, all of which are generally outside of our control. If our customers do not renew their subscriptions, renew on less favorable terms, fail to add moreauthorized users, fail to purchase additional professional services, decline to act as enthusiastic reference accounts for our customer prospects, or disparageour products and services, our revenue growth rate, business and operating results will be adversely affected.Our revenue growth depends in part on the success of our strategic relationships with third parties and their continued performance.We depend on our channel partners, including our implementation partners, systems integrators, managed services providers and sales partners in orderto grow our business. Our sales efforts have focused on large enterprise customers and there are a limited number of partners with the capacity to provide thesecustomers an effective level of services. In order to continue our revenue growth, we need to recruit these partners and these partners need to devotesubstantial resources to our solutions. Accordingly, we need to build services, implement partner programs, and provide training and other resources torecruit, retain and enable these partners. Our agreements with partners are typically non-exclusive and do not prohibit them from working with ourcompetitors or from offering competing solutions. Our competitors may be effective in providing incentives to our partners to favor their solutions orotherwise disrupt the relationships we have with our partners. In addition, global economic conditions could harm the businesses of our partners, and it ispossible that they may not be able to devote the additional resources we expect to the relationship. If we are unsuccessful in establishing or maintaining ourrelationships with our channel partners, our ability to compete in the marketplace or to grow our revenues could be impaired and our operating results wouldsuffer. To compete in the markets for our newly introduced products in the markets for IT operations management, customer service, security incidentmanagement and use of our platform for service management outside of enterprise IT, we may need to establish relationships with additional sales andimplementation partners. Further, reliance on third parties exposes us to risk of poor performance and failed customer expectations. If our channel partners donot effectively provide services or support to the satisfaction of our end-customers, we may incur additional costs to address the situation, the profitability ofthat work might be impaired, and the customer’s dissatisfaction could damage our reputation or ability to obtain additional revenues from that customer orprospective customers.15Privacy laws and concerns, evolving regulation of cloud computing, and the changes in laws, regulations and standards related to the Internet may causeour business to suffer.Federal, state or foreign government bodies or agencies have in the past adopted, and may in the future adopt, laws and regulations affecting dataprivacy, the use of the Internet as a commercial medium, and data sovereignty requirements concerning the location of data centers that store and processdata. Industry organizations also regularly adopt and advocate for new standards in these areas. Changing laws, regulations and standards applying to thesolicitation, collection, transfer, processing, storage or use of personal or consumer information could affect our customers’ ability to use and share data,potentially restricting our ability to store, process and share data with our customers in connection with providing our services, and in some cases couldimpact our ability to offer our services in certain locations or our customers’ ability to deploy our services globally. For example, the European Court ofJustice in October 2015 issued a ruling immediately invalidating the U.S.-EU Safe Harbor framework that had been in place since 2000, which facilitated thetransfer of personal data from the European Economic Area to the United States in compliance with applicable European data protection laws. While otheradequate legal mechanisms for lawfully transferring European personal data to the United States remain, there is regulatory uncertainty surrounding how datatransfers from the European Economic Area to the United States will be authorized in the future. Future laws, regulations, standards and other obligations, andchanges in the interpretation of existing laws, regulations, standards and other obligations could impair our or our customers’ ability to collect, use ordisclose information relating to individuals, which could decrease demand for our applications, require us to restrict our business operations, increase ourcosts and impair our ability to maintain and grow our customer base and increase our revenue. In addition, government agencies or private organizations maybegin to impose taxes, fees or other charges for accessing the Internet, commerce conducted via the Internet or validation that particular processes follow thelatest standards. These changes could limit the viability of cloud computing services such as ours. If we are not able to adjust to changing laws, regulationsand standards related to the Internet, our business may be adversely affected.Prospective customers that have not yet embraced cloud computing solutions may continue to be reluctant, slow, or unwilling to do so, any of which couldharm our business and operating results.We do not know whether the trend of adoption of enterprise cloud computing solutions from which we have benefited in the past will continue in thefuture at the same overall growth rates. Many organizations have invested substantial personnel and financial resources to integrate enterprise software intotheir businesses over time, and some have been reluctant or unwilling to migrate to cloud computing solutions. Furthermore, some organizations have beenreluctant or unwilling to use cloud computing solutions because they have concerns regarding the risks associated with the security of their data, the physicallocation of data centers in which their data is stored and processed, and the reliability of the technology delivery model associated with these solutions. Inaddition, if either we or other cloud computing providers experience security incidents, loss of customer data, disruptions in delivery, or other problems, themarket for cloud computing solutions as a whole, including for our products and services, will be negatively impacted. For these and other reasons, there is asubstantial risk that enterprises (including Global 2000 enterprises on which we are dependent for sales growth) that have not yet embraced cloud computingsolutions will continue to be reluctant, slow, or be unwilling to do so, or willing to do so only to a limited extent, any of which could harm our business.Foreign currency exchange rate fluctuations could harm our financial results.We conduct significant transactions, including revenue transactions and intercompany transactions, in currencies other than the U.S. Dollar or thefunctional operating currency of the transactional entities. In addition, our international subsidiaries maintain significant net assets that are denominated incurrencies other than the functional operating currencies of these entities. Accordingly, changes in the value of currencies relative to the U.S. Dollar canaffect our consolidated revenues and operating results due to transactional and translational remeasurement that is reflected in our earnings. For example, theU.S. Dollar has strengthened relative to the Euro and other currencies in the past year. This has, and if this trend continues it will continue to, negativelyimpact our consolidated revenues. It is particularly difficult to forecast any impact from exchange rate movements, so there is risk that unanticipated currencyfluctuations could adversely affect our results or cause our results to differ from investor expectations or our own guidance in any future periods.We do not currently maintain a program to hedge transactional exposures in foreign currencies. However, in the future, we may use derivativeinstruments, such as foreign currency forward and option contracts, to hedge certain exposures to fluctuations in foreign currency exchange rates. The use ofsuch hedging activities may not offset any or more than a portion of the adverse financial effects of unfavorable movements in foreign exchange rates overthe limited time the hedges are in place. Moreover, the use of hedging instruments may introduce additional risks if we are unable to structure effectivehedges with such instruments.16Because we recognize revenues from our subscription service over the subscription term, downturns or upturns in new sales and renewals will not beimmediately reflected in our operating results.We generally recognize revenues from customers ratably over the terms of their subscriptions. As a result, most of the revenues we report in each quarterare derived from the recognition of deferred revenues relating to subscriptions entered into during previous quarters. Consequently, a decline in new orrenewed subscriptions in any single quarter will likely have only a small, and perhaps no apparent, impact on our revenue results for that quarter. Such adecline, however, will negatively affect our revenues in future quarters. Accordingly, the effect of significant downturns in sales and market acceptance of ourservices, and potential changes in our rate of renewals, may not be fully reflected in our results of operations until future periods. Our subscription model alsomakes it difficult for us to rapidly increase our revenues through additional sales in any period, as revenues from new customers must be recognized over theapplicable subscription term. In addition, we may be unable to adjust our cost structure to reflect the changes in revenues.Unanticipated changes in our effective tax rate could harm our financial results.We are subject to income taxes in the United States and various foreign jurisdictions, and our domestic and international tax liabilities are subject to theallocation of earnings and losses in differing jurisdictions. Our effective tax rate could be adversely affected by changes in the mix of earnings and losses incountries with differing statutory tax rates, certain non-deductible expenses as a result of acquisitions, the valuation of deferred tax assets and liabilities andchanges in federal, state or international tax laws and accounting principles. Increases in our effective tax rate would reduce our profitability or in some casesincrease our losses.Our tax provision could be impacted by changes in federal, state, or international tax laws or tax rulings. For example, the current U.S. administrationand key members of Congress have made public statements indicating that tax reform is a priority. Certain changes to U.S. tax laws, including limitations onthe ability to defer U.S. taxation on earnings outside of the United States until those earnings are repatriated to the United States, could affect the taxtreatment of our foreign earnings. In addition, many countries in the European Union, as well as a number of other countries and organizations such as theOrganization for Economic Cooperation and Development, are actively considering changes to existing tax laws or have enacted new laws. Certain proposalsor newly enacted laws include provisions that could significantly increase our tax obligations in some countries. These changes in taxation may increase ourworldwide effective tax rate and harm our financial position and results of operations.In addition, we may be subject to income tax audits by tax jurisdictions throughout the world, many of which have not established clear guidance onthe tax treatment of cloud computing companies. Although we believe our income tax liabilities are reasonably estimated and accounted for in accordancewith applicable laws and principles, an adverse resolution of one or more uncertain tax positions in any period could have a material impact on the results ofoperations for that period.We may acquire or invest in companies and technologies, which may divert our management’s attention, and result in additional dilution to ourstockholders. We may be unable to integrate acquired businesses and technologies successfully or achieve the expected benefits of such acquisitions orinvestments.As part of our business strategy, we have acquired companies in the past and may evaluate and consider potential strategic transactions, includingacquisitions of, or investments in, businesses, technologies, services, products and other assets in the future. We also may enter into relationships with otherbusinesses to expand our service offerings or our ability to provide services in international locations, which could involve preferred or exclusive licenses,additional channels of distribution, discount pricing or investments in other companies. An acquisition, investment or business relationship may result inunforeseen operating difficulties and expenditures. In particular, we may encounter difficulties assimilating or integrating the businesses, technologies,products, personnel or operations of the acquired companies, particularly if the key personnel of the acquired company choose not to work for us, theirtechnology is not easily adapted to work with ours, or we have difficulty retaining the customers of any acquired business due to changes in ownership,management or otherwise.Negotiating these transactions can be time-consuming, difficult and expensive, and our ability to close these transactions may often be subject toconditions or approvals that are beyond our control. Consequently, these transactions, even if undertaken and announced, may not close. For one or more ofthose transactions, we may:•issue additional equity securities that would dilute our stockholders;•use cash that we may need in the future to operate our business;•incur debt on terms unfavorable to us or that we are unable to repay;•incur large charges or substantial liabilities;•encounter difficulties retaining key employees of the acquired company or integrating diverse technologies, software or business cultures; and17•become subject to adverse tax consequences, substantial depreciation or deferred compensation charges.Acquisitions or other strategic investments may also disrupt our business, divert our resources and require significant management attention that wouldotherwise be available for development of our existing business. Moreover, the anticipated benefits of any acquisition, investment or business relationshipmay not be realized or we may be exposed to unknown risks or liabilities.A portion of our revenues are generated by sales to government entities and heavily regulated organizations, which are subject to a number of challengesand risks.A portion of our sales are to governmental agencies. Additionally, many of our current and prospective customers, such as those in the financialservices and health care industries, are highly regulated and may be required to comply with more stringent regulations in connection with subscribing to andimplementing our services. Selling to these entities can be highly competitive, expensive and time consuming, often requiring significant upfront time andexpense without any assurance that we will successfully complete a sale. Furthermore, engaging in sales activities to foreign governments introducesadditional compliance risks specific to the Foreign Corrupt Practices Act, the UK Bribery Act and other similar statutory requirements prohibiting bribery andcorruption in the jurisdictions in which we operate. Government and highly regulated entities often require contract terms that differ from our standardarrangements and impose compliance requirements that are complicated, require preferential pricing or “most favored nation” terms and conditions, or areotherwise time consuming and expensive to satisfy. If we undertake to meet special standards or requirements and do not meet them, we could be subject toincreased liability from our customers or regulators. Even if we do meet them, the additional costs associated with providing our services to government andhighly regulated customers could harm our margins. Moreover, changes in the underlying regulatory conditions that affect these types of customers couldharm our ability to efficiently provide our services to them and to grow or maintain our customer base.Our sales cycles are long, and if they lengthen further, or if our substantial upfront sales investments do not result in sufficient sales, our business andoperating results could be adversely affected.We target our sales efforts at large enterprise customers. Because these customers are often making an enterprise-wide decision to deploy our services,sometimes on a global basis, we face long and variable sales cycles, complex customer requirements, substantial upfront pre-sales costs and less predictabilityin completing some of our sales. Our sales cycle is generally six to nine months, but is variable and difficult to predict and can be much longer. Furthermore,large enterprises often undertake a prolonged evaluation of our services, including whether they need professional services performed by us or a third partyfor their service management needs, and a comparison of our services to products offered by our competitors. Some of our large enterprise customers initiallydeploy our services on a limited basis, with no guarantee that these customers will deploy our services widely enough across their organization to justify oursubstantial pre-sales investment. If our sales cycle lengthens or our substantial upfront pre-sales investments do not result in sufficient subscription revenuesto justify our investments, our operating results could be adversely affected.Sales to customers outside North America expose us to risks inherent in international sales.Because we sell our services throughout the world, we are subject to risks that we would otherwise not face if we conducted our business only in NorthAmerica. The business conduct and ethical standards of many other countries, including the emerging market countries that we are expanding into, aresubstantially different and much less rigorous than the United States. Risks inherent with international sales include without limitation:•foreign currency fluctuations which may cause exchange and translation losses;•compliance with multiple, conflicting and changing governmental laws and regulations, including employment, tax, competition, privacy anddata protection laws and regulations;•compliance by us and our business partners with international bribery and corruption laws, including the UK Bribery Act and the Foreign CorruptPractices Act;•the risk that illegal or unethical activities of our business partners will be attributed to or result in liability to us;•compliance with regional data privacy laws that apply to the transmission of our customers’ data across international borders, many of which arestricter than the equivalent U.S. laws;•difficulties in staffing and managing foreign operations;•different or lesser protection of our intellectual property;•longer and potentially more complex sales cycles;•longer accounts receivable payment cycles and other collection difficulties;•treatment of revenues from international sources and changes to tax codes, including being subject to foreign tax laws and being liable for payingwithholding, income or other taxes in foreign jurisdictions;18•different pricing and distribution environments;•local business practices and cultural norms that may favor local competitors;•localization of our services, including translation into foreign languages and associated expenses; and•regional economic and political conditions.Any of these factors could negatively impact our business and results of operations.Our intellectual property protections may not provide us with a competitive advantage, and defending our intellectual property may result in substantialexpenses that harm our operating results.Our success depends to a significant degree on our ability to protect our proprietary technology and our brand under a combination of patent and otherintellectual property laws of the United States and other jurisdictions. Though we seek patent protection for our technology, we may not be successful inobtaining patent protection, and any patents issued in the future may not provide us with competitive advantages, or may be successfully challenged by thirdparties. Furthermore, legal standards relating to the validity, enforceability and scope of protection of intellectual property rights are uncertain. Any of ourintellectual property rights may be challenged by others or invalidated through administrative process or litigation. Effective patent, trademark, copyrightand trade secret protection may not be available to us in every country in which our services are available. The laws of some foreign countries may not be asprotective of intellectual property rights as those in the United States, and mechanisms for enforcement of intellectual property rights may be inadequate. Wemay be required to spend significant resources to monitor and protect our intellectual property rights. We have, and in the future may, initiate claims orlitigation against third parties for infringement of our proprietary rights or to establish the validity of our proprietary rights. Any litigation, whether or not itis resolved in our favor, could result in significant expense to us, divert the efforts of our technical and management personnel and may result in counter-claims with respect to infringement of intellectual property rights by us. If we are unable to prevent third parties from infringing upon or misappropriating ourintellectual property, or are required to incur substantial expenses in defending our intellectual property rights, our business and operating results may beadversely affected.Our use of open source software could harm our ability to sell our services and subject us to possible litigation.Our products incorporate software licensed to us by third-party authors under open source licenses, and we may continue to incorporate open sourcesoftware into other services in the future. We attempt to monitor our use of open source software in an effort to avoid subjecting our services to adverselicensing conditions. However, there can be no assurance that our efforts have been or will be successful. There is little or no legal precedent governing theinterpretation of the terms of open source licenses, and therefore the potential impact of these terms on our business is uncertain and enforcement of theseterms may result in unanticipated obligations regarding our services and technologies. For example, depending on which open source license governs opensource software included within our services or technologies, we may be subjected to conditions requiring us to offer our services to users at no cost; makeavailable the source code for modifications and derivative works based upon, incorporating or using the open source software; and license suchmodifications or derivative works under the terms of the particular open source license. Moreover, if an author or other third party that distributes such opensource software were to allege that we had not complied with the conditions of one or more of these licenses, we could be required to incur significant legalcosts defending ourselves against such allegations, be subject to significant damages or be enjoined from the distribution of our services.If we are unable to maintain effective internal control over financial reporting, the accuracy and timeliness of our financial reporting may be adverselyaffected.The Sarbanes-Oxley Act requires us, among other things, to assess and report on the effectiveness of our internal control over financial reportingannually and disclosure controls and procedures quarterly. In addition, our independent registered public accounting firm is required to audit theeffectiveness of our internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act annually. Our independent registeredpublic accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our controls are documented, designed oroperating. Moreover, our testing, or the subsequent testing by our independent registered public accounting firm, may reveal material weaknesses. If materialweaknesses are identified or we are not able to comply with the requirements of Section 404 in a timely manner, our reported financial results could bematerially misstated or could subsequently require restatement, we could receive an adverse opinion regarding our internal control over financial reportingfrom our independent registered public accounting firm, we could be subject to investigations or sanctions by regulatory authorities and we could incursubstantial expenses.19Natural disasters and other events beyond our control could harm our business.Natural disasters or other catastrophic events may cause damage or disruption to our operations, international commerce and the global economy, andthus could have a negative effect on us. Our business operations are subject to interruption by natural disasters, flooding, fire, power shortages, pandemicsand other events beyond our control. Although we maintain crisis management and disaster response plans, such events could make it difficult or impossiblefor us to deliver our services to our customers, could decrease demand for our services, and would cause us to incur substantial expense. Our insurance maynot be sufficient to cover losses or additional expense that we may sustain in connection with any natural disaster. The majority of our research anddevelopment activities, corporate offices, information technology systems, and other critical business operations are located near major seismic faults inCalifornia. Customer data could be lost, significant recovery time could be required to resume operations and our financial condition and operating resultscould be adversely affected in the event of a major natural disaster or catastrophic event.Weakened global economic conditions may harm our industry, business and results of operations.Our overall performance depends in part on worldwide economic conditions. Global financial developments seemingly unrelated to us or the softwareindustry may harm us. The United States and other key international economies have been impacted by high levels of bad debt globally, geopoliticalinstability, slowing economic growth in China, falling demand for a variety of goods and services including oil and other commodities, high levels ofpersistent unemployment and wage and income stagnation in some geographic markets, restricted credit, poor liquidity, reduced corporate profitability,volatility in credit, equity and foreign exchange markets, bankruptcies and overall uncertainty with respect to the economy. These conditions affect the rateof information technology spending and could adversely affect our customers’ ability or willingness to purchase our services, delay prospective customers’purchasing decisions, reduce the value or duration of their subscriptions, or affect renewal rates, all of which could harm our operating results. In addition, theeffects, if any, of global financial conditions on our business can be difficult to distinguish from the effects on our business from product, pricing, and otherdevelopments in the markets specific to our products and our relative competitive strength. If we make incorrect judgments about our business for this reasonour business and results of operations could be adversely affected. Risks Related to Our 0% Convertible Senior Notes Due 2018, or the NotesAlthough the Notes are referred to as convertible senior notes, they are effectively subordinated to any of our secured debt and any liabilities of oursubsidiaries.The Notes will rank senior in right of payment to any of our indebtedness that is expressly subordinated in right of payment to the Notes; equal in rightof payment to any of our liabilities that are not so subordinated; effectively junior in right of payment to any of our secured indebtedness to the extent of thevalue of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities (including trade payables) of our subsidiaries.In the event of our bankruptcy, liquidation, reorganization or other winding up, our assets that secure debt ranking senior in right of payment to the Noteswill be available to pay obligations on the Notes only after the secured debt has been repaid in full from these assets, and the assets of our subsidiaries will beavailable to pay obligations on the Notes only after all claims senior to the Notes have been repaid in full. There may not be sufficient assets remaining topay amounts due on any or all of the Notes then outstanding. The indenture governing the Notes does not prohibit us from incurring additional senior debt orsecured debt, nor does it prohibit any of our current or future subsidiaries from incurring additional liabilities.As of December 31, 2015, we and our subsidiaries had $474.5 million in consolidated indebtedness, and our subsidiaries had $231.6 million ofliabilities (including trade payables but excluding intercompany obligations and liabilities of a type not required to be reflected on a balance sheet of suchsubsidiaries in accordance with GAAP) to which the Notes would have been structurally subordinated.Recent and future regulatory actions and other events may adversely affect the trading price and liquidity of the Notes.We expect that many investors in, and potential purchasers of, the Notes will employ, or seek to employ, a convertible arbitrage strategy with respect tothe Notes. Investors would typically implement such a strategy by selling short the common stock underlying the Notes and dynamically adjusting theirshort position while continuing to hold the Notes. Investors may also implement this type of strategy by entering into swaps on our common stock in lieu ofor in addition to short selling the common stock.20The SEC and other regulatory and self-regulatory authorities have implemented various rules and taken certain actions, and may in the future adoptadditional rules and take other actions, that may impact those engaging in short selling activity involving equity securities (including our common stock).Such rules and actions include Rule 201 of SEC Regulation SHO, the adoption by the Financial Industry Regulatory Authority, Inc. and the nationalsecurities exchanges of a “Limit Up-Limit Down” program, the imposition of market-wide circuit breakers that halt trading of securities for certain periodsfollowing specific market declines, and the implementation of certain regulatory reforms required by the Dodd-Frank Wall Street Reform and ConsumerProtection Act of 2010. Any governmental or regulatory action that restricts the ability of investors in, or potential purchasers of, the Notes to effect shortsales of our common stock, borrow our common stock or enter into swaps on our common stock could adversely affect the trading price and the liquidity ofthe Notes.We may still incur substantially more debt or take other actions which would diminish our ability to make payments on the Notes when due.We and our subsidiaries may be able to incur substantial additional debt in the future, subject to the restrictions contained in our future debtinstruments, some of which may be secured debt. We are not restricted under the terms of the indenture governing the Notes from incurring additional debt,securing existing or future debt, recapitalizing our debt or taking a number of other actions that are not limited by the terms of the indenture governing theNotes that could have the effect of diminishing our ability to make payments on the Notes when due.We may not have the ability to raise the funds necessary to settle conversions of the Notes in cash or to repurchase the Notes upon a fundamental change,and our future debt may contain limitations on our ability to pay cash upon conversion or repurchase of the Notes.Holders of the Notes will have the right to require us to repurchase all or a portion of their Notes upon the occurrence of a fundamental change at arepurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid special interest, if any. In addition, uponconversion of the Notes, unless we elect to deliver solely shares of our common stock to settle such conversion (other than paying cash in lieu of deliveringany fractional share), we will be required to make cash payments in respect of the Notes being converted. However, we may not have enough available cash orbe able to obtain financing at the time we are required to make repurchases of Notes surrendered therefor or pay cash with respect to Notes being converted.In addition, our ability to repurchase or to pay cash upon conversion of the Notes may be limited by law, regulatory authority or agreements governingour future indebtedness. Our failure to repurchase Notes at a time when the repurchase is required by the indenture or to pay cash upon conversion of theNotes as required by the indenture would constitute a default under the indenture. A default under the indenture or the fundamental change itself could alsolead to a default under agreements governing our future indebtedness. Moreover, the occurrence of a fundamental change under the indenture couldconstitute an event of default under any such agreements. If the payment of the related indebtedness were to be accelerated after any applicable notice orgrace periods, we may not have sufficient funds to repay the indebtedness and repurchase the Notes or to pay cash upon conversion of the Notes.The conditional conversion feature of the Notes, if triggered, may adversely affect our financial condition and operating results.In the event the conditional conversion feature of the Notes is triggered, holders of Notes will be entitled to convert the Notes at any time duringspecified periods at their option. If one or more holders elect to convert their Notes, unless we elect to satisfy our conversion obligation by delivering solelyshares of our common stock (other than paying cash in lieu of delivering any fractional share), we would be required to settle a portion or all of ourconversion obligation in cash, which could adversely affect our liquidity. In addition, even if holders do not elect to convert their Notes, we could berequired under applicable accounting rules to reclassify all or a portion of the outstanding principal of the Notes as a current rather than long-term liability,which would result in a material reduction of our net working capital.21The accounting method for convertible debt securities that may be settled in cash, such as the Notes, could have a material effect on our reported financialresults.In May 2008, Financial Accounting Standards Board (FASB) issued FASB Staff Position No. APB 14-1, Accounting for Convertible Debt InstrumentsThat May Be Settled in Cash upon Conversion (Including Partial Cash Settlement), which has subsequently been codified as Accounting StandardsCodification 470-20, Debt with Conversion and Other Options, or ASC 470-20. Under ASC 470-20, an entity must separately account for the liability andequity components of the convertible debt instruments (such as the Notes) that may be settled entirely or partially in cash upon conversion in a manner thatreflects the issuer’s economic interest cost. The effect of ASC 470-20 on the accounting for the Notes is that the equity component is required to be includedin the additional paid-in capital section of stockholders’ equity on our consolidated balance sheet at the issuance date and the value of the equity componentwould be treated as debt discount for purposes of accounting for the debt component of the Notes. As a result, we are required to record a greater amount ofnon-cash interest expense as a result of the amortization of the discounted carrying value of the Notes to their face amount over the term of the Notes. We willreport lower net income (or larger net losses) in our financial results because ASC 470-20 requires interest to include both the amortization of the debtdiscount and the instrument’s non-convertible coupon interest rate, which could adversely affect our future financial results, the trading price of our commonstock and the trading price of the Notes.Holders of Notes will not be entitled to any rights with respect to our common stock, but they will be subject to all changes made with respect to them to theextent our conversion obligation includes shares of our common stock.Holders of Notes will not be entitled to any rights with respect to our common stock (including, without limitation, voting rights and rights to receiveany dividends or other distributions on our common stock) prior to the conversion date relating to such Notes (if we have elected to settle the relevantconversion by delivering solely shares of our common stock (other than paying cash in lieu of delivering any fractional share)) or the last trading day of therelevant observation period (if we elect to pay and deliver, as the case may be, a combination of cash and shares of our common stock in respect of therelevant conversion), but holders of Notes will be subject to all changes affecting our common stock. For example, if an amendment is proposed to ourrestated certificate of incorporation or restated bylaws requiring stockholder approval and the record date for determining the stockholders of record entitledto vote on the amendment occurs prior to the conversion date related to a holder’s conversion of its Notes (if we have elected to settle the relevant conversionby delivering solely shares of our common stock (other than paying cash in lieu of delivering any fractional share)) or the last trading day of the relevantobservation period (if we elect to pay and deliver, as the case may be, a combination of cash and shares of our common stock in respect of the relevantconversion), such holder will not be entitled to vote on the amendment, although such holder will nevertheless be subject to any changes affecting ourcommon stock.The conditional conversion feature of the Notes could result in note holders receiving less than the value of our common stock into which the Notes wouldotherwise be convertible.Prior to the close of business on the business day immediately preceding July 1, 2018, holders of our Notes may convert their Notes only if specifiedconditions are met. If the specific conditions for conversion are not met, holders will not be able to convert their Notes, and they may not be able to receivethe value of the cash, common stock or a combination of cash and common stock, as applicable, into which their Notes would otherwise be convertible.Upon conversion of the Notes, note holders may receive less valuable consideration than expected because the value of our common stock may declineafter holders exercise their conversion right but before we settle our conversion obligation.Under the Notes, a converting holder will be exposed to fluctuations in the value of our common stock during the period from the date such holdersurrenders Notes for conversion until the date we settle our conversion obligation.22Upon conversion of the Notes, we have the option to pay or deliver, as the case may be, cash, shares of our common stock, or a combination of cash andshares of our common stock. If we elect to satisfy our conversion obligation in cash or a combination of cash and shares of our common stock, the amount ofconsideration that a note holder will receive upon conversion of such holder’s Notes will be determined by reference to the volume weighted average pricesof our common stock for each trading day in a 30 trading-day observation period. This period would be: (i) if the relevant conversion date occurs prior to July1, 2018, the 30 consecutive trading days beginning on, and including, the second trading day immediately succeeding such conversion date; and (ii) if therelevant conversion date occurs during the period from, and including, July 1, 2018 to the close of business on the second scheduled trading dayimmediately preceding November 1, 2018, the 30 consecutive trading days beginning on, and including, the 32nd scheduled trading day immediatelypreceding the maturity date. Accordingly, if the price of our common stock decreases during this period, the amount and/or value of consideration noteholders receive will be adversely affected. In addition, if the market price of our common stock at the end of such period is below the average of the dailyvolume weighted average prices of our common stock during such period, the value of any shares of our common stock that note holders will receive insatisfaction of our conversion obligation will be less than the value used to determine the number of shares that holders will receive.If we elect to satisfy our conversion obligation solely in shares of our common stock upon conversion of the Notes, we will be required to deliver theshares of our common stock, together with cash for any fractional share, on the third business day following the relevant conversion date (or, for conversionsoccurring on or after July 1, 2018, on the maturity date). Accordingly, if the price of our common stock decreases during this period, the value of the sharesthat holders receive will be adversely affected and would be less than the conversion value of the Notes on the conversion date.The Notes are not protected by restrictive covenants.The indenture governing the Notes does not contain any financial or operating covenants or restrictions on the payments of dividends, the incurrenceof indebtedness or the issuance or repurchase of securities by us or any of our subsidiaries. The indenture contains no covenants or other provisions to affordprotection to holders of the Notes in the event of a fundamental change or other corporate transaction involving us except in certain cases described in theindenture connected with fundamental changes, consolidations, mergers or sales of assets.The increase in the conversion rate for Notes converted in connection with a make-whole fundamental change may not adequately compensate holders ofthe Notes for any lost value of the Notes as a result of such transaction.If a make-whole fundamental change occurs prior to maturity, under certain circumstances, we will increase the conversion rate by a number ofadditional shares of our common stock for Notes converted in connection with such make-whole fundamental change. The increase in the conversion ratewill be determined based on the date on which the specified corporate transaction becomes effective and the price paid (or deemed to be paid) per share of ourcommon stock in such transaction. The increase in the conversion rate for Notes converted in connection with a make-whole fundamental change may notadequately compensate holders for any lost value of the Notes as a result of such transaction. In addition, if the price of our common stock in the transactionis greater than $250.00 per share or less than $53.73 per share (in each case, subject to adjustment), no additional shares will be added to the conversion rate.Moreover, in no event will the conversion rate per $1,000 principal amount of Notes as a result of this adjustment exceed 18.6115 shares of common stock,subject to adjustment in the same manner as the conversion rate.Our obligation to increase the conversion rate for Notes converted in connection with a make-whole fundamental change could be considered apenalty, in which case the enforceability thereof would be subject to general principles of reasonableness and equitable remedies.The conversion rate of the Notes may not be adjusted for all dilutive events.The conversion rate of the Notes is subject to adjustment for certain events, including, but not limited to, the issuance of certain stock dividends on ourcommon stock, the issuance of certain rights or warrants, subdivisions, combinations, distributions of capital stock, indebtedness, or assets, cash dividendsand certain issuer tender or exchange offers. However, the conversion rate will not be adjusted for other events, such as a third-party tender or exchange offeror an issuance of common stock for cash, that may adversely affect the trading price of the Notes or our common stock. An event that adversely affects thevalue of the Notes may occur, and that event may not result in an adjustment to the conversion rate.23Provisions in the indenture for the Notes may deter or prevent a business combination that may be favorable to note holders.If a fundamental change occurs prior to the maturity date of the Notes, holders of the Notes will have the right, at their option, to require us torepurchase all or a portion of their Notes. In addition, if a make-whole fundamental change occurs prior to the maturity date of the Notes, we will in somecases be required to increase the conversion rate for a holder that elects to convert its Notes in connection with such make-whole fundamental change.Furthermore, the indenture for the Notes prohibits us from engaging in certain mergers or acquisitions unless, among other things, the surviving entityassumes our obligations under the Notes and the indenture. These and other provisions in the indenture could deter or prevent a third party from acquiring useven when the acquisition may be favorable to note holders.Some significant restructuring transactions may not constitute a fundamental change, in which case we would not be obligated to offer to repurchase theNotes.Upon the occurrence of a fundamental change, note holders have the right to require us to repurchase all or a portion of the Notes. However, thefundamental change provisions will not afford protection to holders of Notes in the event of other transactions that could adversely affect the Notes. Forexample, transactions such as leveraged recapitalizations, refinancings, restructurings, or acquisitions initiated by us may not constitute a fundamentalchange requiring us to offer to repurchase the Notes. In the event of any such transaction, the holders would not have the right to require us to repurchase theNotes, even though each of these transactions could increase the amount of our indebtedness, or otherwise adversely affect our capital structure or any creditratings, thereby adversely affecting the holders of Notes.In addition, absent the occurrence of a fundamental change or a make-whole fundamental change, changes in the composition of our board of directorswill not provide holders with the right to require us to repurchase the Notes or to an increase in the conversion rate upon conversion.We have not registered the Notes or the common stock issuable upon conversion of the Notes, if any, which will limit the ability of note holders to resellthem.The Notes and the shares of common stock issuable upon conversion of the Notes, if any, have not been registered under the Securities Act of 1933, asamended, or the Securities Act, or any state securities laws. Unless the Notes and any shares of common stock issuable upon conversion of the Notes havebeen registered, they may not be transferred or resold except in a transaction exempt from or not subject to the registration requirements of the Securities Actand applicable state securities laws. We do not intend to file a registration statement for the resale of the Notes and the common stock, if any, into which theNotes are convertible.We cannot guarantee an active trading market for the Notes.We have not listed and do not intend to apply to list the Notes on any securities exchange or to arrange for quotation on any automated dealerquotation system. Moreover, the initial purchasers of the Notes may cease making a market in the Notes at any time without notice. In addition, the liquidityof the trading market in the Notes, and the market price quoted for the Notes, may be adversely affected by changes in the overall market for this type ofsecurity and by changes in our financial performance or prospects or in the prospects for companies in our industry generally. As a result, we cannot assurenote holders that there will be an active trading market for the Notes. If an active trading market is not maintained, the market price and liquidity of the Notesmay be adversely affected. In that case, note holders might not be able to sell the Notes at a particular time or at a favorable price.Any adverse rating of the Notes may cause their trading price to fall.We have not obtained and do not intend to seek a rating on the Notes. However, if a rating service were to rate the Notes and if such rating service wereto lower its rating on the Notes below the rating initially assigned to the Notes or otherwise announces its intention to put the Notes on credit watch, thetrading price of the Notes could decline.24Note holders may be subject to tax if we make or fail to make certain adjustments to the conversion rate of the Notes even though note holders do notreceive a corresponding cash distribution.The conversion rate of the Notes is subject to adjustment in certain circumstances, including the payment of cash dividends. If the conversion rate isadjusted as a result of a distribution that is taxable to our common stockholders, such as a cash dividend, note holders may be deemed to have received adividend subject to U.S. federal income tax without the receipt of any cash. In addition, a failure to adjust (or to adjust adequately) the conversion rate afteran event that increases a note holder’s proportionate interest in us could be treated as a deemed taxable dividend to such note holder. If a make-wholefundamental change occurs prior to maturity, under some circumstances, we will increase the conversion rate for Notes converted in connection with themake-whole fundamental change. Such increase may also be treated as a distribution subject to U.S. federal income tax as a dividend. If a holder is a non-U.S.holder, any deemed dividend generally would be subject to U.S. federal withholding tax at a 30% rate, or such lower rate as may be specified by anapplicable treaty, which may be set off against subsequent payments on the Notes.Future sales of our common stock in the public market could lower the market price for our common stock and adversely impact the trading price of theNotes.In the future, we may sell additional shares of our common stock to raise capital. In addition, a substantial number of shares of our common stock isreserved for issuance upon the exercise of stock options, the vesting of restricted stock, settlement of restricted stock units and issuance of performance sharespursuant to our employee benefit plans, for purchase by employees under our employee stock purchase plan, upon conversion of the Notes and in relation tothe warrant transactions we entered into in connection with the pricing of the Notes. We cannot predict the size of future issuances or the effect, if any, thatthey may have on the market price for our common stock. The issuance and sale of substantial amounts of common stock, or the perception that suchissuances and sales may occur, could adversely affect the trading price of the Notes and the market price of our common stock and impair our ability to raisecapital through the sale of additional equity securities.The convertible note hedge and warrant transactions may affect the value of the Notes and our common stock.In connection with the sale of the Notes, we entered into convertible note hedge, or Note Hedge, transactions with certain financial institutions (the“option counterparties”). We also entered into warrant transactions with the option counterparties pursuant to which we sold warrants for the purchase of ourcommon stock, or Warrants. The Note Hedge transactions are expected generally to reduce the potential dilution upon any conversion of Notes and/or offsetany cash payments we are required to make in excess of the principal amount of converted Notes, as the case may be. The warrant transactions couldseparately have a dilutive effect to the extent that the market price per share of our common stock exceeds the strike price of the Warrants.The option counterparties and/or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives withrespect to our common stock and/or purchasing or selling our common stock in secondary market transactions prior to the maturity of the Notes (and arelikely to do so during any observation period related to a conversion of Notes or following any repurchase of Notes by us on any fundamental changerepurchase date or otherwise). This activity could also cause or avoid an increase or a decrease in the market price of our common stock or the Notes, whichcould affect note holders’ ability to convert the Notes and, to the extent the activity occurs during any observation period related to a conversion of Notes, itcould affect the amount and value of the consideration that note holders will receive upon conversion of the Notes.The potential effect, if any, of these transactions and activities on the market price of our common stock or the Notes will depend in part on marketconditions and cannot be ascertained at this time. Any of these activities could adversely affect the value of our common stock and the value of the Notes(and as a result, the value of the consideration, the amount of cash and/or the number of shares, if any, that note holders would receive upon the conversion ofany Notes) and, under certain circumstances, the ability of the note holders to convert the Notes.We do not make any representation or prediction as to the direction or magnitude of any potential effect that the transactions described above may haveon the price of the Notes or our common stock. In addition, we do not make any representation that the option counterparties will engage in thesetransactions or that these transactions, once commenced, will not be discontinued without notice.25We are subject to counterparty risk with respect to the Note Hedge transactions.The option counterparties are financial institutions, and we will be subject to the risk that any or all of them may default under the Note Hedgetransactions. Our exposure to the credit risk of the option counterparties will not be secured by any collateral. Recent global economic conditions haveresulted in the actual or perceived failure or financial difficulties of many financial institutions. If an option counterparty becomes subject to insolvencyproceedings, we will become an unsecured creditor in those proceedings, with a claim equal to our exposure at that time under our transactions with thatoption counterparty. Our exposure will depend on many factors but, generally, an increase in our exposure will be correlated to an increase in the marketprice and in the volatility of our common stock. In addition, upon a default by an option counterparty, we may suffer adverse tax consequences and moredilution than we currently anticipate with respect to our common stock. We can provide no assurances as to the financial stability or viability of the optioncounterparties.Risks Related to Ownership of Our Common Stock The market price of our common stock has historically been and is likely to continue to be volatile, could adversely impact the trading price of the Notesand could subject us to litigation.The trading price of our common stock has been, and is likely to continue to be, volatile and could be subject to wide fluctuations in response tovarious factors, some of which are beyond our control. In addition, the trading prices of the securities of technology companies in general have been highlyvolatile, and the volatility in market price and trading volume of securities is often unrelated or disproportionate to the financial performance of thecompanies issuing the securities. Factors affecting the market price of our common stock include: •variations in our growth rate, operating results, earnings per share, cash flows from operating activities, deferred revenue, and other financialmetrics and non-financial metrics, and how those results compare to analyst expectations;•forward-looking statements related to future revenues and earnings per share;•the net increases in the number of customers, either independently or as compared with published expectations of industry, financial or otheranalysts that cover our company;•changes in the estimates of our operating results or changes in recommendations by securities analysts that elect to follow our common stock;•announcements of technological innovations, new solutions or enhancements to services, strategic alliances or significant agreements by us or byour competitors;•announcements regarding our efforts to expand our offerings for service domains outside of IT, and offerings for small and medium-sizedbusinesses;•announcements by us or by our competitors of mergers or other strategic acquisitions, or rumors of such transactions involving us or ourcompetitors;•announcements of customer additions and customer cancellations or delays in customer purchases;•recruitment or departure of key personnel;•disruptions in our services due to computer hardware, software or network problems, security breaches, or other man-made or natural disasters;•the economy as a whole, and market conditions in our industry and the industries of our customers;•trading activity by a limited number of stockholders who together beneficially own a majority of our outstanding common stock;•the size of our market float and the volume of trading in our common stock, including sales upon exercise of outstanding options or vesting ofequity awards or sales and purchases of any common stock issued upon conversion of the Notes or in connection with the Note Hedge and Warranttransactions relating to the Notes; and•any other factors discussed herein.26In addition, if the market for technology stocks or the stock market in general experiences uneven investor confidence, the market price of our commonstock could decline for reasons unrelated to our business, operating results or financial condition. The market price of our common stock might also declinein reaction to events that affect other companies within, or outside, our industry even if these events do not directly affect us. A decrease in the market priceof our common stock would likely adversely impact the trading price of our Notes. The price of our common stock could also be affected by possible sales ofour common stock by investors who view the Notes as a more attractive means of equity participation in us and by hedging or arbitrage trading activity thatwe expect to develop involving our common stock. This trading activity could, in turn, affect the trading price of the Notes. Some companies that haveexperienced volatility in the trading price of their stock have been the subject of securities class action litigation. If we are the subject of such litigation, itcould result in substantial costs and a diversion of our management’s attention and resources.We do not intend to pay dividends on our common stock so any returns will be limited to changes in the value of our common stock. We have never declared or paid any cash dividends on our common stock. We currently anticipate that we will retain future earnings for thedevelopment, operation and expansion of our business and do not anticipate declaring or paying any cash dividends for the foreseeable future. In addition,our ability to pay cash dividends on our common stock may be prohibited or limited by the terms of any future debt financing arrangement. Any return tostockholders will therefore be limited to the increase, if any, of our stock price.Provisions in our charter documents, Delaware law and our Notes might discourage, delay or prevent a change of control of our company or changes inour management and, therefore, depress the market price of our common stock. Our restated certificate of incorporation and restated bylaws contain provisions that could depress the market price of our common stock by acting todiscourage, delay or prevent a change in control of our company or changes in our management that the stockholders of our company may deemadvantageous. These provisions among other things: •establish a classified board of directors so that not all members of our board are elected at one time;•permit the board of directors to establish the number of directors;•provide that directors may only be removed “for cause” and only with the approval of 66 2/3% of our stockholders;•require super-majority voting to amend some provisions in our restated certificate of incorporation and restated bylaws;•authorize the issuance of “blank check” preferred stock that our board could use to implement a stockholder rights plan;•eliminate the ability of our stockholders to call special meetings of stockholders;•prohibit stockholder action by written consent, which requires all stockholder actions to be taken at a meeting of our stockholders;•provide that the board of directors is expressly authorized to make, alter or repeal our restated bylaws; and•establish advance notice requirements for nominations for election to our board or for proposing matters that can be acted upon by stockholders atannual stockholder meetings.In addition, Section 203 of the Delaware General Corporation Law may discourage, delay or prevent a change in control of our company. Section 203imposes certain restrictions on merger, business combinations and other transactions between us and holders of 15% or more of our common stock.Further, the fundamental change provisions of our Notes may delay or prevent a change in control of our company, because those provisions allow noteholders to require us to repurchase such notes upon the occurrence of a fundamental change (as defined in the indenture for the Notes).27ITEM 1B. UNRESOLVED STAFF COMMENTSNone.ITEM 2. PROPERTIESOur principal office is located in Santa Clara, California.We also maintain offices in various North American, South American, European and Asian countries. All of our properties are currently leased. Webelieve our existing facilities are adequate to meet our current requirements. See Note 16 in the notes to our consolidated financial statements includedelsewhere in this Annual Report on Form 10-K for more information about our lease commitments. We expect to expand our facilities capacity as ouremployee base grows. We believe we will be able to obtain such space on acceptable and commercially reasonable terms.ITEM 3. LEGAL PROCEEDINGSOn February 6, 2014, Hewlett-Packard Company (“Hewlett-Packard”) filed a lawsuit against us in the U.S. District Court for the Northern District ofCalifornia that alleges that some of our services infringe the claims of U.S. Patent Nos. 6,331,229 (the “’229 patent”), 7,027,411 (the “’411 patent”),7,392,300 (the “’300 patent”), 7,610,512 (the “’512 patent”), 7,890,802 (the “’802 patent”), 7,925,981 (the “’981 patent”), 7,945,860 (the “’860 patent”) and8,224,683 (the “’683 patent”). Hewlett-Packard is seeking unspecified damages and an injunction. We filed an answer to the complaint on March 28, 2014denying the allegations and asserting various affirmative defenses. The parties are currently conducting discovery. Hewlett-Packard served infringementcontentions on July 3, 2014 and November 18, 2014. We served invalidity contentions on January 9, 2015. On March 10, 2015, the court granted our motionfor summary judgment, finding that the asserted claims of four of the eight asserted Hewlett-Packard patents are invalid for failing to claim patentable subjectmatter. On October 13, 2015, the court granted in part our renewed motion for a stay of litigation, staying all proceedings as to two of the four remainingasserted patents pending final decisions from the United States Patent and Trademark Office on our petitions for inter partes review. A claim constructionhearing for the two asserted patents not subject to the court’s stay is scheduled for April 29, 2016. The trial is currently scheduled to begin on May 22, 2017.We filed petitions for inter partes review with the United States Patent Trial and Appeal Board (“PTAB”) seeking to invalidate all eight Hewlett Packardpatents. The PTAB granted our petitions for inter partes review of the ‘229, ‘411, ‘300 and ‘683 patents and denied our petitions of the remaining fourpatents. We also filed petitions for covered business method (“CBM”) review with the PTAB seeking to invalidate the ‘981 and ‘860 patents. The PTABdenied our petitions for CBM review of the ‘981 and ‘860 patents.On or about November 1, 2015, Hewlett-Packard separated into two independently publicly traded companies: (i) Hewlett Packard Enterprise Company(“HPE”); and (ii) HP, Inc. As part of this separation, Hewlett-Packard assigned to HPE all right, title, and interest in the eight Hewlett-Packard patents in suit.On or about November 4, 2015, Hewlett-Packard filed a stipulated request to substitute HPE for Hewlett-Packard and the Court granted the stipulated request,substituting HPE for Hewlett-Packard as plaintiff in the litigation.On September 23, 2014, BMC Software, Inc. (“BMC”) filed a lawsuit against us in the U.S. District Court for the Eastern District of Texas alleging thatsome of our services willfully infringe the claims of U.S. Patent Nos. 5,978,594 (the “‘594 patent”), 6,816,898 (the “‘898 patent”), 6,895,586 (the “‘586patent”), 7,062,683 (the “‘683 patent”), 7,617,073 (the “‘073 patent”), 8,646,093 (the “‘093 patent”) and 8,674,992 (the “‘992 patent”). BMC is seekingdamages and an injunction. BMC served infringement contentions on January 6, 2015. We served invalidity contentions on March 3, 2015. We filed ananswer to the complaint on June 1, 2015 denying the allegations and asserting various affirmative defenses. A claim construction hearing occurred on July10, 2015, followed by the court's claim construction order on August 13, 2015. On January 25, 2016, the court issued an order dismissing all of BMC’s claimsrelated to the ‘594 and ‘093 patents without prejudice. On February 23, 2016, BMC voluntarily withdrew all claims related to the ‘073 patent. The trial iscurrently scheduled to begin on March 11, 2016. We filed petitions for inter partes review with the PTAB seeking to invalidate the ‘594, ‘073, ‘898, ‘586,‘093 and ‘992 patents. The PTAB granted our petitions for inter partes review of the ‘594, ‘073 and ‘992 patents and denied our petitions of the ‘586, ‘093and ‘898 patents. We also filed petitions for CBM review with the PTAB seeking to invalidate the ‘683 and ‘093 patents. The PTAB granted our petition forCBM review of the ‘093 patent and denied our petition for CBM review of the ‘683 patent.28On February 12, 2016, BMC filed an additional lawsuit against us in the U.S. District Court for the Eastern District of Texas alleging that some of ourservices willfully infringe the claims of U.S. Patent Nos. 7,877,783 (the “‘783 patent”), 7,966,398 (the “‘398 patent”), 8,554,750 (the “‘750 patent”), the ‘586patent and the ‘898 patent. BMC is seeking damages and an injunction. The court has not yet set a schedule for this lawsuit.We intend to vigorously defend against HPE’s and BMC's lawsuits. The final outcome with respect to the claims in the lawsuits, including our liability,if any, is uncertain. Furthermore, we cannot be certain that any claims by HPE or BMC would be resolved in our favor. For example, an adverse litigationruling could result in a significant damages award against us, could result in injunctive relief, could result in a requirement that we make substantial royaltypayments, and could require that we modify our products to the extent that we are found to infringe any valid claims asserted against us. Moreover, to theextent we are found to infringe on any valid claims asserted against us, our attempt to modify our products so that they are no longer infringing may beunsuccessful, could cause us to incur substantial expense, could be a distraction to management, and any such modified products may not be well received inthe market. To the extent that we reach a negotiated settlement, the settlement could require that we pay substantial royalties and could require that we makemodifications to our products that may not be well received in the market.At this stage in these litigation matters, any possible monetary loss or range of monetary loss cannot be estimated. The outcome of litigation isinherently uncertain. If one or more of these legal matters were resolved against us in a reporting period, or settled on unfavorable terms, our consolidatedfinancial statements for that reporting period could be materially adversely affected.ITEM 4. MINE SAFETY DISCLOSURESNot applicable.29PART IIITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITYSECURITIESMarket Information for Common StockOur common stock is listed on the New York Stock Exchange under the symbol “NOW.”The following table sets forth for the indicated periods the high and low sales prices of our common stock as reported by the New York Stock Exchange. High LowYear ended December 31, 2015 First Quarter$81.24 $62.55 Second Quarter$83.52 $70.32 Third Quarter$81.21 $64.29 Fourth Quarter$91.28 $67.65 Year ended December 31, 2014 First Quarter$71.80 $54.36 Second Quarter$63.96 $44.17 Third Quarter$64.98 $54.11 Fourth Quarter$70.90 $54.05Dividend PolicyWe have never paid any cash dividends on our common stock. Our board of directors currently intends to retain any future earnings to supportoperations and to finance the growth and development of our business, and therefore does not intend to pay cash dividends on our common stock for theforeseeable future. Any future determination related to our dividend policy will be made at the discretion of our board of directors.StockholdersAs of December 31, 2015, there were 24 registered stockholders of record (not including beneficial holders of stock held in street names) of our commonstock.Securities Authorized for Issuance under Equity Compensation PlansThe information required by this item will be included in an amendment to this Annual Report on Form 10-K or incorporated by reference from ourdefinitive proxy statement to be filed pursuant to Regulation 14A.Stock Performance GraphThe following shall not be deemed incorporated by reference into any of our other filings under the Securities Exchange Act of 1934, as amended, theExchange Act, or the Securities Act except to the extent we specifically incorporate it by reference into such filing.The graph below compares the cumulative total stockholder return on our common stock with the cumulative total return on the NYSE CompositeIndex and the Standard & Poor Systems Software Index for the period beginning on June 29, 2012 (the date our common stock commenced trading on theNew York Stock Exchange) through December 31, 2015, assuming an initial investment of $100. Data for the NYSE Composite Index and the Standard &Poor Systems Software Index assume reinvestment of dividends.30The comparisons in the graph below are based upon historical data and are not indicative of, nor intended to forecast, future performance of ourcommon stock. Jun 29,2012 Sep 30,2012 Dec 31,2012 Mar 31,2013 Jun 30,2013 Sep 30,2013 Dec 31,2013 Mar 31,2014 Jun 30,2014 Sep 30,2014 Dec 31,2014 Mar 31,2015 Jun 30,2015 Sep 30,2015 Dec 31,2015ServiceNow, Inc.100.00 157.24 122.07 147.15 164.19 211.18 227.68 243.58 251.87 238.94 275.81 320.24 302.07 282.32 351.87NYSE Composite100.00 106.46 109.60 118.97 120.54 127.34 138.40 140.95 147.96 145.06 147.74 149.14 149.14 136.10 141.70S&P SystemsSoftware100.00 101.19 97.22 102.05 112.75 113.91 129.20 139.18 141.64 150.50 158.92 144.85 150.92 147.05 175.56Unregistered Sales of Equity SecuritiesThere were no unregistered sales of equity securities which have not been previously disclosed in a quarterly report on Form 10-Q or a current report onForm 8-K during the year ended December 31, 2015.Issuer Purchases of Equity SecuritiesDuring the year ended December 31, 2015, we did not purchase any of our equity securities that are registered under Section 12 of the Exchange Act.31ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA The following selected consolidated financial data should be read together with our consolidated financial statements and accompanying notes and“Management’s Discussion and Analysis of Financial Condition and Results of Operations” appearing elsewhere in this filing. The selected consolidatedfinancial data in this section are not intended to replace our consolidated financial statements and the related notes. Our historical results are not necessarilyindicative of our future results. The selected consolidated statements of operations data for each of the years ended December 31, 2015, 2014 and 2013, and the selected consolidatedbalance sheet data as of December 31, 2015 and 2014 are derived from our audited consolidated financial statements and are included in this Form 10-K. Theconsolidated statements of operations data for the year ended December 31, 2012, six months ended December 31, 2011 and fiscal 2011 and the consolidatedbalance sheet data as of December 31, 2013, 2012, 2011 and June 30, 2011 are derived from our consolidated financial statements which are not included inthis Annual Report on Form 10-K. The consolidated financial information below reflects the impact of the Company’s acquisitions. The consolidated balancesheet data as of December 31, 2013 and 2014 have been adjusted retrospectively to give effect to our adoption on December 31, 2015 of FASB AccountingStandard Update ASU 2015-03, "Simplifying the Presentation of Debt Issuance Costs", which resulted in a reduction of total assets and convertible seniornotes by $0.4 million and $0.3 million, respectively. In addition, the consolidated balance sheet data as of December 31, 2015 has been adjusted for theadoption of ASU 2015-17, “Balance Sheet Classification of Deferred Taxes”, resulting in a decrease of total assets by $15.2 million.In February 2012, we changed our fiscal year-end from June 30 to December 31. References to “fiscal 2011” are to the fiscal year ended June 30, 2011,while references to 2011, 2012, 2013 and 2014 refer to the respective years ending on December 31.32 Year Ended December 31, Six Months EndedDecember 31, Fiscal Year EndedJune 30, 2015 2014 2013 2012 2011 2011 (in thousands, except share and per share data)Consolidated Statements of Operations Data: Revenues: Subscription$848,278 $567,217 $349,804 $204,526 $64,886 $79,191Professional services and other157,202 115,346 74,846 39,186 8,489 13,450Total revenues1,005,480 682,563 424,650 243,712 73,375 92,641Cost of revenues(1): Subscription183,400 142,687 87,928 63,258 15,073 15,311Professional services and other146,013 106,089 67,331 40,751 12,850 16,264Total cost of revenues329,413 248,776 155,259 104,009 27,923 31,575Gross profit676,067 433,787 269,391 139,703 45,452 61,066Operating expenses(1): Sales and marketing498,439 341,119 195,190 103,837 32,501 34,123Research and development217,389 148,258 78,678 39,333 7,030 7,004General and administrative126,604 96,245 61,790 34,117 10,084 9,379Total operating expenses842,432 585,622 335,658 177,287 49,615 50,506Income (loss) from operations(166,365) (151,835) (66,267) (37,584) (4,163) 10,560Interest expense(31,097) (29,059) (3,498) — — —Interest income and other income (expense), net4,450 5,354 (1,432) 1,604 (1,446) 606Income (loss) before provision for income taxes(193,012) (175,540) (71,197) (35,980) (5,609) 11,166Provision for income taxes5,414 3,847 2,511 1,368 1,075 1,336Net income (loss)$(198,426) $(179,387) $(73,708) $(37,348) $(6,684) $9,830Net income (loss) attributable to commonstockholders: Basic$(198,426) $(179,387) $(73,708) $(37,656) $(6,996) $1,639Diluted$(198,426) $(179,387) $(73,708) $(37,656) $(6,996) $2,310Net income (loss) per share attributable to commonstockholders: Basic$(1.27) $(1.23) $(0.54) $(0.51) $(0.33) $0.09Diluted$(1.27) $(1.23) $(0.54) $(0.51) $(0.33) $0.08Weighted-average shares used to compute netincome (loss) per share attributable to commonstockholders: Basic155,706,643 145,355,543 135,415,809 73,908,631 21,104,219 18,163,977Diluted155,706,643 145,355,543 135,415,809 73,908,631 21,104,219 28,095,486(1)Stock-based compensation included in the statements of operations data above was as follows: Year Ended December 31, Six Months EndedDecember 31, Fiscal Year EndedJune 30, 2015 2014 2013 2012 2011 2011 (in thousands)Cost of revenues: Subscription$23,416 $14,988 $8,434 $3,929 $674 $548Professional services and other23,265 13,116 4,749 1,574 193 117Sales and marketing102,349 54,006 21,609 10,189 2,010 1,004Research and development70,326 42,535 16,223 6,496 704 468General and administrative38,357 29,674 14,566 5,749 2,056 817 33 As of December 31, As of June 30, 2015 2014 2013 2012 2011 2011 (in thousands)Consolidated Balance Sheet Data: Cash and cash equivalents$412,305 $252,455 $366,303 $118,989 $68,088 $59,853Working capital, excluding deferred revenue947,002 809,660 722,214 364,426 95,033 75,801Total assets1,807,052 1,424,752 1,168,077 478,114 156,323 108,746Deferred revenue, current and non-current portion603,754 422,238 266,722 170,361 104,636 74,646Convertible senior notes, net474,534 443,437 414,378 — — —Convertible preferred stock— — — — 68,172 67,860Total stockholders’ equity (deficit)566,814 428,675 394,259 243,405 (57,426) (58,381)34ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financialstatements and the related notes appearing under "Consolidated Financial Statements and Supplementary Data" in Item 8 of this filing. Some of theinformation contained in this discussion and analysis or set forth elsewhere in this filing, including information with respect to our plans and strategy forour business, includes forward-looking statements that involve risks and uncertainties. You should carefully read the "Risk Factors” section of this filing fora discussion of important factors that could cause actual results and the timing of certain events to differ materially from future results expressed or impliedby the forward-looking statements contained in the following discussion and analysis.Certain measures in the section entitled “—Key Factors Affecting Our Performance—Billings,” “—Comparison of the years ended December 31, 2015and 2014" are presented on a constant currency basis. Our constant currency, billings and free cash flow measures included in the sections entitled “—KeyFactors Affecting Our Performance—Billings,” “—Comparison of the years ended December 31, 2015 and 2014,” and “—Key Factors Affecting OurPerformance—Free Cash Flow” are not in accordance with U.S. Generally Accepted Accounting Principles, or GAAP. These non-GAAP financial measuresare not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP.These measures may be different from non-GAAP financial measures used by other companies, limiting their usefulness for comparison purposes. We believeinvestors should consider these non-GAAP financial measures in evaluating our results as they are indicative of our ongoing performance and reflect howmanagement evaluates our operational results and trends. Overview ServiceNow is a leading provider of enterprise cloud computing solutions that define, structure, manage and automate services across the globalenterprise. Our mission is to help the modern enterprise operate faster and be more scalable by applying a service-oriented lens to the activities, tasks andprocesses that comprise day-to-day work life. Our solutions, and the custom solutions built by our customers and partners, are empowering enterprises tochange the way people work. We offer our services on an annual subscription fee basis which includes access to the ordered subscription service and relatedsupport including updates to the subscribed service during the subscription term. We provide a scaled pricing model based on the duration of thesubscription term and we frequently extend discounts to our customers based on the number of users. We generate sales through our direct sales team andindirectly through channel partners and third-party referrals. We also generate revenues from professional services for implementation and training ofcustomer personnel. We generally bill our customers annually in advance for subscription services and monthly in arrears for our professional services as thework is performed. A majority of our revenues come from large global enterprise customers. We continue to invest in the development of our services, infrastructure andsales and marketing to drive long-term growth. We increased our overall employee headcount to 3,686 as of December 31, 2015 from 2,826 as of December31, 2014. Key Factors Affecting Our Performance Renewal rate. We calculate our renewal rate by subtracting our attrition rate from 100%. Our attrition rate for a period is equal to the annualizedcontract value, or ACV, from lost customers divided by the total ACV from all customers that renewed during the period, excluding changes in price or users,and total ACV from all lost customers. A lost customer is a customer that did not renew a contract expiring 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 decreaserepresents the majority of the customer's ACV, we may deem the renewal as a lost customer. Our renewal rate was 98%, 97% and 96% for the years endedDecember 31, 2015, 2014 and 2013, respectively.Upsell rate. To grow our business it is important for us to generate additional sales from existing customers, which we refer to as our upsell rate. Wecalculate our upsell rate as the ACV of upsells, net of losses and reductions in ACV from existing customers during the period, divided by our total ACVsigned during the period. Our upsell rate was 38%, 43% and 39% for the years ended December 31, 2015, 2014 and 2013, respectively. We expect our upsellrate to decrease in the long term as our renewal base continues to grow.Our upsells are primarily derived from an increase in the number of user seats purchased by our customers and are also derived from the addition ofother subscription services. In the first quarter of 2015, we made a change to our customer count definition to better align to a global standard for businessidentification and tracking. Refer to the “Total customers” paragraph below for further details about the change. The change in customer count definitionincreased the upsell rate we had disclosed in the prior year from 36% to 43% for the year ended December 31, 2014, and from 31% to 39% for the year endedDecember 31, 2013.35Total customers. We believe our total customer count is a key indicator of our market penetration, growth and future revenues. We have aggressivelyinvested in, and intend to continue to invest in, our direct sales force and partnerships with our indirect sales channel in order to grow our customer base.Based on our new definition of customer count as described below, our total enterprise customer count was approximately 3,000, 2,300 and 1,800, as ofDecember 31, 2015, 2014 and 2013, respectively. As of December 31, 2015, we had approximately 400 customers that have purchased our Express productoffering (“Express customers”), which is our entry-level IT service management solution. Our Express customer count as of December 31, 2014 and 2013 wasless than 100.In the first quarter of 2015, we changed our definition of customer count to better align to a global standard for business identification and tracking.Previously, we generally defined a customer as an entity with an active subscription contract as of the measurement date. In situations where a single contractapplied to entities with multiple subsidiaries or divisions, universities or governmental organizations, each entity that contracted for a separate productioninstance of our services was counted as a separate customer. Beginning on January 1, 2015, a customer is defined as an entity with a unique Dunn &Bradstreet Global Ultimate, or GULT, Data Universal Numbering System, or DUNS, and an active subscription contract as of the measurement date. TheDUNS number is a global standard for business identification and tracking. We will make exceptions for holding companies, government entities and otherorganizations for which the GULT, in our judgment, does not accurately represent the ServiceNow customer. For example, while all U.S. government agenciesroll up to "Government of the United States" under the GULT, we count each government agency that we contract with as a separate customer.The change in customer count definition reduced our enterprise customer count by approximately 14% and 12% as of December 31, 2014 and 2013,respectively. We did not previously disclose our Express customer count. As the enterprise customer definition is a factor used in the calculation of othermetrics we disclose (upsell rate, number of customers with ACV greater than $1 million, number of deals with net new ACV greater than $1 million andaverage contract term for new customers, upsells and renewals), we have revised previously disclosed numbers for the impacted metrics to ensurecomparability across the periods.Number of customers with ACV greater than $1 million. We count the total number of customers with ACV greater than $1 million as of the end of theperiod. We had 230, 153 and 81 customers with ACV greater than $1 million as of December 31, 2015, 2014 and 2013, respectively. The change in customercount definition increased the total number of customers with ACV greater than $1 million we previously disclosed in our Annual Report on Form 10-K forthe year ended December 31, 2014 from 129 to 153 for the year ended December 31, 2014, and from 67 to 81 for the year ended December 31, 2013.The number of deals with net new ACV greater than $1 million entered into during the years ended December 31, 2015, 2014 and 2013, were 36, 34 and15, respectively. We define net new ACV as ACV from new customers and upsells to existing customers, net of losses to those customers. The change incustomer count definition decreased the total number of deals with ACV greater than $1 million we had disclosed in the prior year from 36 to 34 for the yearended December 31, 2014, and increased the total number of deals with ACV greater than $1 million from 14 to 15 for the year ended December 31, 2013.G2K customer count. The Global 2000, or G2K, customer count is defined as the total number of G2K companies in our customer base as of the end ofthe period. The Forbes Global 2000 is an annual ranking of the top 2000 public companies in the world by Forbes magazine. The ranking is based on a mixof four metrics: sales, profit, assets, and market value. The Forbes Global 2000 is updated annually in the second quarter of the calendar year. Current andprior period G2K customer counts are based on the most recent list for comparability purposes. We adjust the G2K count for acquisitions, spin-offs, and othermarket activity to ensure the G2K customer count is accurately captured. For example, we add a G2K customer when a G2K company that is not our customeracquires a company in our existing customer base that is not a G2K company. When we enter into a contract with a G2K parent company, or any of its relatedsubsidiaries, or any combination of entities within a G2K company, we count only one G2K customer. We do not count further penetration into entitieswithin the G2K as a new customer in the G2K customer count. Our G2K customer count based on the most recent Forbes Global 2000 and adjusted foracquisitions, spin-offs and other market activity was 638, 538 and 445 as of December 31, 2015, 2014 and 2013, respectively.Average ACV per G2K customer. We calculate average ACV for our G2K customers by taking cumulative ACV from G2K customers as of the end of theperiod divided by the cumulative count of G2K customers as of the end of the period. Our average ACV per G2K customer was approximately $868,000,$711,000 and $515,000 for the years ended December 31, 2015, 2014 and 2013.36Billings. We define billings as revenue recognized plus the change in total deferred revenue as presented on the consolidated statements of cash flows.The change in total deferred revenue as presented on the consolidated statements of cash flows represent the change in deferred revenues in local currenciestranslated into U.S. dollars using an average foreign currency exchange rate, and is a better approximation of actual billings as it is more aligned with theexchange rates in effect at the time of the billings. We believe billings offers investors useful supplemental information regarding the performance of ourbusiness and will help investors better understand the sales volume and performance of our business.A calculation of billings is provided below: Year Ended December 31, % Change Year EndedDecember 31, % Change 2015 2014 2013 (dollars in thousands)Billings: Total revenues$1,005,480 $682,563 47% $424,650 61%Change in deferred revenue from the consolidated statementsof cash flows195,900 168,393 16% 94,405 78%Total billings$1,201,380 $850,956 41% $519,055 64%Our international operations provide a significant portion of our total billings and revenues. As a result, the general strengthening of the U.S. Dollarrelative to other major foreign currencies (primarily the Euro) from the year ended December 31, 2014 to the year ended December 31, 2015 had anunfavorable impact on our billings and revenues. For entities reporting in currencies other than the U.S. Dollar, if we had translated our results for the yearended December 31, 2015 at the exchange rates for the year ended December 31, 2014 rather than the actual exchange rates in effect during the period, ourtotal billings would have increased by an additional $74.3 million, with $60.1 million of the increase relating to an increase in total revenues and $14.2million of the increase relating to the change in deferred revenue from the consolidated statements of cash flows.The impact of currency movement from the year ended December 31, 2013 to the year ended December 31, 2014 did not have a significant impact onbillings and revenues.Average contract term. We calculate the average contract term for new customers, upsells and renewals based on the term of those contracts entered intoduring the period weighted by their ACV. The average new customer contract term was 31 months, 32 months and 34 months for the years ended December31, 2015, 2014 and 2013, respectively. The average upsell contract term was 26 months, 25 months and 24 months for the years ended December 31, 2015,2014 and 2013, respectively. The average renewal contract term was 24 months for the year ended December 31, 2015, and 26 months for each of the yearsended December 31, 2014 and 2013.In the first quarter of 2015, we made a change to our customer count definition to better align to a global standard for business identification andtracking. Refer to the “Total customers” paragraph section above for further details of the change. The change in customer count definition decreased theaverage new customer contract term from 34 months as disclosed in the prior year to 32 months for the year ended December 31, 2014, and increased theaverage new customer contract term from 33 months as previously disclosed to 34 months for the year ended December 31, 2013. The change in customercount increased the average upsell contract term from 24 months as disclosed in the prior year to 25 months for the year ended December 31, 2014. Thechange in customer count definition had no impact to our disclosures in the Annual Report on Form 10-K for the year ended December 31, 2014 for theaverage upsell for the year ended December 31, 2013 and the average renewal contract term for the years ended December 31, 2014 and 2013.37Free cash flow. We define free cash flow, a non-GAAP financial measure, as GAAP net cash provided by operating activities reduced by purchases ofproperty and equipment. We believe information regarding free cash flow provides investors with an important perspective on the cash available to invest inour business and fund ongoing operations. However, our calculation of free cash flow may not be comparable to similar measures used by other companies. Acalculation of free cash flow is provided below: Year Ended December 31, 2015 2014 2013 (dollars in thousands)Free cash flow: Net cash provided by operating activities$315,091 $138,900 $81,746Purchases of property and equipment(87,481) (54,379) (55,321)Free cash flow$227,610 $84,521 $26,425 Components of Results of Operations Revenues Subscription revenues. Subscription revenues are comprised primarily of fees that give customers access to the ordered subscription service, relatedsupport and upgrades, if any, to the subscribed service during the subscription term. Pricing includes multiple instances, hosting and support services, databackup and disaster recovery services, as well as future upgrades, when and if available, offered during the subscription term. We typically invoice ourcustomers for subscription fees in annual increments upon execution of the initial contract or subsequent renewal. Our contracts are generally non-cancelableduring the subscription term, though a customer can terminate for breach if we materially fail to perform. Professional services and other revenues. Professional services revenues consist of fees associated with the implementation and configuration of oursubscription service. Our arrangements for professional services are primarily on a time-and-materials basis. We generally invoice our professional servicesmonthly in arrears based on actual hours and expenses incurred. Other revenues primarily include fees from customer training delivered on-site or publiclyavailable classes, attendance and sponsorship fees for our annual Knowledge user conference and other customer forums. Typical payment terms require ourcustomers to pay us within 30 days of invoice.We generate sales directly through our sales team and, to a lesser extent, through our channel partners. Revenues from our direct sales organizationrepresented 89%, 87% and 88% for the years ended December 31, 2015, 2014 and 2013, respectively. We make sales to our channel partners at a discountand record those revenues at the discounted price when all revenue recognition criteria are met. From time to time, our channel partners also provide usreferrals for which we pay a referral fee. We pay referral fees to channel partners and other third parties, which is between 5% and 15% of the customer's ACV,depending on the level of activity the partner performs in the sales process. We include these fees in sales and marketing expense. Refer to “Critical Accounting Policies and Significant Judgments and Estimates” below for further discussion of our revenue recognition accountingpolicy.Allocation of Overhead Costs Overhead costs associated with office facilities, corporate expenses, IT and certain depreciation related to infrastructure that is not dedicated forcustomer or research and development use are allocated to cost of revenues and operating expenses based on headcount.Cost of Revenues Cost of subscription revenues. Cost of subscription revenues consists primarily of expenses related to hosting our services and providing support to ourcustomers. These expenses are comprised of data center capacity costs, which includes facility costs associated with our data center, depreciation related toour cloud-based infrastructure hardware equipment dedicated for customer use, amortization of acquired developed technology intangibles, personnel relatedcosts directly associated with our cloud-based infrastructure and customer support, including salaries, benefits, bonuses and stock-based compensation andallocated overhead. Cost of professional services and other revenues. Cost of professional services and other revenues consists primarily of personnel related costs directlyassociated with our professional services and training departments, including salaries, benefits, bonuses and stock-based compensation, the costs ofcontracted third-party partners and allocated overhead.38Professional services associated with the implementation and configuration of our subscription services are performed directly by our services team, aswell as by contracted third-party partners. Fees paid to third-party partners are primarily recognized as cost of revenues as the professional services aredelivered. Cost of revenues associated with our professional services engagements subcontracted to third-party partners as a percentage of professionalservices and other revenues was 20% for the year ended December 31, 2015, and 17% for each of the years ended December 31, 2014 and 2013.Sales and Marketing Expenses Sales and marketing expenses consist primarily of personnel related expenses directly associated with our sales and marketing staff, including salaries,benefits, bonuses, commissions and stock-based compensation. Sales and marketing expenses also include third-party referral fees, marketing andpromotional events, including our annual Knowledge user conference, online marketing, product marketing and allocated overhead. Research and Development Expenses Research and development expenses consist primarily of personnel related expenses directly associated with our research and development staff,including salaries, benefits, bonuses and stock-based compensation and allocated overhead. Research and development expenses also include data centercapacity costs and depreciation of cloud-based infrastructure hardware equipment that are used solely for research and development purposes. General and Administrative Expenses General and administrative expenses consist primarily of personnel related expenses for our executive, finance, legal, human resources, facility andadministrative personnel, including salaries, benefits, bonuses and stock-based compensation, external legal, accounting and other professional services fees,other corporate expenses and allocated overhead. Provision for Income Taxes The provision for income taxes consists of federal, state and foreign income taxes. Due to cumulative losses, we maintain a valuation allowance againstour U.S. deferred tax assets as of December 31, 2015 and 2014. We consider all available evidence, both positive and negative, including but not limited toearnings history, projected future outcomes, industry and market trends and the nature of each of the deferred tax assets in assessing the extent to which avaluation allowance should be applied against our U.S. deferred tax assets.39Results of Operations To enhance comparability, the following table sets forth our results of operations for the periods presented. The period-to-period comparison offinancial results is not necessarily indicative of future results. Year Ended December 31, 2015 2014 2013 (in thousands)Revenues: Subscription$848,278$567,217$349,804Professional services and other157,202115,34674,846Total revenues1,005,480682,563424,650Cost of revenues(1): Subscription183,400142,68787,928Professional services and other146,013106,08967,331Total cost of revenues329,413248,776155,259Gross profit676,067433,787269,391Operating expenses(1): Sales and marketing498,439341,119195,190Research and development217,389148,25878,678General and administrative126,60496,24561,790Total operating expenses842,432585,622335,658Loss from operations(166,365)(151,835)(66,267)Interest expense(31,097) (29,059) (3,498)Interest income and other income (expense), net4,4505,354(1,432)Loss before provision for income taxes(193,012)(175,540)(71,197)Provision for income taxes5,4143,8472,511Net loss$(198,426)$(179,387)$(73,708) (1)Stock-based compensation included in the statements of operations data above was as follows: Year Ended December 31, 2015 2014 2013 (in thousands)Cost of revenues: Subscription$23,416 $14,988 $8,434Professional services and other23,265 13,116 4,749Sales and marketing102,349 54,006 21,609Research and development70,326 42,535 16,223General and administrative38,357 29,674 14,56640 Year Ended December 31, 2015 2014 2013Revenues: Subscription84 % 83 % 82 %Professional services and other16 17 18Total revenues100 100 100Cost of revenues: Subscription18 21 21Professional services and other15 16 16Total cost of revenues33 37 37Gross profit67 63 63Operating expenses: Sales and marketing50 50 46Research and development22 22 18General and administrative12 14 14Total operating expenses84 86 78Loss from operations(17) (23) (15)Interest expense(3) (3) —Interest income and other income (expense), net1 1 (1)Loss before provision for income taxes(19) (25) (16)Provision for income taxes1 1 1Net loss(20)% (26)% (17)% Year Ended December 31, 2015 2014 2013 (in thousands)Revenues by geography North America$702,985 $465,332 $295,400Europe233,378 173,635 105,177Asia Pacific and other69,117 43,596 24,073Total revenues$1,005,480 $682,563 $424,650 Year Ended December 31, 2015 2014 2013Revenues by geography North America70% 68% 69%Europe23 26 25Asia Pacific and other7 6 6Total revenues100% 100% 100%41Comparison of the years ended December 31, 2015 and 2014 Revenues Year Ended December 31, % Change 2015 2014 (dollars in thousands) Revenues: Subscription$848,278 $567,217 50%Professional services and other157,202 115,346 36%Total revenues$1,005,480 $682,563 47%Percentage of revenues: Subscription84% 83% Professional services and other16 17 Total100% 100% Subscription revenues increased $281.1 million during the year ended December 31, 2015, compared to the prior year, driven by our upsells, renewalsand an increase in our customer count.Subscription revenues consist of the following: Year Ended December 31, % Change 2015 2014 (dollars in thousands) Enterprise Service Management solutions$783,603 $532,045 47%IT Operations Management solutions64,675 35,172 84%Total subscription revenues$848,278 $567,217 50%Our Enterprise Service Management solutions include Service Management, Business Management and ServiceNow Platform, which have similarfeatures and functions and are generally priced on a per user basis. Our IT Operations Management solutions, which improve visibility, availability andagility of enterprise services, are generally priced on a per node basis. We expect subscription revenues for our IT Operations Management solutions to growin absolute dollars and as a percentage of revenues in the year ended December 31, 2016.Professional services and other revenues increased $41.9 million during the year ended December 31, 2015, compared to the prior year, due to anincrease in the services provided to our growing customer base. In addition, revenues from our annual Knowledge user conference increased to $10.9 millionduring the year ended December 31, 2015 compared to $8.2 million in the prior year due to increased sponsorship and paid registrations in the current year.We expect professional services and other revenues to grow at a slower rate compared to subscription revenues as we are increasingly focused on deployingour internal professional services organization as a strategic resource and relying on our partner ecosystem to contract directly with customers for servicedelivery.Our international operations have provided and will continue to provide a significant portion of our total revenues. Revenues outside North Americarepresented 30% and 32% of total revenues for the year ended December 31, 2015 and 2014, respectively. As a result, the general strengthening of the U.S.Dollar relative to other major foreign currencies (primarily Euro) from the year ended December 31, 2014 to the year ended December 31, 2015 had anunfavorable impact on our revenues. For entities reporting in currencies other than the U.S. Dollar, if we had translated our results for the year endedDecember 31, 2015 at the exchange rates for the year ended December 31, 2014 rather than the actual exchange rates in effect during the period, oursubscription revenues would have increased by an additional $48.0 million and our professional services and other revenues would have increased by anadditional $12.0 million.42Cost of Revenues and Gross Profit Percentage Year Ended December 31, % Change 2015 2014 (dollars in thousands) Cost of revenues: Subscription$183,400 $142,687 29%Professional services and other146,013 106,089 38%Total cost of revenues$329,413 $248,776 32%Gross profit percentage: Subscription78% 75% Professional services and other7% 8% Total gross profit percentage67% 63% Gross profit:$676,067 $433,787 56%Headcount (at period end) Subscription579 478 21%Professional services and other486 416 17%Total headcount1,065 894 19% Cost of subscription revenues increased $40.7 million during the year ended December 31, 2015, compared to the prior year, primarily due to increasedheadcount resulting in an increase of $11.2 million in personnel related costs excluding stock-based compensation, an increase of $8.4 million in stock-based compensation, an increase of $6.0 million in depreciation expense primarily due to purchases of cloud-based infrastructure hardware equipment for ourdata centers and an increase of $6.0 million in other overhead expenses. Data center capacity costs increased $1.0 million primarily due to the expansion ofour data centers. Amortization of intangible assets increased $4.8 million as a result of the acquisition of Neebula Systems, Ltd., or Neebula, in July 2014.Our subscription gross profit percentage increased to 78% for the year ended December 31, 2015, from 75% for the year ended December 31, 2014, dueto data center density and improved economies of scale. We expect our cost of subscription revenues to increase in absolute dollar terms as we providesubscription services to more customers and increase the number of users within our customer instances, but we expect such increase to be at a slower ratethan the increase in our subscription revenue, leading to a slight increase in our subscription gross profit percentage for the year ended December 31, 2016 aswe continue to leverage the investments we have made in our existing data center infrastructure. To the extent future acquisitions are consummated, our costof subscription revenues may increase due to additional non-cash charges associated with the amortization of intangible assets acquired. Our forecast forrevenues, cost of revenues and operating expenses was based on foreign exchange rates as of December 31, 2015.Cost of professional services and other revenues increased $39.9 million during the year ended December 31, 2015 compared to the prior year, primarilydue to increased headcount resulting in an increase of $11.2 million in personnel related costs excluding stock-based compensation, an increase of $10.1million in stock-based compensation, an increase of $5.3 million in overhead expenses, and an increase of $13.2 million in contracted third-party party costs.Our professional services and other gross profit percentage decreased to 7% during the year ended December 31, 2015 compared to 8% in the prior yeardue to increased stock-based compensation. The decrease in gross profit percentage was partially offset by the increase in revenues from our annualKnowledge user conference. Costs associated with Knowledge are included in sales and marketing expense. Knowledge contributed $10.9 million, or 7percentage points to the professional services and other gross profit percentage for the year ended December 31, 2015. Knowledge contributed $8.2 million,or 7 percentage points to the professional services and other gross profit percentage for the year ended December 31, 2014.43The general strengthening of the U.S. Dollar relative to other major foreign currencies from the year ended December 31, 2014 to the year endedDecember 31, 2015 had an impact on our cost of revenues. For entities reporting in currencies other than the U.S. Dollar, if we had translated our results forthe year ended December 31, 2015 at the exchange rates for the year ended December 31, 2014 rather than the actual exchange rates in effect during the yearended December 31, 2015, our cost of subscription revenues would have increased by an additional $8.0 million and our cost of professional services andother revenues would have increased by an additional $7.8 million. Sales and Marketing Year Ended December 31 % Change 2015 2014 (dollars in thousands) Sales and marketing$498,439 $341,119 46%Percentage of revenues50% 50% Headcount (at period end)1,416 1,011 40% Sales and marketing expenses increased $157.3 million during the year ended December 31, 2015, compared to the prior year, primarily due toincreased headcount that resulted in an increase of $57.7 million in personnel related costs excluding stock-based compensation, an increase of $48.3 millionin stock-based compensation, an increase of $19.0 million in overhead expenses, and an increase of $15.3 million in commission expense. Commissions andreferral fee expenses amounted to 8% and 10% of subscription revenues for the years ended December 31, 2015 and 2014, respectively.In addition, expenses related to our annual Knowledge user conference increased $5.7 million, from $15.3 million for the year ended December 31,2014 to $21.0 million for the year ended December 31, 2015, due to a 31% increase in attendance year-over-year. All other marketing program expenses,which include events, advertising and market data, increased $10.2 million for the year ended December 31, 2015 compared to the prior year.The general strengthening of the U.S. Dollar relative to other major foreign currencies from the year ended December 31, 2014 to the year endedDecember 31, 2015 had an impact on our sales and marketing expenses. For entities reporting in currencies other than the U.S. Dollar, if we had translated ourresults for the year ended December 31, 2015 at the exchange rates for the year ended December 31, 2014 rather than the actual exchange rates in effectduring the period, our sales and marketing expenses would have increased by an additional $20.9 million.We expect sales and marketing expenses to increase for the year ended December 31, 2016 in absolute dollar terms, but remain relatively flat as apercentage of total revenues as we continue to expand our direct sales force, increase our marketing activities, grow our international operations, build brandawareness and sponsor additional marketing events.Research and Development Year Ended December 31 % Change 2015 2014 (dollars in thousands) Research and development$217,389 $148,258 47%Percentage of revenues22% 22% Headcount (at period end)756 585 29% Research and development expenses increased $69.1 million during the year ended December 31, 2015, compared to the prior year, primarily due toincreased headcount which resulted in an increase of $27.8 million in stock-based compensation, an increase of $25.4 million in personnel related costsexcluding stock-based compensation, and an increase of $10.6 million in overhead expenses. Research and development expenses also increased $3.5million due to an increase in data center capacity costs and depreciation of cloud-based infrastructure hardware equipment that are used solely for researchand development purposes.44The general strengthening of the U.S. Dollar relative to other major foreign currencies from the year ended December 31, 2014 to the year endedDecember 31, 2015 had an impact on our research and development expenses. For entities reporting in currencies other than the U.S. Dollar, if we hadtranslated our results for the year ended December 31, 2015 at the exchange rates for the year ended December 31, 2014 rather than the actual exchange ratesin effect during the year ended December 31, 2015, our research and development expenses would have increased by an additional $4.2 million. We expect research and development expenses to increase for the year ended December 31, 2016 in absolute dollar terms, but remain relatively flat as apercentage of total revenues as we continue to improve the existing functionality of our services, develop new applications to fill market needs and continueto enhance our core platform. General and Administrative Year Ended December 31 % Change 2015 2014 (dollars in thousands) General and administrative$126,604 $96,245 32%Percentage of revenues12% 14% Headcount (at period end)449 336 34% General and administrative expenses increased $30.4 million during the year ended December 31, 2015, compared to the prior year, primarily due to anincrease of $14.2 million in outside services primarily driven by an increase in legal fees associated with our litigation and an increase in the number ofcontractors to support our administrative functions. In addition, stock-based compensation increased $8.7 million, and personnel related costs excludingstock-based compensation increased $7.4 million, primarily driven by the increased headcount.The impact from the foreign currency movements from the year ended December 31, 2014 to the year ended December 31, 2015 is not material togeneral and administrative expenses.We expect general and administrative expenses to increase for the year ended December 31, 2016 in absolute dollar terms as we continue to hire peopleand incur costs associated with our litigations, but remain flat as a percentage of total revenues as we continue to grow. This includes anticipated attorney’sfees and expenses for our outstanding litigations with BMC and HPE, but not any forecast related to their outcomes. The trials are currently scheduled forMarch 2016 and May 2017, respectively. Refer to “Legal Proceedings” in Item 3 of this filing for details on the litigation matters. Stock-based Compensation Year Ended December 31 % Change 2015 2014 (dollars in thousands) Cost of revenues: Subscription$23,416 $14,988 56%Professional services and other23,265 13,116 77%Sales and marketing102,349 54,006 90%Research and development70,326 42,535 65%General and administrative38,357 29,674 29%Total stock-based compensation$257,713 $154,319 67%Percentage of revenues26% 23% 45Stock-based compensation increased $103.4 million during the year ended December 31, 2015, compared to the prior year, primarily due to additionalannual grants of equity incentive awards, increased headcount, an increase in the weighted-average grant date fair value of stock awards, and performanceRSUs granted to our executives in the current year. The new equity incentive awards granted in the current year, including the performance RSUs, resulted inan increase of $102.1 million in stock-based compensation. The weighted-average grant date exercise price per stock option share was $75.76 and $61.40 forthe year ended December 31, 2015 and 2014, respectively. The weighted-average grant date fair value per restricted stock unit was $73.98 and $61.13 for theyear ended December 31, 2015 and 2014, respectively.Stock-based compensation is inherently difficult to forecast due to fluctuations in our stock price and the uncertainty around the achievement ofperformance criteria associated with our performance RSUs. We expect stock-based compensation to continue to increase for the year ended December 31,2016 in absolute dollar terms, but remain relatively flat as a percentage of total revenues as we continue to grow. Interest Expense Year Ended December 31 % Change 2015 2014 (dollars in thousands) Interest expense$(31,097) $(29,059) 7%Percentage of revenues(3)% (3)% Interest expense increased $2.0 million during the year ended December 31, 2015, compared to the prior year, due to the increase in amortizationexpense of debt discount and issuance costs related to our convertible senior notes, or the "Notes" issued in November 2013. During the year ended December31, 2016, we expect to incur approximately $33.3 million in amortization expense of debt discount and issuance costs related to the Notes.Interest Income and Other Income (Expense), net Year Ended December 31 % Change 2015 2014 (dollars in thousands) Interest income$4,749 $2,964 60 %Foreign currency exchange gain (loss)51 2,490 (98)%Other(350) (100) 250 %Interest income and other income (expense), net$4,450 $5,354 (17)%Percentage of revenues1% 1% Interest income and other expense, net, decreased $0.9 million during the year ended December 31, 2015, compared to the prior year, primarily due to alower foreign currency gain, partially offset by increased interest income. Our foreign currency exchange gain decreased $2.4 million during the year endedDecember 31, 2015 compared to the prior year primarily due to the strengthening of the U.S. Dollar against other major currencies and an increase in ourforeign operations. Interest income increased $1.8 million due to the higher investment balances during the year ended December 31, 2015 compared to theprior year.Our expanding international operations will continue to increase our exposure to currency risks, though we cannot presently predict the impact of thisexposure on our consolidated financial statements. While we have not engaged in the hedging of our foreign currency transactions to date, we are conductingan ongoing evaluation of the costs and benefits of initiating such a program and in the future may hedge selected significant transactions denominated incurrencies other than the U.S. Dollar. 46 Provision for Income Taxes Year Ended December 31 % Change 2015 2014 (dollars in thousands) Loss before income taxes$(193,012) $(175,540) 10%Provision for income taxes5,414 3,847 41%Effective tax rate(3)% (2)% Our effective tax rate was (3)% for the year ended December 31, 2015 compared to (2)% for the prior year. Our tax expense increased $1.6 millionduring the year ended December 31, 2015, compared to the prior year, primarily due to a higher proportion of taxable earnings in foreign jurisdictions. SeeNote 15 in the notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for our reconciliation of income taxesat the statutory federal rate to the provision for income taxes.We continue to maintain a full valuation allowance on our U.S. federal and state deferred tax assets, and the significant components of the tax expenserecorded are current cash taxes in various jurisdictions. The cash tax expenses are impacted by each jurisdiction’s individual tax rates, laws on timing ofrecognition of income and deductions, and availability of net operating losses and tax credits. Given the full valuation allowance, sensitivity of current cashtaxes to local rules and our foreign structuring, we expect our effective tax rate could fluctuate significantly on a quarterly basis and could be adverselyaffected to the extent earnings are lower than anticipated in countries that have lower statutory rates and higher than anticipated in countries that have higherstatutory rates. We consider the earnings of our foreign subsidiaries to be indefinitely reinvested outside of the United States.Net Loss Year Ended December 31 % Change 2015 2014 (dollars in thousands) Net loss$(198,426) $(179,387) 11%Percentage of revenues(20)% (26)% Net loss increased $19.0 million during the year ended December 31, 2015, compared to the prior year as the growth in our expenses, particularly stock-based compensation, exceeded our revenue growth. We expect to continue to incur a GAAP loss for the year ended December 31, 2016, due to increased costsand expenses, including increased non-cash charges associated with equity awards and amortization of intangibles and other expenses. 47Comparison of the years ended December 31, 2014 and 2013 Revenues Year Ended December 31, % Change 2014 2013 (dollars in thousands) Revenues: Subscription$567,217 $349,804 62%Professional services and other115,346 74,846 54%Total revenues$682,563 $424,650 61%Percentage of revenues: Subscription83% 82% Professional services and other17 18 Total100% 100% Subscription revenues increased $217.4 million during the year ended December 31, 2014, compared to the prior year, driven by our upsells, renewalsand an increase in our customer count.Subscription revenues consist of the following: Year Ended December 31, % Change 2014 2013 (dollars in thousands) Enterprise Service Management solutions$532,045 $329,040 62%IT Operations Management solutions35,172 20,764 69%Total subscription revenues$567,217 $349,804 62%Our Enterprise Service Management solutions include Service Management, Business Management and ServiceNow Platform, which have similarfeatures and functions and are generally priced on a per user basis. Our IT Operations Management solutions, which improve visibility, availability andagility of enterprise services, are generally priced on a per node basis.Professional services and other revenues increased $40.5 million during the year ended December 31, 2014, compared to the prior year, due to anincrease in the services provided to our growing customer base. In addition, revenues from our annual Knowledge user conference increased to $8.2 millionduring the year ended December 31, 2014 compared to $5.0 million in the prior year due to increased sponsorship and paid registrations in the current year.48Cost of Revenues and Gross Profit Percentage Year Ended December 31, % Change 2014 2013 (dollars in thousands) Cost of revenues: Subscription$142,687 $87,928 62%Professional services and other106,089 67,331 58%Total cost of revenues$248,776 $155,259 60%Gross profit percentage: Subscription75% 75% Professional services and other8% 10% Total gross profit percentage63% 63% Gross profit:$433,787 $269,391 61%Headcount (at period end) Subscription478 341 40%Professional services and other416 295 41%Total headcount894 636 41% Cost of subscription revenues increased $54.8 million during the year ended December 31, 2014, compared to the prior year, primarily due to increasedheadcount resulting in an increase of $22.9 million in personnel related costs excluding stock-based compensation, an increase of $6.6 million in stock-based compensation, an increase of $6.3 million in depreciation expense primarily due to purchases of cloud-based infrastructure hardware equipment for ourdata centers and an increase of $4.4 million in other overhead expenses. Data center capacity costs increased $5.4 million primarily due to the expansion ofour data centers. Amortization of intangible assets increased $5.4 million as a result of the acquisition of Neebula in July 2014. Our subscription gross profitpercentage was 75% for each of the years ended December 31, 2014 and 2013.Cost of professional services and other revenues increased $38.8 million during the year ended December 31, 2014 compared to the prior year, primarilydue to increased headcount resulting in an increase of $21.6 million in personnel related costs excluding stock-based compensation, an increase of $8.4million in stock-based compensation, an increase of $3.2 million in overhead expenses, and an increase of $6.0 million in contracted third-party vendorcosts.Our professional services and other gross profit percentage decreased to 8% during the year ended December 31, 2014 compared to 10% in the prioryear due to increased stock-based compensation. The decrease in gross profit percentage was partially offset by the increase in revenues from our annualKnowledge user conference. Costs associated with Knowledge are included in sales and marketing expense. Knowledge contributed $8.2 million, or 7percentage points to the professional services and other gross profit percentage for the year ended December 31, 2014. Knowledge contributed $5.0 millionin revenue, or 6 percentage points to the professional services and other gross profit percentage for the year ended December 31, 2013. Sales and Marketing Year Ended December 31 % Change 2014 2013 (dollars in thousands) Sales and marketing$341,119 $195,190 75%Percentage of revenues50% 46% Headcount (at period end)1,011 615 64% Sales and marketing expenses increased $145.9 million during the year ended December 31, 2014, compared to the prior year, primarily due toincreased headcount that resulted in an increase of $67.5 million in personnel related costs excluding stock-based compensation, an increase of $32.4 millionin stock-based compensation, an increase of $8.6 million in overhead expenses, and an increase of $21.6 million in commission expense. Commissions andreferral fee expenses amounted to 10% of subscription revenues for the years ended December 31, 2014 and 2013.49In addition, expenses related to our annual Knowledge user conference increased $7.0 million, from $8.3 million for the year ended December 31, 2013to $15.3 million for the year ended December 31, 2014, due to an increase in attendance of more than 50% year-over-year. All other marketing programexpenses, which include events, advertising and market data, increased $6.1 million for the year ended December 31, 2014 compared to the prior year.Research and Development Year Ended December 31 % Change 2014 2013 (dollars in thousands) Research and development$148,258 $78,678 88%Percentage of revenues22% 18% Headcount (at period end)585 352 66% Research and development expenses increased $69.6 million during the year ended December 31, 2014, compared to the prior year, primarily due toincreased headcount which resulted in an increase of $34.9 million in personnel related costs excluding stock-based compensation, an increase of $26.3million in stock-based compensation and an increase of $6.7 million in overhead expenses. General and Administrative Year Ended December 31 % Change 2014 2013 (dollars in thousands) General and administrative$96,245 $61,790 56%Percentage of revenues14% 14% Headcount (at period end)336 227 48% General and administrative expenses increased $34.5 million during the year ended December 31, 2014, compared to the prior year, primarily due toincreased headcount which resulted in an increase of $15.1 million in stock-based compensation, an increase of $10.3 million in personnel related costsexcluding stock-based compensation, and an increase of $3.0 million in overhead expenses. Outside services increased $4.5 million primarily due to anincrease in legal fees associated with our litigation, an increase in the number of contractors to support our administrative functions and costs associated withthe acquisition of Neebula.Stock-based Compensation Year Ended December 31 % Change 2014 2013 (dollars in thousands) Cost of revenues: Subscription$14,988 $8,434 78%Professional services and other13,116 4,749 176%Sales and marketing54,006 21,609 150%Research and development42,535 16,223 162%General and administrative29,674 14,566 104%Total stock-based compensation$154,319 $65,581 135%Percentage of revenues23% 15% 50Stock-based compensation increased $88.7 million during the year ended December 31, 2014, compared to the prior year, primarily due to increasedheadcount, an increase in the weighted-average grant date fair value of stock awards, and performance RSUs granted to our executives in the current year. Thenew equity incentive awards granted in the current year, including the performance RSUs, resulted in an increase of $75.1 million in stock-basedcompensation. The weighted-average grant date exercise price per stock option share was $61.40 and $38.07 for the year ended December 31, 2014 and2013, respectively. The weighted-average grant date fair value per restricted stock unit was $61.13 and $38.15 for the year ended December 31, 2014 and2013, respectively.In addition, stock-based compensation increased $19.9 million related to equity incentive awards granted in the prior year, for which a partial year ofexpense was recognized in the prior year and $2.4 million related to increased participation in our employee stock purchase plan. The increase in stock-basedcompensation was partially offset by stock awards forfeited in the current year and stock awards fully vesting in the current year.Interest Expense Year Ended December 31 % Change 2014 2013 (dollars in thousands) Interest expense related to the Notes$(29,059) $(3,498) 731%Percentage of revenues(3)% —% Interest expense increased $25.6 million during the year ended December 31, 2014, compared to the prior year, due to the increase in amortizationexpense of debt discount and issuance costs related to the Notes.Interest Income and Other Income (Expense), net Year Ended December 31 % Change 2014 2013 (dollars in thousands) Interest income$2,964 $1,053 181 %Foreign currency exchange gain (loss)2,490 (2,493) (200)%Other(100) 8 NMInterest income and other income (expense), net$5,354 $(1,432) NMPercentage of revenues1% (1)% Interest income and other income (expense), net, increased $6.8 million during the year ended December 31, 2014, compared to the prior year, primarilydue to a gain from foreign currency transactions and increased interest income. We had a foreign currency transaction gain of $2.5 million for the year endedDecember 31, 2014, compared to a loss of $2.5 million for the prior year, primarily due to the strengthening of the U.S. Dollar against other major currenciesand an increase in our foreign operations. Interest income increased $1.9 million due to the higher investment balances during the year ended December 31,2014 compared to the prior year. Provision for Income Taxes Year Ended December 31 % Change 2014 2013 (dollars in thousands) Loss before income taxes$(175,540) $(71,197) 147%Provision for income taxes3,847 2,511 53%Effective tax rate(2)% (4)% 51Our effective tax rate was (2)% for the year ended December 31, 2014 compared to (4)% for the prior year. Our tax expense increased $1.3 millionduring the year ended December 31, 2014, compared to the prior year, primarily due to a higher proportion of taxable earnings in foreign jurisdictions. SeeNote 15 in the notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K. for our reconciliation of income taxesat the statutory federal rate to the provision for income taxes.Net Loss Year Ended December 31 % Change 2014 2013 (dollars in thousands) Net loss$(179,387) $(73,708) 143%Percentage of revenues(26)% (17)% Net loss increased $105.7 million during the year ended December 31, 2014, compared to the prior year as the growth in our expenses, particularlystock-based compensation, exceeded our revenue growth. Quarterly Results of Operations The following table sets forth our unaudited quarterly consolidated statements of operations. We have prepared the quarterly data on a consistent basiswith the audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K. In the opinion of management, the financialinformation reflects all necessary adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of this data. This informationshould be read in conjunction with the audited consolidated financial statements and related notes thereto included elsewhere in this Annual Report on Form10-K. The results of historical periods are not necessarily indicative of the results of operations for a full year or any future period.52 For the Three Months Ended Dec 31,2015 Sep 30,2015 June 30,2015 March 31,2015 Dec 31,2014 Sep 30,2014 June 30,2014 March 31,2014 (in thousands, except per share data)Revenues: Subscription$244,702 $223,208 $200,461 $179,907 $166,751 $150,367 $132,724 $117,375Professionalservices and other40,948 37,942 46,255 32,057 31,253 28,345 34,033 21,715Totalrevenues285,650 261,150 246,716 211,964 198,004 178,712 166,757 139,090Cost of revenues: Subscription49,511 46,053 45,392 42,444 40,330 37,925 33,243 31,189Professionalservices and other41,398 35,835 34,325 34,455 30,308 28,161 25,695 21,925Total costof revenues90,909 81,888 79,717 76,899 70,638 66,086 58,938 53,114Gross profit194,741 179,262 166,999 135,065 127,366 112,626 107,819 85,976Operating expenses: Sales andmarketing133,909 117,899 136,574 110,057 95,764 84,002 91,937 69,416Research anddevelopment58,443 55,822 53,276 49,848 42,026 39,683 35,439 31,110General andadministrative33,247 33,581 30,384 29,392 26,260 23,440 24,914 21,631Totaloperatingexpenses225,599 207,302 220,234 189,297 164,050 147,125 152,290 122,157Loss fromoperations(30,858) (28,040) (53,235) (54,232) (36,684) (34,499) (44,471) (36,181)Interest expense(7,973) (7,839) (7,707) (7,578) (7,451) (7,325) (7,202) (7,081)Interest income andother income(expense), net3,177 (3,952) 521 4,704 889 1,376 1,971 1,118Loss before provisionfor income taxes(35,654) (39,831) (60,421) (57,106) (43,246) (40,448) (49,702) (42,144)Provision for incometaxes1,724 1,199 1,504 987 1,417 602 661 1,167Net loss$(37,378) $(41,030) $(61,925) $(58,093) $(44,663) $(41,050) $(50,363) $(43,311)Net loss attributable tocommon stockholders- basic and diluted$(37,378) $(41,030) $(61,925) $(58,093) $(44,663) $(41,050) $(50,363) $(43,311)Net loss per shareattributable tocommon stockholders- basic and diluted$(0.23) $(0.26) $(0.40) $(0.38) $(0.30) $(0.28) $(0.35) $(0.30)53Seasonality, Cyclicality and Quarterly Trends We have historically experienced seasonality in terms of when we enter into customer agreements for our services. We sign a significantly higherpercentage of agreements with new customers, as well as renewal agreements with existing customers, in the quarter ended December 31. The increase incustomer agreements for the quarter ended December 31 is primarily a result of the terms of our commission plans to incentivize our direct sales force to meettheir quotas by December 31 and large enterprise account buying patterns typical in the software industry. Furthermore, we usually sign a significant portionof these agreements during the last month, and often the last two weeks, of each quarter. This seasonality in our billings, is reflected to a much lesser extent,and sometimes is not immediately apparent, in our revenues, due to the fact that we recognize subscription revenues over the term of the license agreement,which is generally 12 to 36 months. Although these seasonal factors are common in the technology industry, historical patterns should not be considered areliable indicator of our future sales activity or performance. Our revenues have increased over the periods presented due to increased sales to new customers, as well as upsells to existing customers. We havehistorically seen an increase in professional services and other revenues in the quarter ended June 30, and a corresponding decrease in professional servicesand other revenues in the quarter ended September 30 due to the revenues earned from our annual Knowledge user conference that occurs in the quarterended June 30. Our operating expenses have increased over the periods presented primarily due to increases in headcount and other related expenses tosupport our growth. We have historically seen an increase in marketing expenses in the quarter ended June 30, and a corresponding decrease in marketingexpenses in the quarter ended September 30 due to the expenses incurred for our annual Knowledge user conference. Marketing expenses in the quarterended December 31 are also historically higher due to customer forums we conduct in that quarter. We anticipate operating expenses will continue toincrease in future periods as we continue to focus on investing in the long-term growth of our business. Liquidity and Capital Resources Year Ended December 31, 2015 2014 2013 (dollars in thousands)Net cash provided by operating activities$315,091$138,900 $81,746Net cash used in investing activities(231,743)(316,928) (402,795)Net cash provided by financing activities82,99370,772 568,570Net increase (decrease) in cash and cash equivalents, net of impact ofexchange rates on cash159,850(113,848) 247,314 Our principal sources of liquidity are our cash and cash equivalents, investments, and cash generated from operations. As of December 31, 2015, wehad $801.3 million in cash and cash equivalents and short-term investments, of which $92.3 million represented cash owned by foreign subsidiaries. Inaddition, we had $422.7 million in long-term investments which provide additional capital resources.In November 2013, we issued Notes with an aggregate principal amount of $575.0 million and concurrently entered into a hedge, or Note Hedge, andwarrant transaction, or Warrants. The net proceeds of this debt issuance are being used for general corporate purposes, including potential acquisitions andstrategic transactions. The Warrants are exercisable at a strike price of $107.46 per share. Upon conversion of the Notes, we may choose to pay or deliver, asthe case may be, cash, shares of our common stock or a combination of cash and shares of our common stock. As of December 31, 2015, the Notes were notconvertible.We anticipate our current cash and cash equivalents balance and cash generated from operations will be sufficient to meet our liquidity needs includingthe expansion of data centers, lease obligations, expenditures related to the growth of our headcount and the acquisition of fixed assets and investments inoffice facilities to accommodate our growth for at least the next 12 months. Whether these resources are adequate to meet our liquidity needs beyond thatperiod will depend on our growth, operating results, cash utilized for acquisitions, if any are consummated, and the capital expenditures required to meetpossible increased demand for our services. If we require additional capital resources to grow our business at any time in the future, we may seek to financeour operations from the current funds available or seek additional equity or debt financing. Operating Activities Cash provided by operating activities mainly consists of net loss adjusted for certain non-cash items, including depreciation and amortization,amortization of issuance cost and debt discount, stock-based compensation, tax benefits from employee stock plans and changes in operating assets andliabilities during the year.54Net cash provided by operating activities was $315.1 million for the year ended December 31, 2015 compared to $138.9 million for the prior year. Theincrease in operating cash flow was primarily due to an increased net loss offset by a substantial increase in non-cash adjustments to reconcile net loss to netcash provided by operations and the favorable impact on operating cash flow from changes in operating assets and liabilities. Net cash flow from theaggregate of changes in accounts receivable, deferred commissions and deferred revenue increased due to increased sales for the year ended December 31,2015. Net cash flows from the aggregate of changes in accrued liabilities, accounts payable and prepaid expenses increased due to the growth of our businessand increased headcount of 30% for the year ended December 31, 2015, as well as timing of our cash payments.Net cash provided by operating activities was $138.9 million for the year ended December 31, 2014 compared to $81.7 million for the prior year. Theincrease in operating cash flow was primarily due to an increased net loss offset by a substantial increase in non-cash adjustments to reconcile net loss to netcash provided by operations and the favorable impact on operating cash flow from changes in operating assets and liabilities. Net cash flow from theaggregate of changes in accounts receivable, deferred commissions and deferred revenue increased due to increased sales for the year ended December 31,2014. The increase was partially offset by a decrease in net cash flows from the aggregate of changes in accrued liabilities, accounts payable and prepaidexpenses due to the growth of our business and increased headcount of 54% for the year ended December 31, 2014. Investing Activities Net cash used in investing activities for the year ended December 31, 2015 was $231.7 million compared to $316.9 million for the prior year. Thedecrease in cash used in investing activities was mainly due to the $32.0 million decrease in the net purchases of investments and the $98.7 million decreasein cash used for acquisitions, offset by the $33.1 million increase in capital expenditures related to the purchase of cloud-based infrastructure hardwareequipment to support the expansion of our data centers as well as investments in leasehold improvements, furniture and equipment to support our headcountgrowth, and the $10.5 million increase in the purchases of strategic investments.Net cash used in investing activities for the year ended December 31, 2014 was $316.9 million compared to $402.8 million for the prior year. Thedecrease in cash used in investing activities was mainly due to a decrease in the net purchases of investments of $171.3 million. The decrease was offset by anincrease of $86.5 million in acquisition activity due to the Neebula acquisition in 2014. Financing Activities Net cash provided by financing activities for the year ended December 31, 2015 was $83.0 million compared to $70.8 million for the prior year. Theincrease in cash provided by financing activities was primarily due to the $24.0 million increase in proceeds from employee stock plans, offset by the $12.1million increase in taxes paid related to net share settlement of equity awards.Net cash provided by financing activities for the year ended December 31, 2014 was $70.8 million compared to $568.6 million for the prior year. Thedecrease in cash provided by financing activities was primarily due to net proceeds of $511.7 million from issuance of the Notes and Warrants and purchaseof the Note Hedge in 2013. The decrease was offset by $13.2 million increase in proceeds from the exercise of employee stock options and the EmployeeStock Purchase Plan, or ESPP and related tax benefit.55Contractual Obligations and Commitments Contractual obligations represent future cash commitments and liabilities under agreements with third parties, and exclude orders for goods andservices entered into in the normal course of business that are not enforceable or legally binding.The following table represents our known contractual obligations as of December 31, 2015, aggregated by type: Payments Due by Period Total LessThan1 Year 1 – 3Years 3 – 5Years MoreThan5 Years (in thousands)Operating leases: Data centers$39,375 $17,249 $13,226 $5,138 $3,762Office leases, net of sublease income277,478 24,715 58,216 57,136 137,411Convertible Senior Notes575,000 — 575,000 — —Other4,523 512 1,024 1,024 1,963Total contractual obligations$896,376 $42,476 $647,466 $63,298 $143,136In addition to the obligations in the table above, approximately $2.6 million of unrecognized tax benefits have been recorded as liabilities as ofDecember 31, 2015. It is uncertain as to if or when such amounts may be settled. We have also recorded a liability for potential penalties of $0.2 million andinterest of $0.3 million related to these unrecognized tax benefits.Off-Balance Sheet Arrangements During all periods presented, we did not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred toas structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or othercontractually narrow or limited purposes. As such, we are not exposed to any financing, liquidity, market or credit risk that could arise if we had engaged inthose types of relationships. Critical Accounting Policies and Significant Judgments and Estimates Our management’s discussion and analysis of financial condition and results of operations is based on our consolidated financial statements, whichhave been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these consolidated financialstatements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets andliabilities at the date of the consolidated financial statements, as well as the reported revenues and expenses during the reporting periods. These items aremonitored and analyzed by us for changes in facts and circumstances, and material changes in these estimates could occur in the future. We base ourestimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis formaking judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Changes in estimates are reflected inreported results for the period in which they become known. Actual results may differ from these estimates under different assumptions or conditions and suchdifferences could be material. While our significant accounting policies are more fully described in Note 2 in the notes to our consolidated financial statements included elsewhere inthis Annual Report on Form 10-K, we believe that the following accounting policies are critical to the process of making significant judgments and estimatesin the preparation of our audited consolidated financial statements. Revenue RecognitionWe derive our revenues from two sources: (i) subscriptions and (ii) professional services and other. Subscription revenues are primarily comprised ofsubscription fees that give customers access to the ordered subscription service, related support and updates, if any, to the subscribed service during thesubscription term.Our contracts typically do not give the customer the right to take possession of the software supporting the services. Professional services and otherrevenues consist of fees associated with the implementation and configuration of our services. Professional services and other revenues also include customertraining and attendance and sponsorship fees for Knowledge, our annual user conference.56We commence revenue recognition when all of the following conditions are met:•There is persuasive evidence of an arrangement;•The service has been provided to the customer;•The collection of related fees is reasonably assured; and•The amount of fees to be paid by the customer is fixed or determinable.We use a signed contract together with a signed order form or a purchase order, as evidence of an arrangement for a new customer. In subsequenttransactions with an existing customer, including an upsell or a renewal, we consider the existing signed contract and either the new signed order form or newpurchase order as evidence of an arrangement.We recognize subscription revenues ratably over the contract term beginning on the commencement date of each contract, the date we make ourservices available to our customers. Once our services are available to customers, we record amounts due in accounts receivable and in deferred revenue. Weprice professional services primarily on a time-and-materials basis and recognize professional services revenues as the services are delivered using aproportional performance model. Such services are delivered over a short period of time. In instances where final acceptance of the services are requiredbefore revenues are recognized, we defer professional services revenues and the associated costs until all acceptance criteria have been met.We assess collectibility based on a number of factors such as past collection history with the customer and creditworthiness of the customer. If wedetermine collectibility is not reasonably assured, we defer revenue recognition until collectibility becomes reasonably assured. We assess whether the fee isfixed or determinable based on the payment terms associated with the transaction and whether the sales price is subject to refund or adjustment. Ourarrangements are generally non-cancelable and do not contain refund-type provisions.We have multiple element arrangements comprised of subscription fees and professional services. We account for subscription and professional servicesrevenues as separate units of accounting. To qualify as a separate unit of accounting, the delivered item must have value to the customer on a standalonebasis. We have concluded that our subscription service has standalone value as it is routinely sold separately by us. In addition, the applications offeredthrough this subscription service are fully functional without any additional development, modification or customization. We provide customers access toour subscription service at the beginning of the contract term. In determining whether professional services have standalone value, we considered thefollowing factors for each professional services agreement: availability of the services from other vendors, the nature of the professional services, the timingof when the professional services contract was signed in comparison to the subscription service start date and the contractual dependence of the subscriptionservice on the customer’s satisfaction with the professional services work. Our professional services, including implementation and configuration services, arenot so unique and complex that other vendors cannot provide them. In some instances, customers independently contract with third-party vendors to do theimplementation and we regularly outsource implementation services to contracted third-party vendors. As a result, we concluded professional services,including implementation and configuration services, have standalone value.The total arrangement consideration for a multiple element arrangement is allocated to the identifiable separate units of accounting based on a relativeselling price hierarchy. We determined the relative selling price for a deliverable based on its vendor-specific objective evidence, or VSOE, of selling price orthird-party evidence, or TPE, of selling price if VSOE does not exist. If neither VSOE nor TPE of selling price exists for a deliverable, the selling price isdetermined using the best estimate of selling price, or BESP. We determine the BESP for each deliverable primarily by considering the historical selling priceof these deliverables in similar transactions as well as other factors, including, but not limited to, market competition, review of stand-alone sales and currentpricing practices. In determining the appropriate pricing structure, we consider the available information regarding the competitive pricing of similarproducts and marketing analysis.In limited circumstances, we grant certain customers the right to deploy our subscription service on the customers’ own servers without significantpenalty. These arrangements are subject to software revenue recognition guidance since the customer deploys our software. We have analyzed all of theelements in these particular multiple element arrangements and determined that we do not have sufficient VSOE of fair value to allocate revenue to oursubscription service and professional services. Consequently, we defer all revenue and related costs under the arrangement until the last element in thetransaction has been delivered or started to be delivered. Once the subscription service and the professional services have commenced, we recognize theentire fee and related costs from the arrangement ratably over the remaining period of the arrangement.Deferred revenue consists primarily of payments received in advance of revenue recognition for our subscriptions and professional services and otherrevenues and is recognized as the revenue recognition criteria are met.57Deferred Commissions Deferred commissions are the incremental selling costs that are directly associated with our customer contracts and consist of sales commissions paid toour direct sales force and referral fees paid to independent third-parties. The majority of commissions and referral fees are deferred and amortized on astraight-line basis over the terms of the related customer contracts. We include amortization of deferred commissions in sales and marketing expense in theconsolidated statements of comprehensive loss. We believe this is the preferable method of accounting as the commission charges are so closely related to therevenue from the customer contracts that they should be recorded as an asset and charged to expense over the same period that the revenue is recognized. Thecommission payments are paid in full the month after the customer’s service commences. Goodwill, Intangible Assets and Other Long Lived AssetsGoodwill represents the excess of the purchase price in a business combination over the fair value of net tangible and intangible assets acquired. Weevaluate and test the recoverability of goodwill for impairment at least annually, during our fourth quarter, or more frequently if circumstances indicate thatgoodwill may not be recoverable. We perform the impairment testing by first assessing qualitative factors to determine whether the existence of events orcircumstances leads to a determination that it is more likely than not that the fair value of its reporting unit is less than its carrying amount. If, after assessingthe totality of events or circumstances, we determine it is more likely than not that the fair value of a reporting unit is less than its carrying amount, weperform a two-step impairment test. The first step requires the identification of the reporting units and comparison of the fair value of a reporting unit with itscarrying amount, including goodwill. If the fair value of the reporting unit is less than its carrying value, an indication of goodwill impairment exists for thereporting unit and the second step of the impairment test is performed to compute the amount of the impairment. Under the second step, an impairment loss isrecognized for any excess of the carrying amount of the reporting unit's goodwill over the implied fair value of that goodwill. We have determined that wehave a single reporting unit. Since the aggregate fair value of our company has consistently and materially exceeded the carrying value of our singlereporting unit, we did not recognize any impairment charges related to goodwill during the years ended December 31, 2015, 2014 and 2013.Intangible assets are amortized over their useful lives ranging from 18 months to 10 years. Each period we evaluate the estimated remaining useful lifeof purchased intangible assets to determine whether events or changes in circumstances warrant a revision to the remaining period of amortization. Weperiodically review the carrying amounts of these assets for impairment whenever events or changes in circumstances indicate that the carrying value of theseassets may not be recoverable. We measure the recoverability of these assets by comparing the carrying amount of each asset to the future undiscounted cashflows we expect the asset to generate. If we consider any of these assets to be impaired, the impairment to be recognized equals the amount by which thecarrying value of the asset exceeds its fair value.Screening for and assessing whether impairment indicators exist or if events or changes in circumstances have occurred, including market conditions,operating fundamentals, competition and general economic conditions, requires significant judgment. Additionally, changes in the technology industryoccur frequently and quickly. Therefore, there can be no assurance that a charge to operating expenses will not occur as a result of future goodwill, intangibleassets and other long-lived assets impairment tests. Stock-based Compensation We recognize compensation expense related to stock options and restricted stock units, or RSUs, on a straight-line basis over the requisite serviceperiod, which is generally the vesting term of four years. For RSUs granted with a performance condition, the expenses are recognized on a graded vestingbasis over the vesting period, after assessing the probability of achieving requisite performance criteria. This has the impact of greater stock-basedcompensation expense during the initial years of the vesting period as stock-based compensation cost is recognized over the requisite service period for eachseparately vesting tranche of the award as though the award were, in substance, multiple awards. We recognize compensation expense related to shares issuedpursuant to the ESPP, on a straight-line basis over the offering period. We estimate the fair value of options using the Black-Scholes options pricing modeland fair value of RSU awards using the fair value of our common stock on the date of grant. We recognize compensation expense net of estimated forfeitureactivity, which is based on historical forfeiture rates. We evaluate the forfeiture rates at least annually, or when events or circumstances indicate a change maybe needed. This may cause a fluctuation in our stock-based compensation in the period of change.58Income Taxes We use the asset and liability method of accounting for income taxes, in which deferred tax assets and liabilities are recognized for the future taxconsequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respectivetax bases. We measure deferred tax assets and liabilities using enacted tax rates expected to apply to taxable income in the years in which those temporarydifferences are expected to be reversed. We recognize the effect on deferred tax assets and liabilities of a change in tax rates as income and expense in theperiod that includes the enactment date. A valuation allowance is established if it is more likely than not that all or a portion of the deferred tax asset will notbe realized. In determining the need for a valuation allowance, we consider future growth, forecasted earnings, future taxable income, the mix of earnings inthe jurisdictions in which we operate, historical earnings, taxable income in prior years, if carryback is permitted under the law, carry-forward periods, andprudent and feasible tax planning strategies.Our tax positions are subject to income tax audits by multiple tax jurisdictions throughout the world. We recognize the tax benefit of an uncertain taxposition only if it is more likely than not the position is sustainable upon examination by the taxing authority, based on the technical merits. We measure thetax benefit recognized as the largest amount of benefit which is more likely than not to be realized upon settlement with the taxing authority. We recognizeinterest accrued and penalties related to unrecognized tax benefits in our tax provision. Significant judgment is required to evaluate uncertain tax positions.Our evaluations are based upon a number of factors, including changes in facts or circumstances, changes in tax law or guidance, correspondence with taxauthorities during the course of audits and effective settlement of audit issues. Changes in the recognition or measurement of uncertain tax positions couldresult in material increases or decreases in our income tax expense in the period in which we make the change, which could have a material impact on oureffective tax rate and operating results.We calculate the current and deferred income tax provision based on estimates and assumptions that could differ from the actual results reflected inincome tax returns filed in subsequent years and record adjustments based on filed income tax returns when identified. The amount of income taxes paid issubject to examination by U.S. federal, state and foreign tax authorities. The estimate of the potential outcome of any uncertain tax issue is subject tomanagement’s assessment of relevant risks, facts and circumstances existing at that time. To the extent the assessment of such tax position changes, we recordthe change in estimate in the period in which we make the determination. Recent Accounting PronouncementsIn May 2014, the Financial Accounting Standards Board, or FASB, issued an update to ASC 606 Revenue from Contracts with Customers, or ASC 606,that will supersede virtually all existing revenue guidance. Under this update, an entity is required to recognize revenue upon transfer of promised goods orservices to customers, in an amount that reflects the expected consideration received in exchange for those goods or services. As such, an entity will need touse more judgment and make more estimates than under the current guidance. This update should be applied retrospectively either to each prior reportingperiod presented in the financial statements, or only to the most current reporting period presented in the financial statements with a cumulative effectadjustment recorded in the retained earnings. This update is effective for our interim and annual reporting periods beginning January 1, 2018. Early adoptionis permitted for us on January 1, 2017. We are currently evaluating the impact of this update on our consolidated financial statements.In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs. To simplify presentation of debt issuance costs, thisnew guidance requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carryingamount of that debt liability, consistent with debt discounts. This guidance will become effective for financial statements issued for fiscal years beginningafter December 15, 2015 and interim periods within those fiscal years. We elected to early adopt this accounting guidance as of December 31, 2015 on aretrospective basis. As a result of the adoption, we reclassified unamortized debt issuance costs of $0.2 million and $0.3 million as of December 31, 2015 and2014, respectively, from "Other assets" and reflected them as a reduction in "Convertible senior notes, net "on the consolidated balance sheets. Adoption ofthis guidance did not impact our consolidated statements of comprehensive loss or consolidated statements of cash flows.In April 2015, the FASB issued ASU 2015-05, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting forFees Paid in a Cloud Computing Arrangement. ASU 2015-05 provides guidance to customers about whether a cloud computing arrangement includessoftware. If a cloud computing arrangement includes a software license, the customer should account for the software license element of the arrangementconsistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should accountfor the arrangement as a service contract. The new guidance does not change the customer’s accounting for service contracts. This guidance is effective forour interim and annual reporting periods beginning January 1, 2016. We are currently evaluating the impact of this guidance on our consolidated financialstatements.59In September 2015, the FASB issued ASU 2015-16, Simplifying the Accounting for Measurement-Period Adjustments (Topic 805), which eliminatesthe requirement to restate prior period financial statements for measurement period adjustments. ASU 2015-16 requires that the cumulative impact of ameasurement period adjustment (including the impact on prior periods) be recognized in the reporting period in which the adjustment is identified. The newstandard is effective for interim and annual periods beginning after December 15, 2015 and early adoption is permitted. This ASU is not expected to have amaterial impact on our consolidated financial statements or disclosures as we do not have any business combinations within the measurement period.In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes. To simplify presentation, the new guidance requiresthat all deferred tax assets and liabilities, along with any related valuation allowance, be classified as non-current on the balance sheet. As a result, eachjurisdiction will now only have one net non-current deferred tax asset or liability. This guidance will become effective for financial statements issued forfiscal years beginning after December 15, 2016 and interim periods within those fiscal years, and may be applied either prospectively to all deferred taxliabilities and assets or retrospectively to all periods presented. Early adoption is permitted. We elected to early adopt this accounting guidance during thethree months ended December 31, 2015 on a prospective basis, resulting in the reclassification of current deferred tax assets to noncurrent deferred taxliabilities on the consolidated balance sheets, which decreased $15.5 million of "Other current assets" and $15.2 million of "Other long-term liabilities", andincreased $0.3 million of "Other assets". Prior periods were not retrospectively adjusted.60ITEM 7A.QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK Foreign Currency Exchange Risk We have foreign currency risks related to our revenue and operating expenses denominated in currencies other than the U.S. Dollar, primarily the Euroand British Pound Sterling. We are a net receiver of Euro and therefore are adversely affected by a strengthening of the U.S. Dollar relative to the Euro.Revenues denominated in U.S. Dollar as a percentage of total revenue was 74%, 72% and 77% during the years ended December 31, 2015, 2014 and 2013,respectively. Changes in exchange rates have recently and may continue to negatively affect our total revenues. We have experienced and expect to continue to experience fluctuations in our net loss as a result of transaction gains or losses related to remeasuringmonetary assets and liabilities that are denominated in currencies other than the functional currency of the entities in which they are recorded. We recognizeda net foreign currency gain of $0.1 million and $2.5 million for the years ended December 31, 2015 and 2014, respectively. While we have not engaged inthe hedging of our foreign currency transactions to date, we may do so in the future.A hypothetical 10% decrease in the U.S. Dollar against other currencies would result in an approximately $2.4 million decrease and $3.5 millionincrease in operating loss for the years ended December 31, 2015 and 2014, respectively. This analysis disregards the possibilities that rates can move inopposite directions and that losses from one geographic area may be offset by gains from another geographic area. Interest Rate Sensitivity We had an aggregate of $1.2 billion in cash, cash equivalents, short-term investments and long-term investments at December 31, 2015. This amountwas invested primarily in money market funds, time deposits, corporate notes and bonds, government securities and other debt securities with a minimumrating of BBB by Standard & Poor's. Baa2 by Moody's or BBB by Fitch. The primary objectives of our investment activities are the preservation of capitaland support of our liquidity requirements. Our investments are exposed to market risk due to fluctuations in interest rates, which may affect our interestincome and the fair market value of our investments. As of December 31, 2015, a hypothetical 100 basis point increase in interest rates would have resulted inan approximate $7.4 million decline of the fair value of our available-for-sale securities. This estimate is based on a sensitivity model that measures marketvalue changes when changes in interest rates occur.As of December 31, 2014, we had an aggregate of $0.9 billion in cash, cash equivalents, short-term investments and long-term investments, and ahypothetical 100 basis point increase in interest rates would have resulted in an approximate $5.6 million decline of the fair value of our available-for-salesecurities.Market RiskIn November 2013, we issued Notes with an aggregate principal amount of $575.0 million. We carry this instrument at face value less unamortizeddiscount on our consolidated balance sheet. Because this instrument does not bear interest, we have no financial statement risk associated with changes ininterest rates. However, the fair value of fixed rate instruments fluctuate when interest rates change, and in the case of convertible notes, when the marketprice of our stock fluctuates.We hold cash balances with multiple financial institutions in various countries and these balances routinely exceed deposit insurance limits.During the year ended December 31, 2015, we invested $10.5 million in privately-held companies that are in the development stage. The fair value ofthese investments may fluctuate depending on the financial condition and near-term prospects of these companies, and we may be required to record animpairment charge if the carrying value of these investments exceed their fair value.61ITEM 8.CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA SERVICENOW, INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS PageReport of Independent Registered Public Accounting Firm63 Consolidated Financial Statements Consolidated Balance Sheets64 Consolidated Statements of Comprehensive Loss65 Consolidated Statements of Stockholders’ Equity66 Consolidated Statements of Cash Flows67 Notes to Consolidated Financial Statements68The supplementary financial information required by this Item 8, is included in Part II, Item 7 under the caption "Quarterly Results of Operations", which isincorporated herein by reference.62Report of Independent Registered Public Accounting Firm To the Board of Directors and Stockholders of ServiceNow, Inc.In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of comprehensive loss, of stockholders’ equity, and ofcash flows present fairly, in all material respects, the financial position of ServiceNow, Inc. and its subsidiaries at December 31, 2015 and December 31, 2014,and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2015 in conformity with accountingprinciples generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internalcontrol over financial reporting as of December 31, 2015, based on criteria established in Internal Control - Integrated Framework (2013) issued by theCommittee of Sponsoring Organizations of the Treadway Commission (COSO). The Company's management is responsible for these financial statements, formaintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, includedin Management's Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on these financialstatements and on the Company's internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with thestandards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtainreasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reportingwas maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts anddisclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overallfinancial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financialreporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on theassessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits providea reasonable basis for our opinions.As discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which it classifies deferred taxes and debt issuancecosts on the consolidated balance sheet in 2015.A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal controlover financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairlyreflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are beingmade only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention ortimely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliancewith the policies or procedures may deteriorate. /s/ PricewaterhouseCoopers LLP San Jose, CaliforniaFebruary 25, 201663SERVICENOW, INC.CONSOLIDATED BALANCE SHEETS(in thousands, except share and per share data) December 31, 2015 2014Assets Current assets: Cash and cash equivalents$412,305 $252,455Short-term investments388,945 416,336Accounts receivable, net203,333 159,171Current portion of deferred commissions51,976 43,232Prepaid expenses and other current assets29,076 35,792Total current assets1,085,635 906,986Deferred commissions, less current portion33,016 29,453Long-term investments422,667 266,772Property and equipment, net144,714 104,237Intangible assets, net43,005 54,526Goodwill55,669 55,016Other assets22,346 7,762Total assets$1,807,052 $1,424,752Liabilities and Stockholders’ Equity Current liabilities: Accounts payable$37,369 $17,829Accrued expenses and other current liabilities101,264 79,497Current portion of deferred revenue593,003 409,671Total current liabilities731,636 506,997Deferred revenue, less current portion10,751 12,567Convertible senior notes, net474,534 443,437Other long-term liabilities23,317 33,076Total liabilities1,240,238 996,077Commitments and contingencies Stockholders’ equity: Preferred stock, $0.001 par value; 10,000,000 shares authorized; no shares issued or outstanding— —Common stock $0.001 par value; 600,000,000 shares authorized; 160,785,764 and 149,509,092shares issued and outstanding at December 31, 2015 and 2014, respectively160 150Additional paid-in capital1,140,545 799,221Accumulated other comprehensive loss(16,882) (12,113)Accumulated deficit(557,009) (358,583)Total stockholders’ equity566,814 428,675Total liabilities and stockholders’ equity$1,807,052 $1,424,752 See accompanying notes to consolidated financial statements64SERVICENOW, INC.CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS(in thousands, except share and per share data) Year Ended December 31, 201520142013Revenues: Subscription$848,278 $567,217 $349,804Professional services and other157,202 115,346 74,846Total revenues1,005,480 682,563 424,650Cost of revenues(1): Subscription183,400 142,687 87,928Professional services and other146,013 106,089 67,331Total cost of revenues329,413 248,776 155,259Gross profit676,067 433,787 269,391Operating expenses(1): Sales and marketing498,439 341,119 195,190Research and development217,389 148,258 78,678General and administrative126,604 96,245 61,790Total operating expenses842,432 585,622 335,658Loss from operations(166,365) (151,835) (66,267)Interest expense(31,097) (29,059) (3,498)Interest income and other income (expense), net4,450 5,354 (1,432)Loss before provision for income taxes(193,012) (175,540) (71,197)Provision for income taxes5,414 3,847 2,511Net loss$(198,426) $(179,387) $(73,708)Net loss attributable to common stockholders - basic and diluted$(198,426) $(179,387) $(73,708)Net loss per share attributable to common stockholders - basic anddiluted$(1.27) $(1.23) $(0.54)Weighted-average shares used to compute net loss per share attributableto common stockholders - basic and diluted155,706,643 145,355,543 135,415,809Other comprehensive loss: Foreign currency translation adjustments$(3,177) $(11,027) $(303)Unrealized loss on investments, net of tax(1,592) (610) (137)Other comprehensive loss(4,769) (11,637) (440)Comprehensive loss$(203,195) $(191,024) $(74,148)(1)Includes stock-based compensation as follows: Year Ended December 31, 2015 2014 2013 Cost of revenues: Subscription$23,416 $14,988 $8,434Professional services and other23,265 13,116 4,749Sales and marketing102,349 54,006 21,609Research and development70,326 42,535 16,223General and administrative38,357 29,674 14,566See accompanying notes to consolidated financial statements65SERVICENOW, INC.CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY(in thousands, except share data) Common Stock AdditionalPaid-inCapital AccumulatedDeficit AccumulatedOtherComprehensive Loss TotalStockholders’Equity Shares Amount Balance at December 31, 2012126,367,700 $126 $348,803 $(105,488) $(36) $243,405Common stock issued under employee stockplans13,986,905 14 56,484 — — 56,498Tax benefit from employee stock plans— — 1,658 — — 1,658Vesting of early exercised stock options— — 381 — — 381Stock-based compensation— — 65,694 — — 65,694Equity component of the convertible notes,net— — 152,061 — — 152,061Purchase of convertible note hedge— — (135,815) — — (135,815)Sales of warrants— — 84,525 — — 84,525Other comprehensive loss, net — — (440) (440)Net loss — (73,708) — (73,708)Balance at December 31, 2013140,354,605 $140 $573,791 $(179,196) $(476) $394,259Common stock issued under employee stockplans9,154,487 10 68,723 — — 68,733Tax benefit from employee stock plans— — 2,001 — — 2,001Vesting of early exercised stock options— — 167 — — 167Stock-based compensation— — 154,539 — — 154,539Other comprehensive loss, net — — (11,637) (11,637)Net loss — (179,387) — (179,387)Balance at December 31, 2014149,509,092 $150 $799,221 $(358,583) $(12,113) $428,675Common stock issued under employee stockplans11,276,672 10 93,338 — — 93,348Tax benefit from employee stock plans— — 2,663 — — 2,663Taxes paid related to net share settlement ofequity awards— — (12,795) — — (12,795)Vesting of early exercised stock options— — 44 — — 44Stock-based compensation— — 258,074 — — 258,074Other comprehensive loss, net — — (4,769) (4,769)Net loss — (198,426) — (198,426)Balance at December 31, 2015160,785,764 $160 $1,140,545 $(557,009) $(16,882) $566,814See accompanying notes to consolidated financial statements66SERVICENOW, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS(in thousands) Year Ended December 31, 2015 2014 2013Cash flows from operating activities: Net loss$(198,426) $(179,387) $(73,708)Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization60,356 42,059 24,152Amortization of premiums on investments7,064 8,084 4,758Amortization of deferred commissions65,541 51,270 29,364Amortization of debt discount and issuance costs31,097 29,059 3,498Stock-based compensation257,713 154,319 65,581Tax benefit from employee stock plans(2,663) (2,037) (1,658)Deferred income tax(1,282) (1,198) (231)Other(6,223) (4,469) 558Changes in operating assets and liabilities: Accounts receivable(50,855) (56,785) (29,506)Deferred commissions(80,142) (73,786) (54,943)Prepaid expenses and other assets(10,961) (5,540) 3,471Accounts payable14,785 10,223 (252)Deferred revenue195,900 168,393 94,405Accrued expenses and other liabilities33,187 (1,305) 16,257Net cash provided by operating activities315,091 138,900 81,746Cash flows from investing activities: Purchases of property and equipment(87,481) (54,379) (55,321)Business combination, net of cash acquired(1,100) (99,813) (13,330)Purchase of other intangibles(1,750) ——Purchases of investments(712,782) (521,393) (570,679)Purchases of strategic investments(10,500) — —Sales of investments277,045 166,997 55,158Maturities of investments305,047 191,715 181,554Restricted cash(222) (55) (177)Net cash used in investing activities(231,743) (316,928) (402,795)Cash flows from financing activities: Net proceeds from (offering costs paid in connection with) follow-onoffering— — (698)Net proceeds from borrowings on convertible senior notes— — 562,941Proceeds from issuance of warrants— — 84,525Purchase of convertible note hedge— — (135,815)Proceeds from employee stock plans93,348 69,396 55,959Taxes paid related to net share settlement of equity awards(12,795) (661) —Tax benefit from employee stock plans2,663 2,037 1,658Payments on financing obligation(223) — —Net cash provided by financing activities82,993 70,772 568,570Foreign currency effect on cash and cash equivalents(6,491) (6,592) (207)Net increase (decrease) in cash and cash equivalents159,850 (113,848) 247,314Cash and cash equivalents at beginning of period252,455 366,303 118,989Cash and cash equivalents at end of period$412,305 $252,455 $366,303Supplemental disclosures of other cash flow information: Income taxes paid$3,630 $12,604 $920Non-cash investing and financing activities: Property and equipment included in accounts payable, accrued expensesand other liabilities$14,427 $10,313 $3,741Financing obligation for property and equipment— 6,161 — See accompanying notes to consolidated financial statements67SERVICENOW, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(1) Description of the Business ServiceNow is a leading provider of enterprise cloud computing solutions that define, structure, manage and automate services across the globalenterprise. Our mission is to help the modern enterprise operate faster and be more scalable by applying a service-oriented lens to the activities, tasks andprocesses that comprise day-to-day work life.(2) Summary of Significant Accounting Policies Principles of Consolidation The consolidated financial statements have been prepared in conformity with U.S. Generally Accepted Accounting Principles, or GAAP, and includeour accounts and the accounts of our wholly-owned subsidiaries. All significant intercompany transactions and balances have been eliminated uponconsolidation.Prior Period Reclassifications Certain reclassifications of prior period amounts have been made to conform to the current period presentation. Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make certain estimates and assumptions. Theseestimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of theconsolidated financial statements, as well as reported amounts of revenues and expenses during the reporting period. Actual results could differ from thoseestimates. Segments We define the term “chief operating decision maker” to be our Chief Executive Officer. Our chief operating decision maker allocates resources andassesses financial performance based upon discrete financial information at the consolidated level. Accordingly, we have determined that we operate as asingle operating and reportable segment. Foreign Currency Translation and Transactions The functional currencies for our foreign subsidiaries are primarily their local currencies. Assets and liabilities of the wholly-owned foreign subsidiariesare translated into U.S. Dollars at exchange rates in effect at each period end. Amounts classified in stockholders’ equity are translated at historical exchangerates. Revenues and expenses are translated at the average exchange rates during the period. The resulting translation adjustments are recorded inaccumulated other comprehensive loss as a component of stockholders’ equity. Foreign currency transaction gains and losses are included in interest incomeand other income (expense), net within the consolidated statements of comprehensive loss, and have not been material for all periods presented. Allocation of Overhead Costs Overhead costs associated with office facilities, IT and certain depreciation related to non-cloud-based infrastructure hardware equipment are allocatedto cost of revenues and operating expenses based on headcount. Revenue Recognition We derive our revenues from two sources: (i) subscriptions and (ii) professional services and other. Subscription revenues are primarily comprised ofsubscription fees that give customers access to the ordered subscription service, related support and updates to the subscribed service during the subscriptionterm. Our contracts typically do not give the customer the right to take possession of the software supporting the services. Professional services and otherrevenues consist of fees associated with the implementation and configuration of our services. Professional services and other revenues also include customertraining and attendance and sponsorship fees for Knowledge, our annual user conference.We commence revenue recognition when all of the following conditions are met: •There is persuasive evidence of an arrangement;•The service has been provided to the customer;•The collection of related fees is reasonably assured; and68•The amount of fees to be paid by the customer is fixed or determinable.Our arrangements are generally non-cancelable and do not contain refund-type provisions.We recognize subscription revenues ratably over the contract term beginning on the commencement date of each contract, the date we make ourservices available to our customers. Once our services are available to customers, we record amounts due in accounts receivable and in deferred revenue.We recognize professional services revenues as the services are delivered using a proportional performance model. Such services are delivered over ashort period of time. In instances where final acceptance of the services are required before revenues are recognized, we defer professional services revenuesand the associated costs until all acceptance criteria have been met. We have multiple element arrangements comprised of subscription fees and professional services. To qualify as a separate unit of accounting, thedelivered item must have value to the customer on a standalone basis. We have concluded that our subscription service and professional services, includingimplementation and configuration services, have standalone value. The total arrangement consideration for a multiple element arrangement is allocated to the identifiable separate units of accounting based on a relativeselling price hierarchy. We determined the relative selling price for a deliverable based on its vendor-specific objective evidence, or VSOE, of selling price orthird-party evidence, or TPE, of selling price if VSOE does not exist. If neither VSOE nor TPE of selling price exists for a deliverable, the selling price isdetermined using the best estimate of selling price, or BESP. We determine the BESP for each deliverable primarily by considering the historical selling priceof these deliverables in similar transactions as well as other factors, including, but not limited to, market competition, review of stand-alone sales and currentpricing practices. In determining the appropriate pricing structure, we consider the extent of competitive pricing of similar products and marketing analysis. In limited circumstances, we grant certain customers the right to deploy our subscription service on the customers’ own servers without significantpenalty. These arrangements are subject to software revenue recognition guidance since the customer deploys our software. We have analyzed all of theelements in these particular multiple element arrangements and determined that we do not have sufficient VSOE of fair value to allocate revenue to oursubscription service and professional services. Consequently, we defer all revenue and related costs under the arrangement until the last element in thetransaction has been delivered or started to be delivered. Once the subscription service and the professional services have commenced, we recognize theentire fee and related costs from the arrangement ratably over the remaining period of the arrangement.Deferred revenue consists primarily of payments received in advance of revenue recognition for our subscriptions and professional services and otherrevenues and is recognized as the revenue recognition criteria are met. Deferred Commissions Deferred commissions are the incremental selling costs that are directly associated with our customer contracts and consist of sales commissions paid toour direct sales force and referral fees paid to independent third-parties. The majority of commissions and referral fees are deferred and amortized on astraight-line basis over the terms of the related customer contracts. We include amortization of deferred commissions in sales and marketing expense in theconsolidated statements of comprehensive loss. Fair Value Measurements We apply fair value accounting for all financial assets and liabilities and non-financial assets and liabilities that are recognized in the financialstatements on a non-recurring basis or disclosed at fair value in the financial statements on a recurring basis. Fair value is defined as the exchange price thatwould be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderlytransaction between market participants on the measurement date. We use a fair value hierarchy that is based on three levels of inputs, of which the first twoare considered observable and the last unobservable. The three levels of the fair value hierarchy are as follows: Level 1—Quoted prices (unadjusted) in active markets for identical assets or liabilities that we have the ability to access; Level 2—Inputs other than Level 1 that are directly or indirectly observable, such as quoted prices for identical or similar assets and liabilities, quotedprices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of theassets or liabilities, such as interest rates, yield curves and foreign currency spot rates; and Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. 69Cash and Cash Equivalents Cash and cash equivalents consist of highly liquid investments with original maturities of three months or less. Cash and cash equivalents are stated atcost, which approximates fair value. Investments Investments consist of commercial paper, corporate notes and bonds, certificates of deposit and U.S. government and agency securities. We classifyinvestments as available-for-sale at the time of purchase and reevaluate such classification as of each balance sheet date. All investments are recorded atestimated fair value. Unrealized gains and losses for available-for-sale securities are included in accumulated other comprehensive loss, a component ofstockholders’ equity. We evaluate our investments to assess whether those with unrealized loss positions are other than temporarily impaired. We considerimpairments to be other than temporary if they are related to deterioration in credit risk or if it is likely we will sell the securities before the recovery of theircost basis. Realized gains and losses and declines in value judged to be other than temporary are determined based on the specific identification method andare reported in interest income and other income (expense), net in the consolidated statements of comprehensive loss.Strategic InvestmentsWe report our investments in non-marketable equity securities, which consist of minority equity investments in privately-held companies, at cost or fairvalue when an event or circumstance indicates an other-than-temporary decline in value has occurred. Management evaluates financial results, earningstrends, technology milestones and subsequent financing of these companies, as well as the general market conditions to identify indicators of other-than-temporary impairment. Accounts Receivable We record trade accounts receivable at the net invoice value and such receivables are non-interest bearing. We consider receivables past due based onthe contractual payment terms. We review our exposure to accounts receivable and reserve for specific amounts if collectibility is no longer reasonablyassured. Property and Equipment Property and equipment, net, are stated at cost, subject to review of impairment, and depreciated using the straight-line method over the estimateduseful lives of the assets as follows:Building 39 yearsComputer equipment and software 3—5 yearsFurniture and fixtures 3—7 yearsLeasehold improvements shorter of the lease term or estimated useful life When assets are sold, or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts and any gain or loss isincluded in cost of revenues or operating expenses depending on whether the asset sold is being used in our provision of services to our customers. Repairsand maintenance expenses are charged to our statements of comprehensive loss as incurred. Capitalized Software Costs Costs incurred to develop our internal administration, finance and accounting systems are capitalized during the application development stage andamortized over the software’s estimated useful life of three to five years. Leases Leases are reviewed and classified as capital or operating at their inception. For leases that contain rent escalations or periods during the lease termwhere rent is not required, we recognize rent expense based on allocating the total rent payable on a straight-line basis over the term of the lease excludinglease extension periods. The difference between rent payments and straight-line rent expense is recorded as deferred rent in the consolidated balance sheets.Deferred rent that will be recognized during the ensuing 12-month period is recorded as the current portion of deferred rent and the remainder is recorded aslong-term deferred rent. 70Goodwill, Intangible Assets and Other Long Lived AssetsGoodwill represents the excess of the purchase price in a business combination over the fair value of the net tangible and intangible assets acquired. Weevaluate and test the recoverability of goodwill for impairment at least annually, during the fourth quarter, or more frequently if circumstances indicate thatgoodwill may not be recoverable. For purposes of goodwill impairment testing, we have one reporting unit.Intangible assets are amortized over their useful lives ranging from 18 months to ten years. Each period we evaluate the estimated remaining useful lifeof purchased intangible assets to determine whether events or changes in circumstances warrant a revision to the remaining period of amortization.We periodically review the carrying amounts of these assets for impairment whenever events or changes in circumstances indicate that the carryingvalue of these assets may not be recoverable. We measure the recoverability of these assets by comparing the carrying amount of each asset to the futureundiscounted cash flows we expect the asset to generate. If we consider any of these assets to be impaired, the impairment to be recognized equals the amountby which the carrying value of the asset exceeds its fair value.Advertising CostsAdvertising costs are expensed as incurred and are included in sales and marketing expense. Advertising costs for the years ended December 31, 2015,2014 and 2013 were $49.3 million, $33.5 million and $21.0 million, respectively.Stock-based Compensation We recognize compensation expense related to stock options and restricted stock units, or RSUs, on a straight-line basis over the requisite serviceperiod, which is generally the vesting term of four years. For RSUs granted with a performance condition, the expenses are recognized on a graded vestingbasis over the vesting period, after assessing the probability of achieving requisite performance criteria. This has the impact of greater stock-basedcompensation expense during the initial years of the vesting period as stock-based compensation cost is recognized over the requisite service period for eachseparately vesting tranche of the award as though the award were, in substance, multiple awards. We recognize compensation expense related to shares issuedpursuant to the employee stock purchase plan, or ESPP, on a straight-line basis over the offering period. We estimate the fair value of options using theBlack-Scholes options pricing model and fair value of RSUs using the fair value of our common stock on the date of grant. We recognize compensationexpense net of estimated forfeiture activity, which is based on historical forfeiture rates. In some instances, shares are issued on the vesting dates net of theminimum statutory tax withholding requirements to be paid by us on behalf of our employees. In these instances, we record the liability for withholdingamounts to be paid by us as a reduction to additional paid-in capital when paid, and include these payments as a reduction of cash flows from financingactivities. Net Loss Per Share Attributable to Common Stockholders Basic net income (loss) per share attributable to common stockholders is computed by dividing net income (loss) attributable to common stockholdersby the weighted-average number of common shares outstanding during the period. Diluted net income (loss) per share is computed by dividing net income(loss) attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period, adjusted for the effectsof dilutive common shares, which are comprised of outstanding common stock options, convertible preferred stock, RSUs, common stock subject torepurchase, ESPP obligations, convertible senior notes and warrants. The dilutive potential common shares are computed using the treasury stock method orthe as-if converted method, as applicable. In periods where the effect of the conversion of preferred stock is dilutive, net income (loss) attributable to commonstockholders is adjusted by the associated preferred dividends and accretions. The effects of outstanding common stock options, convertible preferred stock,RSUs, common stock subject to repurchase, ESPP obligations, convertible senior notes and warrants are excluded from the computation of diluted net income(loss) per common share in periods in which the effect would be antidilutive. Concentration of Credit Risk and Significant Customers Financial instruments potentially exposing us to credit risk consist primarily of cash, cash equivalents, investments and accounts receivable. We holdcash at financial institutions that management believes are high credit, quality financial institutions and invest in securities with a minimum rating of BBBby Standard & Poor's. Baa2 by Moody's or BBB by Fitch. We are also exposed to credit risk under the convertible note hedge (the "Note Hedge") transactionsthat may result from counterparties' non-performance. 71Credit risk arising from accounts receivable is mitigated due to our large number of customers and their dispersion across various industries andgeographies. As of December 31, 2015 and 2014, there were no customers that represented more than 10% of our accounts receivable balance. There were nocustomers that individually exceeded 10% of our revenues in any of the periods presented. For purposes of assessing concentration of credit risk andsignificant customers, a group of customers under common control or customers that are affiliates of each other are regarded as a single customer. We review the composition of the accounts receivable balance, historical write-off experience and the potential risk of loss associated with delinquentaccounts to determine if an allowance for doubtful accounts is necessary. Individual accounts receivable are written off when we become aware of a specificcustomer’s inability to meet its financial obligation, and all collection efforts are exhausted. The following table presents the changes in the allowance fordoubtful accounts (in thousands): Balance atBeginning ofYear Additions(Deductions):Charged toOperations Additions(Deductions):Charged toDeferred Revenue Less:Write-offs Balance at Endof YearYear ended December 31, 2015 Allowance for doubtful accounts$809 841 (70) 401 $1,179Year ended December 31, 2014 Allowance for doubtful accounts$1,143 395 (523) 206 $809Year ended December 31, 2013 Allowance for doubtful accounts$742 (43) 946 502 $1,143Warranties and Indemnification Our cloud-based services are typically warranted to perform in material conformance with its specifications. We include service level commitments to our customers that permit those customers to receive credits in the event we fail to meet those service levels.We establish an accrual based on an evaluation of the known service disruptions. Service level credit accrual charges are recorded against revenue and werenot material for all periods presented. We have also agreed to indemnify our directors and executive officers for costs associated with any fees, expenses, judgments, fines and settlementamounts incurred by any of these persons in any action or proceeding to which any of those persons is, or is threatened to be, made a party by reason of theperson’s service as a director or officer, including any action by us, arising out of that person’s services as a director or officer of our company or that person’sservices provided to any other company or enterprise at our request. We maintain director and officer insurance coverage that may enable us to recover aportion of any future amounts paid. The fair values of these obligations are not material as of each balance sheet date. Our agreements include provisions indemnifying customers against intellectual property and other third-party claims. We have not incurred any costs asa result of such indemnification obligations and have not recorded any liabilities related to such obligations in the consolidated financial statements. Income Taxes We use the asset and liability method of accounting for income taxes, in which deferred tax assets and liabilities are recognized for the future taxconsequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respectivetax bases. We measure deferred tax assets and liabilities using enacted tax rates expected to apply to taxable income in the years in which those temporarydifferences are expected to be reversed. We recognize the effect on deferred tax assets and liabilities of a change in tax rates as income and expense in theperiod that includes the enactment date. A valuation allowance is established if it is more likely than not that all or a portion of the deferred tax asset will notbe realized. In determining the need for a valuation allowance, we consider future growth, forecasted earnings, future taxable income, the mix of earnings inthe jurisdictions in which we operate, historical earnings, taxable income in prior years, if carryback is permitted under the law, carry-forward periods, andprudent and feasible tax planning strategies. Our tax positions are subject to income tax audits by multiple tax jurisdictions throughout the world. We recognize the tax benefit of an uncertain taxposition only if it is more likely than not the position is sustainable upon examination by the taxing authority, based on the technical merits. We measure thetax benefit recognized as the largest amount of benefit which is more likely than not to be realized upon settlement with the taxing authority. We recognizeinterest accrued and penalties related to unrecognized tax benefits in our tax provision.72We calculate the current and deferred income tax provision based on estimates and assumptions that could differ from the actual results reflected inincome tax returns filed in subsequent years and record adjustments based on filed income tax returns when identified. The amount of income taxes paid issubject to examination by U.S. federal, state and foreign tax authorities. The estimate of the potential outcome of any uncertain tax issue is subject tomanagement’s assessment of relevant risks, facts and circumstances existing at that time. To the extent the assessment of such tax position changes, we recordthe change in estimate in the period in which we make the determination.Recent Accounting PronouncementsIn May 2014, the Financial Accounting Standards Board, or FASB, issued an update to ASC 606 Revenue from Contracts with Customers, or ASC 606,that will supersede virtually all existing revenue guidance. Under this update, an entity is required to recognize revenue upon transfer of promised goods orservices to customers in an amount that reflects the expected consideration received in exchange for those goods or services. As such, an entity will need touse more judgment and make more estimates than under the current guidance. This update should be applied retrospectively either to each prior reportingperiod presented in the financial statements, or only to the most current reporting period presented in the financial statements with a cumulative effectadjustment recorded in the retained earnings. This update is effective for our interim and annual reporting periods beginning January 1, 2018. Early adoptionis permitted for us on January 1, 2017. We are currently evaluating the impact of this update on our consolidated financial statements.In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs. To simplify presentation of debt issuance costs, thisnew guidance requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carryingamount of that debt liability, consistent with debt discounts. This guidance will become effective for financial statements issued for fiscal years beginningafter December 15, 2015 and interim periods within those fiscal years. We elected to early adopt this accounting guidance as of December 31, 2015 on aretrospective basis. As a result of the adoption, we reclassified unamortized debt issuance costs of $0.2 million and $0.3 million as of December 31, 2015 and2014, respectively, from "Other assets" and reflected them as a reduction in "Convertible senior notes, net" on the consolidated balance sheets. Adoption ofthis guidance did not impact our consolidated statements of comprehensive loss or consolidated statements of cash flows.In April 2015, the FASB issued ASU 2015-05, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting forFees Paid in a Cloud Computing Arrangement. ASU 2015-05 provides guidance to customers about whether a cloud computing arrangement includessoftware. If a cloud computing arrangement includes a software license, the customer should account for the software license element of the arrangementconsistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should accountfor the arrangement as a service contract. The new guidance does not change the customer’s accounting for service contracts. This guidance is effective forour interim and annual reporting periods beginning January 1, 2016. We are currently evaluating the impact of this guidance on our consolidated financialstatements.In September 2015, the FASB issued ASU 2015-16, Simplifying the Accounting for Measurement-Period Adjustments (Topic 805), which eliminatesthe requirement to restate prior period financial statements for measurement period adjustments. ASU 2015-16 requires that the cumulative impact of ameasurement period adjustment (including the impact on prior periods) be recognized in the reporting period in which the adjustment is identified. The newstandard is effective for interim and annual periods beginning after December 15, 2015 and early adoption is permitted. This ASU is not expected to have amaterial impact on our consolidated financial statements or disclosures as we do not have any business combinations within the measurement period.In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes. To simplify presentation, the new guidance requiresthat all deferred tax assets and liabilities, along with any related valuation allowance, be classified as non-current on the balance sheet. As a result, eachjurisdiction will now only have one net non-current deferred tax asset or liability. This guidance will become effective for financial statements issued forfiscal years beginning after December 15, 2016 and interim periods within those fiscal years, and may be applied either prospectively to all deferred taxliabilities and assets or retrospectively to all periods presented. Early adoption is permitted. We elected to early adopt this accounting guidance during thethree months ended December 31, 2015 on a prospective basis, resulting in the reclassification of current deferred tax assets to noncurrent deferred taxliabilities on the consolidated balance sheets, which decreased $15.5 million of "Other current assets" and $15.2 million of "Other long-term liabilities", andincreased $0.3 million of "Other assets". Prior periods were not retrospectively adjusted.73(3) Investments Marketable securitiesThe following is a summary of our available-for-sale investment securities, excluding those securities classified within cash and cash equivalents on theconsolidated balance sheets (in thousands): December 31, 2015 AmortizedCost GrossUnrealizedGains GrossUnrealizedLosses EstimatedFair ValueAvailable-for-sale securities: Commercial paper$32,430 $2 $(38) $32,394Corporate notes and bonds617,054 7 (2,027) 615,034Certificates of deposit29,610 2 (17) 29,595U.S. government and agency securities134,962 1 (374) 134,589Total available-for-sale securities$814,056 $12 $(2,456) $811,612 December 31, 2014 AmortizedCost GrossUnrealizedGains GrossUnrealizedLosses EstimatedFair ValueAvailable-for-sale securities: Commercial paper$8,195 $1 $— $8,196Corporate notes and bonds554,421 56 (845) 553,632Certificates of deposit27,251 8 (2) 27,257U.S. government and agency securities94,093 2 (72) 94,023Total available-for-sale securities$683,960 $67 $(919) $683,108As of December 31, 2015, the contractual maturities of our investment securities did not exceed 25 months. The fair values of available-for-saleinvestment securities, by remaining contractual maturity, are as follows (in thousands): December 31,2015Due in one year or less$388,945Due in one year through two years417,665Due after two years5,002Total$811,612We had certain available-for-sale investment securities in a gross unrealized loss position, substantially all of which had been in such position for lessthan 12 months. There were no impairments considered "other-than-temporary" as it is more likely than not we will hold the securities until maturity or arecovery of the cost basis. The following table shows the fair values and the gross unrealized losses of these securities, classified by the length of time that thesecurities have been in a continuous unrealized loss position, and aggregated by investment types (in thousands): 74 December 31, 2015 Less than 12 Months 12 Months or Greater Total Fair Value GrossUnrealizedLosses Fair Value GrossUnrealizedLosses Fair Value GrossUnrealizedLossesCommercial paper$24,913 $(38) $— $— $24,913 $(38)Corporate notes and bonds539,586 (1,897) 60,099 (130) 599,685 (2,027)Certificates of deposit19,750 (17) — — 19,750 (17)U.S. government and agency securities132,581 (374) — — 132,581 (374)Total$716,830 $(2,326) $60,099 $(130) $776,929 $(2,456) December 31, 2014 Less than 12 Months 12 Months or Greater Total Fair Value GrossUnrealizedLosses Fair Value GrossUnrealizedLosses Fair Value GrossUnrealizedLossesCorporate notes and bonds$436,140 $(845) $— $— $436,140 $(845)Certificates of deposit7,999 (2) — — 7,999 (2)U.S. government and agency securities80,014 (72) — — 80,014 (72)Total$524,153 $(919) $— $— $524,153 $(919) As of December 31, 2015, we had a total of 327 available-for-sale securities, excluding those securities classified within cash and cash equivalents onthe consolidated balance sheet in an unrealized loss position.Strategic investmentsDuring the year ended December 31, 2015, we invested in non-marketable equity securities of certain privately-held companies. The investments areaccounted for under the cost method as we have less than 20% ownership interest and we do not have the ability to exercise significant influence over theoperations of these companies. The carrying value of these investments was $10.5 million as of December 31, 2015, which is included in "Other assets" on theconsolidated balance sheets.75(4) Fair Value Measurements The following table presents our fair value hierarchy for our assets measured at fair value on a recurring basis at December 31, 2015 (in thousands): Level 1 Level 2 TotalCash equivalents: Money market funds$263,515 $— $263,515Commercial paper— 2,000 2,000Corporate notes and bonds— 1,119 1,119Short-term investments: Commercial paper— 32,394 32,394Corporate notes and bonds— 303,567 303,567Certificates of deposit— 23,736 23,736U.S. government and agency securities— 29,248 29,248Long-term investments: Corporate notes and bonds— 311,467 311,467Certificates of deposit— 5,859 5,859U.S. government and agency securities— 105,341 105,341Total$263,515 $814,731 $1,078,246 The following table presents our fair value hierarchy for our assets measured at fair value on a recurring basis at December 31, 2014 (in thousands): Level 1 Level 2 TotalCash equivalents: Money market funds$46,541 $— $46,541Commercial paper— 4,600 4,600Short-term investments: Commercial paper— 8,196 8,196Corporate notes and bonds— 342,864 342,864Certificates of deposit— 25,258 25,258U.S. government and agency securities— 40,018 40,018Long-term investments: Corporate notes and bonds— 210,768 210,768Certificates of deposit— 1,999 1,999U.S. government and agency securities— 54,005 54,005Total$46,541 $687,708 $734,249We determine the fair value of our security holdings based on pricing from our service provider and market prices from industry-standard independentdata providers. Such market prices may be quoted prices in active markets for identical assets (Level 1 inputs) or pricing determined using inputs other thanquoted prices that are observable either directly or indirectly (Level 2 inputs), such as yield curve, volatility factors, credit spreads, default rates, loss severity,current market and contractual prices for the underlying instruments or debt, broker and dealer quotes, as well as other relevant economic measures.See Note 9 for the fair value measurement of our convertible senior notes.(5) Business CombinationsNeebula Systems Ltd.On July 11, 2014, we completed the acquisition of a privately-held company, Neebula Systems Ltd., or Neebula, by acquiring all issued andoutstanding common shares of Neebula for approximately $100 million in an all-cash transaction to expand our IT Operations Management solutions. Thefollowing table summarizes the allocation of the purchase price to the fair value of the tangible and intangible assets acquired and liabilities assumed as ofthe acquisition date: Purchase PriceAllocation(in thousands) Useful Life(in years)Net tangible assets acquired$102 Intangible assets: Developed technology56,200 5.5Order backlog600 1.5Trade names300 1.5Goodwill53,788 Net deferred tax liabilities (1)(10,527) Total purchase price$100,463 (1)Deferred tax liabilities, net primarily relates to purchased identifiable intangible assets and is shown net of deferred tax assets.The excess of purchase consideration over the fair value of net tangible and identifiable intangible assets acquired was recorded as goodwill. Webelieve the goodwill represents the synergies expected from expanded market opportunities when integrating Neebula technologies with our offerings. Thegoodwill balance is not deductible for U.S. income tax purposes. Acquisition-related costs of $1.2 million are primarily included in general andadministrative expenses on our consolidated statements of comprehensive loss.The results of operations of Neebula have been included in our consolidated financial statements from the date of purchase. The following unauditedpro forma consolidated financial information combines the results of operations for us and Neebula for the year ended December 31, 2014 and 2013, as if theacquisition of Neebula had occurred on January 1, 2013 (in thousands, except share and per share data): Year Ended December 31, 2014 2013 (Unaudited)Revenue$683,426 $425,515Net loss$(189,457) $(89,871)Weighted-average shares used to compute net loss per share attributable to common stockholders -basic and diluted145,355,543 135,415,809Net loss per share attributable to common stockholders - basic and diluted$(1.30) $(0.66)The pro forma results as presented above are based on estimates and assumptions, which we believe are reasonable. They are not necessarily indicativeof our consolidated results of operations in future periods or the results that actually would have been realized had we been a combined company during theperiods presented. The pro forma results include adjustments primarily related to amortization of acquired intangible assets and acquisition-related costs.Mirror42 Holding B.V.On July 1, 2013, we acquired all the outstanding stock of Mirror42 Holding B.V., a cloud-based performance analytics company, for total cashconsideration of $13.3 million. The following table summarizes the allocation of the purchase price to the fair value of the tangible and intangible assetsacquired and liabilities assumed as of the acquisition date:77 Purchase Price Allocation(in thousands) Useful Life(in years)Net tangible liabilities acquired$(595) Intangible assets: Developed technology5,530 4Contracts297 1.5Non-compete agreements31 1.5Goodwill8,218 Net deferred tax liabilities(139) Total purchase price$13,342 The excess of purchase consideration over the fair value of net tangible and identifiable intangible assets acquired was recorded as goodwill.Management believes that the goodwill represents the synergies expected from expanded market opportunities when integrating the Mirror42 Holding B.V.’stechnologies with our offerings. $8.1 million of the goodwill balance is deductible for income tax purposes.The results of operations of Mirror42 Holding B.V. described above have been included in our consolidated financial statements from the date ofpurchase. The business combination did not have a material impact on our consolidated financial statements, and therefore pro forma disclosures have notbeen presented.(6) Goodwill and Intangible AssetsGoodwill balances are presented below (in thousands): Carrying AmountBalance as of December 31, 2014 $55,016Goodwill acquired 1,442Foreign currency translation adjustments (789)Balance as of December 31, 2015 $55,669Intangible assets consist of the following (in thousands): December 31, 2015 Gross Carrying Amount AccumulatedAmortization Net Carrying AmountDeveloped technology$58,144 $(17,463) $40,681Other3,695 (1,371) 2,324Total intangible assets$61,839 $(18,834) $43,005 December 31, 2014 Gross Carrying Amount AccumulatedAmortization Net Carrying AmountDeveloped technology$59,895 $(6,727) $53,168Other2,260 (902) 1,358Total intangible assets$62,155 $(7,629) $54,526Amortization expense for intangible assets was approximately $11.8 million, $6.8 million and $0.9 million, respectively, for the years ended December31, 2015, 2014 and 2013.78The following table presents the estimated future amortization expense related to intangible assets held at December 31, 2015 (in thousands):Years Ending December 31, 2016 $11,3282017 10,6412018 9,8912019 9,8112020 459Thereafter 875Total future amortization expense $43,005(7) Property and Equipment Property and equipment, net consists of the following (in thousands): December 31, 2015 2014Computer equipment and software$180,197 $128,546Leasehold improvements31,659 14,929Furniture and fixtures26,017 18,253Building6,318 —Construction in progress1,886 9,762 246,077 171,490Less: Accumulated depreciation(101,363) (67,253)Total property and equipment, net$144,714 $104,237 During the year ended December 31, 2014, we entered into a new lease for office space in Tel Aviv, Israel. We concluded for accounting purposes thatwe were considered the owner of the building during the construction period as we were responsible to fund the construction costs related to structuralimprovements necessary to make the space ready for use. Following completion of construction during the year ended December 31, 2015, we concluded weretained continuing involvement which precluded de-recognition of the building. As such, we continue to account for the building as owned real estate andrecord a financing obligation for our obligation to the legal owner. The building will be reflected as an asset on our consolidated balance sheet through May31, 2025, the period of intended use, and depreciated on a straight-line basis over a period of approximately 39 years. Rent payments of $0.5 million per yearwill be recorded as interest expense and principal reduction to the financing obligation.Construction in progress consisted primarily of in-process software development costs. Depreciation expense was $48.5 million, $35.3 million and$22.6 million for the years ended December 31, 2015, 2014 and 2013, respectively.(8) Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consist of the following (in thousands): December 31, 2015 2014Taxes payable$9,080 $7,625Bonuses and commissions33,124 28,228Accrued compensation17,089 14,961Other employee expenses21,529 16,080Other20,442 12,603Total accrued expenses and other current liabilities$101,264 $79,497 79(9) Convertible Senior NotesIn November 2013, we issued 0% convertible senior notes due November 1, 2018 with an aggregate principal amount of $575 million, or the Notes.The Notes will not bear interest. The Notes mature on November 1, 2018 unless converted or repurchased in accordance with their terms prior to such date.We cannot redeem the Notes prior to maturity.The Notes are unsecured obligations and do not contain any financial covenants or restrictions on the payments of dividends, the incurrence ofindebtedness or the issuance or repurchase of securities by us or any of our subsidiaries.Upon conversion, we may choose to pay or deliver, as the case may be, cash, shares of our common stock or a combination of cash and shares of ourcommon stock. We intend to settle the principal amount of the Notes with cash.The Notes are convertible into up to 7.8 million shares of our common stock at an initial conversion rate of approximately 13.54 shares of commonstock per $1,000 principal amount, which is equal to an initial conversion price of approximately $73.88 per share of common stock, subject to adjustment.Holders of the Notes may convert their Notes at their option at any time prior to the close of business on the business day immediately preceding July 1,2018, only under the following circumstances:•during any calendar quarter commencing after the calendar quarter ending on March 31, 2014 (and only during such calendar quarter), if the lastreported sale price of the common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading daysending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on eachapplicable trading day;•during the five business day period after any five consecutive trading day period, or the measurement period, in which the trading price per $1,000principal 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 ourcommon stock and the conversion rate on each such trading day; or•upon the occurrence of specified corporate events.On or after July 1, 2018, a holder may convert all or any portion of its notes at any time prior to the close of business on the second scheduled tradingday immediately preceding the maturity date regardless of the foregoing conditions. Upon conversion, we will pay or deliver, as the case may be, cash, sharesof our common stock or a combination of cash and shares of our common stock, at our election.The conversion price will be subject to adjustment in some events. Holders of the Notes who convert their notes in connection with certain corporateevents that constitute a “make-whole fundamental change” are, under certain circumstances, entitled to an increase in the conversion rate. Additionally, inthe event of a corporate event that constitutes a “fundamental change,” holders of the Notes may require us to purchase with cash all or a portion of the Notesupon the occurrence of a fundamental change, at a purchase price equal to 100% of the principal amount of the Notes plus any accrued and unpaid interest.In accounting for the issuance of the Notes, we separated the Notes into liability and equity components. The carrying cost of the liability componentwas calculated by measuring the fair value of a similar liability that does not have an associated convertible feature. The carrying amount of the equitycomponent representing the conversion option was determined by deducting the fair value of the liability component from the par value of the Notes. Thedifference between the principal amount of the Notes and the proceeds allocated to the liability component, or debt discount, is amortized to interest expenseusing the effective interest method over the term of the Note. The equity component is not remeasured as long as it continues to meet the conditions forequity classification.In accounting for the transaction costs related to the issuance of the Notes, we allocated the total amount incurred to the liability and equitycomponents based on their relative fair values. Transaction costs attributable to the liability component are being amortized to interest expense over the termof the Notes, and transaction costs attributable to the equity component were netted with the equity component of the Notes in stockholders’ equity. TheNotes consist of the following (in thousands): December 31, 2015 2014Liability: Principal$575,000 $575,000Less: debt issuance costs and debt discount, net of amortization(100,466) (131,563)Net carrying amount$474,534 $443,43780We consider the fair value of the Notes at December 31, 2015 and 2014 to be a Level 2 measurement. The estimated fair value of the Notes was $741.8million and $653.3 million at December 31, 2015 and 2014 (based on the closing trading price per $100 of the Notes on December 31, 2015 and 2014),respectively. The Notes were not convertible as of December 31, 2015 and 2014. As of December 31, 2015, the remaining life of the Notes is 34 months. The following table sets forth total interest expense recognized related to theNotes (in thousands): Year Ended December 31, 2015 2014 2013Amortization of debt issuance cost$1,668 $1,558 $188Amortization of debt discount29,429 27,501 3,310Total$31,097 $29,059 $3,498Effective interest rate of the liability component6.5%Note HedgeTo minimize the impact of potential economic dilution upon conversion of the Notes, we entered into convertible note hedge transactions, or the NoteHedge, with respect to our common stock concurrent with the issuance of the Notes. The Note Hedge covers approximately 7.8 million shares of our commonstock at a strike price per share that corresponds to the initial conversion price of the Notes, subject to adjustment, and is exercisable upon conversion of theNotes. We paid an aggregate amount of $135.8 million for the Note Hedge. The Note Hedge will expire upon maturity of the Notes. The Note Hedge isintended to reduce the potential economic dilution upon conversion of the Notes in the event that the fair value per share of our common stock at the time ofexercise is greater than the conversion price of the Notes. The Note Hedge is a separate transaction and is not part of the terms of the Notes. The Note Hedgedoes not impact earnings per share, as it was entered into to offset any dilution from the Notes.WarrantsSeparately, we entered into warrant transactions, or the Warrants, whereby we sold warrants to acquire up to 7.8 million shares of our common stock, at astrike price of $107.46 per share, subject to adjustment. We received aggregate proceeds of $84.5 million from the sale of the Warrants. If the average marketvalue per share of our common stock for the reporting period, as measured under the Warrants, exceeds the strike price of the Warrants, the Warrants will havea dilutive effect on our earnings per share. The Warrants are separate transactions and are not remeasured through earnings each reporting period. TheWarrants are not part of the Notes or the Note Hedge, and have been accounted for as part of additional paid-in capital.(10) Accumulated Other Comprehensive LossThe components of accumulated other comprehensive loss consist of the following (in thousands): December 31, 2015 2014Foreign currency translation adjustment$(14,438) $(11,261)Net unrealized loss on investments, net of tax(2,444) (852) Accumulated other comprehensive loss$(16,882) $(12,113)Reclassification adjustments out of accumulated other comprehensive loss into net loss were immaterial for all periods presented.81(11) Stockholders' EquityCommon Stock We are authorized to issue a total of 600,000,000 shares of common stock as of December 31, 2015. Holders of our common stock are not entitled toreceive dividends unless declared by our board of directors. As of December 31, 2015, we had 160,785,764 shares of common stock outstanding and hadreserved shares of common stock for future issuance as follows: December 31, 2015Stock option plans: Options outstanding 8,255,554RSUs 12,417,805Stock awards available for future grants: 2012 Equity Incentive Plan(1) 16,271,7982012 Employee Stock Purchase Plan(1) 7,561,621Total reserved shares of common stock for future issuance 44,506,778 (1)Refer to Note 12 for a description of these plans.During the years ended December 31, 2015 and 2014, we issued a total of 11,276,672 shares and 9,154,487 shares, respectively, from stock optionexercises, vesting of RSUs and ESPP.Preferred StockOur board of directors has the authority, without further action by stockholders, to issue up to 10,000,000 shares of preferred stock in one or more series.Our board of directors may designate the rights, preferences, privileges and restrictions of the preferred stock, including dividend rights, conversion rights,voting rights, terms of redemption, liquidation preference and number of shares constituting any series or the designation of any series. The issuance ofpreferred stock could have the effect of restricting dividends on our common stock, diluting the voting power of our common stock, impairing the liquidationrights of our common stock, or delaying or preventing a change in control. At December 31, 2015 and 2014, no shares of preferred stock were outstanding.(12) Stock Awards We have a 2005 Stock Option Plan, or 2005 Plan, which provides for grants of stock awards, including options to purchase shares of common stock,stock purchase rights and RSUs to certain employees, officers, directors and consultants. As of December 31, 2015, there were 53,116,091 total shares ofcommon stock authorized for issuance under the 2005 Plan, which includes shares already issued under such plan and shares reserved for issuance pursuant tooutstanding options and RSUs.On April 27, 2012, the board of directors approved the 2012 Equity Incentive Plan, or 2012 Plan and the 2012 Employee Stock Purchase Plan, or the2012 ESPP, which became effective on June 27, 2012 and June 28, 2012, respectively. Our 2012 Plan provides for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, RSUs, performance-based stockawards and other forms of equity compensation, or collectively, stock awards. In addition, the 2012 Plan provides for the grant of performance cash awards.Incentive stock options may be granted only to employees. All other awards may be granted to employees, including officers, as well as directors andconsultants. The share reserve may increase to the extent outstanding stock options under the 2005 Plan expire or terminate unexercised. The share reservealso automatically increases on January 1 of each year until January 1, 2022, by up to 5% of the total number of shares of common stock outstanding onDecember 31 of the preceding year as determined by the board of directors. As of December 31, 2015, there were 36,875,918 total shares of common stockauthorized for issuance under the 2012 Plan, excluding 8,039,288 shares of common stock automatically added to the 2012 Plan on January 1, 2016 pursuantto the provision described in the preceding sentence. 82Our 2012 ESPP authorizes the issuance of shares of common stock pursuant to purchase rights granted to our employees. The number of shares ofcommon stock reserved for issuance automatically increases on January 1 of each year until January 1, 2022, by up to 1% of the total number of shares ofcommon stock outstanding on December 31 of the preceding year as determined by the board of directors. The price at which common stock is purchasedunder the 2012 ESPP is equal to 85% of the fair market value of the common stock on the first or last day of the offering period, whichever is lower. Offeringperiods are six months long and begin on February 1 and August 1 of each year. As of December 31, 2015, we had 7,368,568 total shares of common stockreserved for issuance under the 2012 ESPP, excluding 1,607,858 shares of common stock automatically added to the 2012 Plan on January 1, 2016.Stock Options The stock options are exercisable at a price equal to the market value of the underlying shares of common stock on the date of the grant as determinedby our board of directors or, for those stock options issued subsequent to our IPO, the closing price of our common stock as reported on the New York StockExchange on the date of grant. Stock options granted under our 2005 Plan and the 2012 Plan to new employees generally vest 25% one year from the datethe requisite service period begins and continue to vest monthly for each month of continued employment over the remaining three years. Options grantedgenerally are exercisable for a period of up to 10 years. Option holders under the 2005 Plan can exercise unvested options to acquire restricted stock. Upontermination of service, we have the right to repurchase at the original purchase price any unvested (but issued) shares of common stock. A summary of the stock option activity was as follows: Number ofShares Weighted-AverageExercisePrice Weighted-AverageRemainingContractualTerm (Years) AggregateIntrinsic Value(in thousands)Outstanding at December 31, 201323,399,374 $9.07 Granted744,144 61.40 Exercised(7,478,595) 6.76 $406,630Canceled(767,501) 22.26 Outstanding at December 31, 201415,897,422 11.96 Granted316,048 75.76 Exercised(7,695,815) 8.89 $523,127Canceled(262,101) 31.31 Outstanding at December 31, 20158,255,554 $16.65 6.09 $577,182Vested and expected to vest as of December 31, 20158,139,464 $16.04 6.06 $573,994Vested and exercisable as of December 31, 20156,644,643 $9.24 5.67 $513,766 Aggregate intrinsic value represents the difference between the estimated fair value of our common stock and the exercise price of outstanding, in-the-money options. The total intrinsic value of the options exercised was $446.1 million the year ended December 31, 2013. The weighted-average grant date fairvalue per share of options granted was $32.64, $29.66 and $18.70 for the years ended December 31, 2015, 2014 and 2013, respectively. The total fair valueof shares vested was $34.5 million, $39.1 million and $33.1 million for the years ended December 31, 2015, 2014 and 2013, respectively. As of December 31, 2015, total unrecognized compensation cost, adjusted for estimated forfeitures, related to unvested stock options wasapproximately $30.2 million. The weighted-average remaining vesting period of unvested stock options at December 31, 2015 was 2.20 years. 83RSUsA summary of RSU activity was as follows: Number ofShares Weighted Average GrantDate Fair Value(Per Share) AggregateFair Value(in thousands)Outstanding at December 31, 20135,427,509 $34.02 Granted6,514,348 61.13 Vested(1,264,521) 32.14 $73,663Forfeited(736,262) 45.22 Outstanding at December 31, 20149,941,074 51.19 Granted6,941,008 73.98 Vested(3,290,220) 50.25 $254,691Forfeited(1,174,057) 59.67 Outstanding at December 31, 201512,417,805 $63.38 $1,074,885Expected to vest as of December 31, 201510,474,349 $906,660RSUs granted under the 2005 Plan and the 2012 Plan to employees generally vest over a four-year period. Included in the number of shares grantedduring the year ended December 31, 2015 and 2014 were 645,000 and 585,000 RSUs, respectively, with both service and performance-based vesting criteriathat were granted to certain executives. These performance RSUs are considered as eligible to vest when approved by the compensation committee in Januaryof the year following the grant. The shares granted during the year ended December 31, 2014 will vest in four quarterly increments starting from February2016, contingent on the continuous employment of each executive. The shares granted during the year ended December 31, 2015 will vest in four quarterlyincrements from August 2016 contingent on the continuous employment of each executive. We recognized $30.8 million and $19.2 million of stock-based compensation expense associated with these performance RSUs on a graded vestingbasis during the year ended December 31, 2015 and 2014, respectively.As of December 31, 2015, total unrecognized compensation cost, adjusted for estimated forfeitures, related to unvested RSUs was approximately$525.4 million and the weighted-average remaining vesting period was 2.92 years.(13) Stock-Based Compensation We use the Black-Scholes options pricing model to estimate the fair value of our stock option grants. This model incorporates various assumptionsincluding expected volatility, expected term, risk-free interest rates and expected dividend yields. The following assumptions were used for each respectiveperiod to calculate our stock-based compensation for each stock option grant on the date of the grant: Year Ended December 31, 2015 2014 2013 Stock Options: Expected volatility41% - 46% 47% - 50% 50% - 52%Expected term (in years)5.50 - 6.08 6.08 6.02Risk-free interest rate1.48% - 1.94% 1.78% - 2.06% 0.91% - 2.05%Dividend yield—% —% —% 84The following assumptions were used to calculate our stock-based compensation for each stock purchase right granted under the 2012 ESPP: Year Ended December 31, 2015 2014 2013 ESPP: Expected volatility31% - 49% 33% - 49% 35% - 42%Expected term (in years)0.50 0.50 0.50Risk-free interest rate0.05% - 0.17% 0.05% - 0.08% 0.08% - 0.16%Dividend yield—% —% —% Expected volatility. Prior to the third quarter of 2015, we used the historic volatility of publicly traded peer companies as an estimate for expectedvolatility. In considering peer companies, characteristics such as industry, stage of development, size and financial leverage are considered. Beginning in thethird quarter of 2015, we began to include our own historical volatility in addition to publicly traded peers to calculate our expected volatility for a periodsimilar to our expected term. We intend to continue to consistently apply this process using the same or similar public companies until a sufficient amount ofhistorical information regarding the volatility of our own common stock share price becomes available. Expected term. Prior to the third quarter of 2015, we used the simplified method for calculating the expected term of options as described in the SEC'sStaff Accounting Bulletin No. 107, Share-Based Payment. The simplified method calculates the expected term as the mid-point between the vesting date andthe contractual expiration date of the award. Beginning in the third quarter of 2015, we determined the expected term based on historical experience ofsimilar awards, giving consideration to the contractual terms of the stock-based awards, vesting schedules and expectations of future employee behavior,because we now believe there is sufficient historical information to derive a reasonable estimate. We estimate the expected term for ESPP using the purchaseperiod. Risk-free interest rate. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for the expected term of the stock-based award. Expected dividend yield. Our expected dividend yield is zero, as we have not and do not currently intend to declare dividends in the foreseeable future. (14) Net Loss Per Share Attributable to Common Stockholders The following tables present the calculation of basic and diluted net loss per share attributable to common stockholders (in thousands, except share andper share data): Year Ended December 31, 2015 2014 2013Numerator: Net loss attributable to common stockholders, basic and diluted$(198,426) $(179,387) $(73,708)Denominator: Weighted-average shares outstanding - basic and diluted155,706,643 145,355,543 135,415,809Net loss per share attributable to common stockholders - basic anddiluted$(1.27) $(1.23) $(0.54) 85Potentially dilutive securities that are not included in the calculation of diluted net loss per share because doing so would be antidilutive are asfollows: Year Ended December 31, 2015 2014 2013Common stock options8,255,554 15,897,422 23,399,374Restricted stock units12,417,805 9,941,074 5,427,509Common stock subject to repurchase— 13,597 91,504ESPP obligations254,728 272,294 226,093Convertible senior notes7,783,023 7,783,023 7,783,023Warrants related to the issuance of convertible senior notes7,783,023 7,783,023 7,783,023Total potentially dilutive securities36,494,133 41,690,433 44,710,526 (15) Income Taxes The provision for income taxes consists of the following (in thousands): Year Ended December 31, 2015 2014 2013Current provision: Federal$682 $2 $2State211 216 287Foreign6,125 5,046 2,454 7,018 5,264 2,743Deferred provision: Federal— (232) —State— (24) —Foreign(1,604) (1,161) (232) (1,604) (1,417) (232)Provision for income taxes$5,414 $3,847 $2,511 The components of loss before provision for income taxes by U.S. and foreign jurisdictions were as follows (in thousands): Year Ended December 31, 2015 2014 2013United States$(150,593) $(109,087) $(35,901)Foreign(42,419) (66,453) (35,296)Total$(193,012) $(175,540) $(71,197) 86The effective income tax rate differs from the federal statutory income tax rate applied to the loss before provision for income taxes due to the following(in thousands): Year Ended December 31, 2015 2014 2013Tax computed at U.S. federal statutory rate$(65,624) $(59,684) $(24,207)State taxes, net of federal benefit53 95 148Tax rate differential for international subsidiaries18,681 26,169 14,310Stock-based compensation13,597 9,049 3,447Tax credits(11,961) (9,481) (12,529)Purchased intangibles1,953 1,036 504Other912 1,195 535Valuation allowance47,803 35,468 20,303Provision for income taxes$5,414 $3,847 $2,511Significant components of our deferred tax assets are shown below (in thousands). A valuation allowance has been recognized to offset our deferred taxassets, as necessary, by the amount of any tax benefits that, based on evidence, are not expected to be realized. December 31, 2015 2014Deferred tax assets: Net operating loss carryforwards$27,570 $11,537Deferred revenue1,570 2,989Accrued expenses6,030 4,073Deferred rent4,014 1,883Credit carryforwards32,824 20,908Stock-based compensation53,249 37,956Note Hedge30,593 39,433Other6,441 3,197Total deferred tax assets162,291 121,976Less valuation allowance(110,311) (62,439) 51,980 59,537Deferred tax liabilities: Depreciation(13,103) (11,144)Convertible notes(35,054) (44,995)Other(4) (726)Net deferred tax assets$3,819 $2,672 As of December 31, 2015, we had U.S. federal net operating loss and federal tax credit carryforwards of approximately $1.2 billion and $25.8 million,respectively. The federal net operating loss carryforwards and federal tax credits will begin to expire in 2024 if not utilized. In addition, we had state netoperating loss and state tax credit carryforwards of approximately $238.1 million and $21.3 million, respectively. The state net operating loss will begin toexpire in 2016 if not utilized, and the tax effected amount due to expire in 2016 is immaterial. State tax credits can be carried forward indefinitely. Utilizationof our net operating loss and credit carryforwards may be subject to annual limitation due to the ownership change limitations provided by the InternalRevenue Code and similar state provisions. Such an annual limitation could result in the expiration of the net operating loss and tax credit carry forwardsbefore utilization. Approximately $1.1 billion of federal net operating losses and $218.3 million of state net operating losses relate to stock-based compensationdeductions in excess of book expense, the tax effect of which would be to credit additional paid-in capital, if realized.87 We maintain a full valuation allowance against our U.S. deferred tax assets as of December 31, 2015. We regularly assess the need for a valuationallowance against our deferred tax assets. In making that assessment, we consider both positive and negative evidence related to the likelihood of realizationof 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 assetswill not be realized. Due to cumulative losses over recent years and based on all available evidence, we have determined that it is more likely than not thatnet deferred tax assets in the United States will not be realized. We have determined that $3.8 million related to deferred tax assets in certain foreignjurisdictions are realizable since certain foreign entities have cumulative income, and expected future income. The valuation allowance increased $47.9million during the year ended December 31, 2015, increased $36.6 million during the year ended December 31, 2014 and increased $12.5 million during theyear ended December 31, 2013. The change in the valuation allowance between the years ended December 31, 2015 and 2014 is primarily attributable to adecrease of deferred tax liabilities related to the Notes and an increase of deferred tax assets related to stock-based compensation, net operating losses, and theextension of the federal research and development tax credit for the year ended December 31, 2015. We will continue to assess the likelihood of realization ofthe deferred tax assets in each of the applicable jurisdictions in future periods and will adjust the valuation allowance accordingly.We have not recorded a provision for deferred U.S. tax expense that could result from the remittance of foreign undistributed earnings since we intend toreinvest the earnings of these foreign subsidiaries indefinitely.Our share of the undistributed earnings of foreign corporations not included in our consolidated federal income tax returns that could be subject toadditional U.S. income tax if remitted is immaterial. The determination of the amount of unrecognized U.S federal deferred income tax liability forundistributed earnings is not practicable.A reconciliation of the beginning and ending balance of total unrecognized tax benefits is as follows (in thousands): Year Ended December 31, 2015 2014 2013Balance, beginning period$9,158 $4,810 $1,725Tax positions taken in prior period: Gross increases2 45 333Gross decreases(1,017) (313) (14)Tax positions taken in current period: Gross increases3,768 4,704 2,784Gross decreases(73) — —Lapse of statute of limitations(101) (88) (18)Balance, end of period$11,737 $9,158 $4,810 As of December 31, 2015, we had gross unrecognized tax benefits of approximately $11.7 million, of which $2.6 million would impact the effective taxrate, if recognized. We recognize accrued interest and penalties related to unrecognized tax benefits as income tax expense. Accrued interest and penaltiesincluded in our liability related to unrecognized tax benefits were $0.5 million and $0.4 million at December 31, 2015 and 2014, respectively. The amount ofunrecognized tax benefits could be reduced upon expiration of the applicable statutes of limitations. The potential reduction in unrecognized tax benefitsduring the next 12 months is not expected to be material. Interest and penalties accrued on these uncertain tax positions will be released upon the expirationof the statutes of limitations and these amounts are also not material. We are subject to taxation in the United States and foreign jurisdictions. As of December 31, 2015, our tax years 2005 to 2015 remain subject toexamination in most jurisdictions. During the year ended December 31, 2015, we entered into a settlement agreement with the Appeals Division of the U.S.Internal Revenue Service resolving all issues that arose in the tax audit of our June 30, 2011 and December 31, 2011 tax years. This settlement did not have amaterial impact on our financial statements. 88There are differing interpretations of tax laws and regulations, and as a result, disputes may arise with tax authorities involving issues of the timing andamount of deductions and allocations of income among various tax jurisdictions. We periodically evaluate our exposures associated with our tax filingpositions. We believe that adequate amounts have been reserved for any adjustments that may ultimately result from these examinations, and we do notanticipate a significant impact to our gross unrecognized tax benefits within the next 12 months related to these years. Although the timing of the resolution,settlement, and closure of any audit is highly uncertain, it is reasonably possible that the balance of gross unrecognized tax benefits could significantlychange in the next 12 months. However, given the number of years that remain subject to examination, we are unable to estimate the full range of possibleadjustments to the balance of gross unrecognized tax benefits.(16) Commitments and Contingencies Leases We lease facilities for data center capacity and office space under non-cancelable operating lease agreements with various expiration dates. Rentexpense associated with data center leases, included in cost of revenues, was $13.7 million, $13.1 million and $9.5 million for the years ended December 31,2015, 2014 and 2013, respectively. Rent expense associated with office space leases was $22.0 million, $15.0 million and $8.1 million for the years endedDecember 31, 2015, 2014 and 2013, respectively. Annual future minimum payments under these operating leases as of December 31, 2015 are presented in the table below (in thousands): Data Centers Office Leases, net ofSublease Income TotalYears Ending December 31, 2016$17,249 $24,715 $41,96420177,586 28,754 36,34020185,640 29,462 35,10220192,818 28,962 31,78020202,320 28,174 30,494Thereafter3,762 137,411 141,173Total minimum lease payments$39,375 $277,478 $316,853 In November 2012, we entered into a lease agreement for 148,704 square feet of office space located in Santa Clara, California. The lease commenced inApril 2013 and has a term of approximately 11 years. Rent is paid on a monthly basis and will increase incrementally over the term of the lease for totalminimum lease payments of approximately $48.8 million.In December 2014, we entered into a lease agreement for 328,867 square feet of space, located in Santa Clara, California. The lease commenced onAugust 15, 2015 for an initial term of 12 years, with two options to renew the lease for additional terms of five years each. Rent is paid on a monthly basis andwill increase incrementally over the term of the lease for total minimum lease payments of approximately $151.1 million.Legal Proceedings From time to time, we are party to litigation and other legal proceedings in the ordinary course of business. While the results of any litigation or otherlegal proceedings are uncertain, management does not believe the ultimate resolution of any pending legal matters is likely to have a material adverse effecton our financial position, results of operations or cash flows, except as discussed below and for those matters for which we have recorded a loss contingency.We accrue for loss contingencies when it is both probable that we will incur the loss and when we can reasonably estimate the amount of the loss or range ofloss. Generally, our subscription agreements require us to defend our customers for third-party intellectual property infringement and other claims. Anyadverse determination related to intellectual property claims or other litigation could prevent us from offering our services and adversely affect our financialcondition and results of operations.89On February 6, 2014, Hewlett-Packard Company (“Hewlett-Packard”) filed a lawsuit against us in the U.S. District Court for the Northern District ofCalifornia that alleges that some of our services infringe the claims of U.S. Patent Nos. 6,331,229 (the “’229 patent”), 7,027,411 (the “’411 patent”),7,392,300 (the “’300 patent”), 7,610,512 (the “’512 patent”), 7,890,802 (the “’802 patent”), 7,925,981 (the “’981 patent”), 7,945,860 (the “’860 patent”) and8,224,683 (the “’683 patent”). Hewlett-Packard is seeking unspecified damages and an injunction. We filed an answer to the complaint on March 28, 2014denying the allegations and asserting various affirmative defenses. The parties are currently conducting discovery. Hewlett-Packard served infringementcontentions on July 3, 2014 and November 18, 2014. We served invalidity contentions on January 9, 2015. On March 10, 2015, the court granted our motionfor summary judgment, finding that the asserted claims of four of the eight asserted Hewlett-Packard patents are invalid for failing to claim patentable subjectmatter. On October 13, 2015, the court granted in part our renewed motion for a stay of litigation, staying all proceedings as to two of the four remainingasserted patents pending final decisions from the United States Patent and Trademark Office on our petitions for inter partes review. A claim constructionhearing for the two asserted patents not subject to the court’s stay is scheduled for April 29, 2016. The trial is currently scheduled to begin on May 22, 2017.We filed petitions for inter partes review with the United States Patent Trial and Appeal Board (“PTAB”) seeking to invalidate all eight Hewlett Packardpatents. The PTAB granted our petitions for inter partes review of the ‘229, ‘411, ‘300 and ‘683 patents and denied our petitions of the remaining fourpatents. We also filed petitions for covered business method (“CBM”) review with the PTAB seeking to invalidate the ‘981 and ‘860 patents. The PTABdenied our petitions for CBM review of the ‘981 and ‘860 patents.On or about November 1, 2015, Hewlett-Packard separated into two independently publicly traded companies: (i) Hewlett Packard Enterprise Company(“HPE”); and (ii) HP, Inc. As part of this separation, Hewlett-Packard assigned to HPE all right, title, and interest in the eight Hewlett-Packard patents in suit.On or about November 4, 2015, Hewlett-Packard filed a stipulated request to substitute HPE for Hewlett-Packard and the Court granted the stipulated request,substituting HPE for Hewlett-Packard as plaintiff in the litigation.On September 23, 2014, BMC Software, Inc. (“BMC”) filed a lawsuit against us in the U.S. District Court for the Eastern District of Texas alleging thatsome of our services willfully infringe the claims of U.S. Patent Nos. 5,978,594 (the “‘594 patent”), 6,816,898 (the “‘898 patent”), 6,895,586 (the “‘586patent”), 7,062,683 (the “‘683 patent”), 7,617,073 (the “‘073 patent”), 8,646,093 (the “‘093 patent”) and 8,674,992 (the “‘992 patent”). BMC is seekingdamages and an injunction. BMC served infringement contentions on January 6, 2015. We served invalidity contentions on March 3, 2015. We filed ananswer to the complaint on June 1, 2015 denying the allegations and asserting various affirmative defenses. A claim construction hearing occurred on July10, 2015, followed by the court's claim construction order on August 13, 2015. On January 25, 2016, the court issued an order dismissing all of BMC’s claimsrelated to the ‘594 and ‘093 patents without prejudice. On February 23, 2016, BMC voluntarily withdrew all claims related to the ‘073 patent. The trial iscurrently scheduled to begin on March 11, 2016. We filed petitions for inter partes review with the PTAB seeking to invalidate the ‘594, ‘073, ‘898, ‘586,‘093 and ‘992 patents. The PTAB granted our petitions for inter partes review of the ‘594, ‘073 and ‘992 patents and denied our petitions of the ‘586, ‘093and ‘898 patents. We also filed petitions for CBM review with the PTAB seeking to invalidate the ‘683 and ‘093 patents. The PTAB granted our petition forCBM review of the ‘093 patent and denied our petition for CBM review of the ‘683 patent.On February 12, 2016, BMC filed an additional lawsuit against us in the U.S. District Court for the Eastern District of Texas alleging that some of ourservices willfully infringe the claims of U.S. Patent Nos. 7,877,783 (the “‘783 patent”), 7,966,398 (the “‘398 patent”), 8,554,750 (the “‘750 patent”), the ‘586patent and the ‘898 patent. BMC is seeking damages and an injunction. The court has not yet set a schedule for this lawsuit.We intend to vigorously defend against HPE’s and BMC's lawsuits. The final outcome with respect to the claims in the lawsuits, including our liability,if any, is uncertain. Furthermore, we cannot be certain that any claims by HPE or BMC would be resolved in our favor. For example, an adverse litigationruling could result in a significant damages award against us, could result in injunctive relief, could result in a requirement that we make substantial royaltypayments, and could require that we modify our products to the extent that we are found to infringe any valid claims asserted against us. Moreover, to theextent we are found to infringe on any valid claims asserted against us, our attempt to modify our products so that they are no longer infringing may beunsuccessful, could cause us to incur substantial expense, could be a distraction to management, and any such modified products may not be well received inthe market. To the extent that we reach a negotiated settlement, the settlement could require that we pay substantial royalties and could require that we makemodifications to our products that may not be well received in the market.At this stage in these litigation matters, any possible monetary loss or range of monetary loss cannot be estimated. The outcome of litigation isinherently uncertain. If one or more of these legal matters were resolved against us in a reporting period, or settled on unfavorable terms, our consolidatedfinancial statements for that reporting period could be materially adversely affected.90(17) Information about Geographic Areas and Products Revenues by geographic area, based on the location of our users, were as follows for the periods presented (in thousands): Year Ended December 31, 2015 2014 2013Revenues by geography North America (1)$702,985 $465,332 $295,400EMEA (2)233,378 173,635 105,177Asia Pacific and other69,117 43,596 24,073Total revenues$1,005,480 $682,563 $424,650Long-lived assets by geographic area were as follows (in thousands): December 31, 2015 2014Long-lived assets: North America (3)$104,085 $66,489EMEA (2)32,027 27,032Asia Pacific and other8,602 10,716Total long-lived assets$144,714 $104,237 (1)Revenues attributed to the United States were approximately 95% of North America revenues for the year ended December 31, 2015, and 94% for the years ended December31, 2014 and 2013.(2)Europe, the Middle East and Africa, or EMEA(3)Long-lived assets attributed to the United States were approximately 98% and 97% of North America long-lived asset for the years ended December 31, 2015 and 2014,respectively.Subscription revenues consist of the following (in thousands): Year Ended December 31, 2015 2014 2013Enterprise Service Management solutions783,603 532,045 329,040IT Operations Management solutions64,675 35,172 20,764Total subscription revenues848,278 567,217 349,804Our Enterprise Service Management solutions include Service Management, Business Management and ServiceNow Platform, which have similarfeatures and functions, and are generally priced on a per user basis. Our IT Operations Management solutions, which improve visibility, availability andagility of enterprise services, are generally priced on a per node basis.(18) Related Party Transactions We have entered into indemnification agreements with each of our directors, executive officers and certain other officers. These agreements require usto indemnify such individuals, to the fullest extent permitted by Delaware law, for certain liabilities to which they may become subject as a result of theiraffiliation with us.All contracts with related parties are executed in ordinary course of business. There were no material related party transactions in 2015, 2014 or 2013.As of December 31, 2015 and 2014, there were no material amounts payable to or amounts receivable from related parties.ITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINACIAL DISCLOSURENone.91ITEM 9A.CONTROLS AND PROCEDURES(a) Evaluation of disclosure controls and proceduresOur management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of our disclosurecontrols and procedures as of December 31, 2015. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under theExchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in thereports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rulesand forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to bedisclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company's management,including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Managementrecognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives,and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.Based on the evaluation of our disclosure controls and procedures as of December 31, 2015, our Chief Executive Officer and Chief Financial Officerconcluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.(b) Management's Report on Internal Control Over Financial ReportingOur management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and15d-15(f) under the Exchange Act) to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of consolidatedfinancial statements for external purposes in accordance with generally accepted accounting principles.Our management, under the supervision of our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of ourinternal control over financial reporting based on the framework in Internal Control—Integrated Framework (2013), issued by the Committee of SponsoringOrganizations of the Treadway Commission. Based on this evaluation, management concluded that our internal control over financial reporting was effectiveas of December 31, 2015.The effectiveness of our internal control over financial reporting as of December 31, 2015 has been audited by PricewaterhouseCoopers LLP, anindependent registered public accounting firm, as stated in their report which is included in Item 8 of this Annual Report on Form 10-K.(c) Changes in internal control over financial reportingThere were no changes in our internal control over financial reporting identified in management's evaluation pursuant to Rules 13a-15(d) or 15d-15(d)of the Exchange Act during the most recent fiscal quarter that materially affected, or are reasonably likely to materially affect, our internal control overfinancial reporting.ITEM 9B.OTHER INFORMATION Our next Annual Meeting of Stockholders is scheduled for June 8, 2016.PART IIIITEM 10.DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCEThe information required by this item will be included in an amendment to this Annual Report on Form 10-K or incorporated by reference from ourdefinitive proxy statement to be filed pursuant to Regulation 14A.92ITEM 11.EXECUTIVE COMPENSATIONThe information required by this item will be included in an amendment to this Annual Report on Form 10-K or incorporated by reference from ourdefinitive proxy statement to be filed pursuant to Regulation 14A.ITEM 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATEDSTOCKHOLDER MATTERSThe information required by this item will be included in an amendment to this Annual Report on Form 10-K or incorporated by reference from ourdefinitive proxy statement to be filed pursuant to Regulation 14A.ITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCEThe information required by this item will be included in an amendment to this Annual Report on Form 10-K or incorporated by reference from ourdefinitive proxy statement to be filed pursuant to Regulation 14A.ITEM 14.PRINCIPAL ACCOUNTING FEES AND SERVICESThe information required by this item will be included in an amendment to this Annual Report on Form 10-K or incorporated by reference from ourdefinitive proxy statement to be filed pursuant to Regulation 14A.PART IVITEM 15.EXHIBITS AND FINANCIAL STATEMENT SCHEDULES The following documents are filed as a part of this Annual Report on Form 10-K:(a) Financial StatementsThe information concerning our financial statements, and Report of Independent Registered Public Accounting Firm required by this Item isincorporated by reference herein to the section of this Annual Report on Form 10-K in Item 8, entitled “ Consolidated Financial Statements andSupplementary Data.”(b) Financial Statement SchedulesAll schedules have been omitted because the required information is not present or not present in amounts sufficient to require submission of theschedules, or because the information required is included in the Consolidated Financial Statements or accompanying notes thereto.(c) Exhibits. The list of exhibits filed with this report is set forth in the Exhibit Index following the signature pages and is incorporated herein by reference.93SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on itsbehalf by the undersigned thereunto duly authorized.Dated: February 25, 2016 SERVICENOW, INC. By: /s/ Frank Slootman Frank SlootmanPresident and Chief Executive Officer POWER OF ATTORNEYKNOW ALL BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Frank Slootman and Michael P.Scarpelli, and each of them, as his true and lawful attorneys-in-fact and agents, each with the full power of substitution, for him and in his name, place orstead, in any and all capacities, to sign any and all amendments to this report, and to file the same, with exhibits thereto and other documents in connectiontherewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to doand perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might orcould do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their or his substitute or substitutes, may lawfully do or causeto be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this report has been signed by the following persons in the capacities and on the datesindicated.Signature Title Date /s/ Frank Slootman President, Chief Executive Officer and Director(Principal Executive Officer) February 25, 2016Frank Slootman /s/ Michael P. Scarpelli Chief Financial Officer(Principal Financial Officer and Principal AccountingOfficer) February 25, 2016Michael P. Scarpelli /s/ Frederic B. Luddy Chief Product Officer and Director February 25, 2016Frederic B. Luddy /s/ Paul V. Barber Director February 25, 2016Paul V. Barber /s/ Susan L. Bostrom Director February 25, 2016Susan L. Bostrom /s/ Ronald E.F. Codd Director February 25, 2016Ronald E. F. Codd /s/ Charles Giancarlo Director February 25, 2016Charles Giancarlo /s/ Jeffrey A. Miller Director February 25, 2016Jeffrey A. Miller /s/ Anita M. Sands Director February 25, 2016Anita M. Sands /s/ William L. Strauss Director February 25, 2016William L. Strauss 94EXHIBIT INDEXExhibitNumberDescription of Document Incorporated by Reference FiledHerewithForm File No. Exhibit Filing Date 3.1Restated Certificate of Incorporation. 10-Q 001-35580 3.1 8/10/2012 3.2Restated Bylaws. 8-K 001-35580 3.1 12/10/2014 4.1Form of Common Stock Certificate. S-1/A 333-180486 4.1 6/19/2012 4.2Indenture dated November 13, 2013 between ServiceNow,Inc. and Wells Fargo Bank, National Association. 8-K 001-35580 4.1 11/13/2013 4.3Third Amended and Restated Investors Rights Agreementdated November 25, 2009 among the Registrant andcertain of its stockholders. S-1 333-180486 4.2 3/30/2012 10.1*Form of Indemnification Agreement. 10-K 001-35580 10.1 2/27/2015 10.2*2005 Stock Plan, Forms of Stock Option Agreement andForm of Restricted Stock Unit Agreement thereunder. S-1 333-180486 10.2 3/30/2012 10.3*2012 Equity Incentive Plan, Forms of Stock Option AwardAgreement, Restricted Stock Agreement, StockAppreciation Right Award Agreement and Restricted StockUnit Award Agreement thereunder. S-1/A 333-180486 10.3 6/19/2012 10.4*Form of Stock Option Award Agreement and RestrictedStock Unit Award Agreement under 2012 Equity IncentivePlan adopted as of January 26, 2016. x10.5*2012 Employee Stock Purchase Plan and Form ofSubscription Agreement thereunder. 10-K 001-35580 10.4 3/8/2013 10.6*Form of Subscription Agreement under 2012 EmployeeStock Purchase Plan adopted as of January 26, 2016. x10.7*Employment Agreement dated May 2, 2011 among theRegistrant and Frank Slootman. S-1 333-180486 10.5 3/30/2012 10.8*First Amendment to Employment Agreement dated April23, 2014 among Registrant and Frank Slootman. 10-Q 001-35580 10.1 8/7/2014 10.9*Employment Agreement dated May 12, 2011 among theRegistrant and Michael P. Scarpelli. S-1 333-180486 10.6 3/30/2012 10.10*First Amendment to Employment Agreement dated August15, 2014 among Registrant and Michael P. Scarpelli. 10-Q 001-35580 10.2 11/5/2014 10.11*Employment Agreement dated May 21, 2011 among theRegistrant and David L. Schneider. S-1 333-180486 10.7 3/30/2012 10.12*First Amendment to Employment Agreement dated July 3,2014 among Registrant and David L. Schneider. 10-Q 001-35580 10.1 11/5/2014 10.13*Employment Agreement dated August 1, 2011 among theRegistrant and Daniel R. McGee. S-1 333-180486 10.8 3/30/2012 10.14*First Amendment to Employment Agreement dated August15, 2014 among Registrant and Daniel R. McGee. 10-Q 001-35580 10.3 11/5/2014 10.15Lease Agreement dated November 8, 2012 between theRegistrant and Jay Ridge LLC. S-1/A 333-184674 10.12 11/9/2012 95ExhibitNumberDescription of Document Incorporated by Reference FiledHerewithForm File No. Exhibit Filing Date 10.16Office Lease dated December 12, 2014 between Registrantand S1 55 LLC 8-K 001-35580 10.1 12/15/2014 10.17Form of Base Convertible Note Hedge TransactionConfirmation. 8-K 001-32224 99.1 11/13/2013 10.18Form of Base Warrant Transaction Confirmation. 8-K 001-32224 99.2 11/13/2013 10.19Form of Additional Convertible Note Hedge TransactionConfirmation. 8-K 001-32224 99.3 11/13/2013 10.20Form of Additional Warrant Transaction Confirmation. 8-K 001-32224 99.4 11/13/2013 21.1Subsidiaries of the Registrant. x23.1Consent of independent registered public accounting firm. x24.1Power of Attorney. Reference is made to the signature pagehereto. x31.1Certification of Periodic Report by Chief Executive Officerunder Section 302 of the Sarbanes-Oxley Act of 2002 x31.2Certification of Periodic Report by Chief Financial Officerunder Section 302 of the Sarbanes-Oxley Act of 2002 x32.1Certification of Chief Executive Officer Pursuant to 18U.S.C. Section 1350 as Adopted Pursuant to Section 906 ofthe Sarbanes-Oxley Act of 2002 x32.2Certification of Chief Financial Officer Pursuant to 18U.S.C. Section 1350 as Adopted Pursuant to Section 906 ofthe Sarbanes-Oxley Act of 2002 x101.INSXBRL Instance Document x101.SCHXBRL Taxonomy Schema Linkbase Document x101.CALXBRL Taxonomy Calculation Linkbase Document x101.DEFXBRL Taxonomy Definition Linkbase Document x101.LABXBRL Taxonomy Labels Linkbase Document x101.PREXBRL Taxonomy Presentation Linkbase Document x*Indicates a management contract, compensatory plan or arrangement.96EXHIBIT 10.4SERVICENOW, INC.2012 EQUITY INCENTIVE PLANNOTICE OF GLOBAL STOCK OPTION GRANTUnless otherwise defined herein, the terms defined in the ServiceNow, Inc. (the “Company”) 2012 Equity Incentive Plan (the “Plan”) shall have thesame meanings in this Notice of Global Stock Option Grant and the electronic representation of this Notice of Global Stock Option Grant establishedand maintained by the Company or a third party designated by the Company (the “Notice”).Name:As set forth in the electronic representation of this Notice of Global Stock Option Grant. Address:As set forth in the electronic representation of this Notice of Global Stock Option Grant. You (the “Participant”) have been granted an option to purchase shares of Common Stock of the Company under the Plan subject to the terms andconditions of the Plan, this Notice and the Global Stock Option Award Agreement, including any appendix to the Global Stock Option AwardAgreement for Participant’s country (the “Appendix”) (the Stock Option Award Agreement and the Appendix are collectively referred to as the“Agreement”).Date of Grant :The “Grant Date” as set forth in the electronic representation of this Notice of Global Stock Option Grant. Exercise Price per Share :US$ The “Exercise Price” as set forth in the electronic representation of this Notice of Global Stock OptionGrant.Total Number of Shares :The “Shares Granted” as set forth in the electronic representation of this Notice of Global Stock OptionGrant. Type of Option :The “Grant Type” as set forth in the electronic representation of this Notice of Global Stock Option Grant. Expiration Date :The “Expiration” as set forth in the electronic representation of this Notice of Global Stock Option Grant. Vesting Schedule:Subject to the limitations set forth in this Notice, the Plan and the Agreement, the Option will vest and may be exercised,in whole or in part, in accordance with the following schedule:As set forth in the “Vesting Schedule Addendum” in the electronicrepresentation of this Notice of Global Stock Option Grant.By accepting (whether in writing, electronically or otherwise) the Option, Participant acknowledges and agrees to the following:Participant understands that Participant’s employment or consulting relationship or service with the Company or a Parent or Subsidiary is for anunspecified duration and that nothing in this Notice, the Agreement or the Plan changes the nature of that relationship. Participant acknowledges thatthe vesting of the Options pursuant to this Notice is earned only by continuing service as an Employee, Director or Consultant of the Company or aParent or Subsidiary. Furthermore, the period during which Participant may exercise the Option after such Termination will commence on the dateParticipant ceases to actively provide services and will not be extended by any notice period mandated under employment laws in the jurisdictionwhere Participant is employed or terms of Participant’s employment agreement. Participant also understands that this Notice is subject to the termsand conditions of both the Agreement and the Plan, both of which are incorporated herein by reference. Participant has read both the Agreement andthe Plan. By accepting this Option, Participant consents to the electronic delivery as set forth in the Agreement.SERVICENOW, INC.2012 EQUITY INCENTIVE PLANGLOBAL STOCK OPTION AWARD AGREEMENTUnless otherwise defined in this Global Stock Option Award Agreement (the “Agreement”), any capitalized terms used herein shallhave the meaning ascribed to them in the ServiceNow, Inc. (the “Company”) 2012 Equity Incentive Plan (the “Plan”).Participant has been granted an option to purchase Shares (the “Option”), subject to the terms and conditions of the Plan, theNotice of Global Stock Option Grant (the “Notice”) and this Agreement, including any appendix to this Agreement for Participant’scountry (the “Appendix”). 1.Vesting Rights. Subject to the applicable provisions of the Plan and this Agreement, this Option may be exercised, inwhole or in part, in accordance with the schedule set forth in the Notice.2.Termination Period.(a) General Rule. Except as provided below, and subject to the Plan, this Option may be exercised for 90 days afterParticipant’s Termination. In no event shall this Option be exercised later than the Expiration Date set forth in the Notice.(b) Death; Disability. Unless provided otherwise in the Notice, upon Participant’s Termination by reason of his or herdeath, or if a Participant dies within 90 days of the Termination Date, this Option may be exercised for twelve months, provided that inno event shall this Option be exercised later than the Expiration Date set forth in the Notice. Unless provided otherwise in the Notice,upon Participant’s Termination by reason of his or her Disability, this Option may be exercised for six months, provided that in noevent shall this Option be exercised later than the Expiration Date set forth in the Notice.(c) Cause. Upon Participant’s Termination for Cause (as defined in the Plan), the Option shall expire on such date ofParticipant’s Termination Date.3.Grant of Option. Participant named in the Notice has been granted an Option for the number of Shares set forth in theNotice at the exercise price per Share in U.S. Dollars set forth in the Notice (the “Exercise Price”). In the event of a conflict between theterms and conditions of the Plan and the terms and conditions of this Agreement, the terms and conditions of the Plan shall prevail. Ifdesignated in the Notice as an Incentive Stock Option (“ISO”), this Option is intended to qualify as an Incentive Stock Option underSection 422 of the Code. However, if this Option is intended to be an ISO, to the extent that it exceeds the U.S. $100,000 rule of CodeSection 422(d) it shall be treated as a Nonqualified Stock Option (“NQSO”).4.Exercise of Option.(a) Right to Exercise. This Option is exercisable during its term in accordance with the Vesting Schedule set forth inthe Notice and the applicable provisions of the Plan and this Agreement. In the event of Participant’s death, Disability, Termination forCause or other Termination, the exercisability of the Option is governed by the applicable provisions of the Plan, the Notice and thisAgreement.(b) Method of Exercise. This Option is exercisable by delivery of an exercise notice (the “Exercise Notice”), whichshall state the election to exercise the Option, the number of Shares in respect of which the Option is being exercised (the “ExercisedShares”), and such other representations and agreements as may be required by the Company pursuant to the provisions of the Plan.The Exercise Notice shall be delivered in person, by mail, via electronic mail or facsimile or by other authorized method to theSecretary of the Company or other person designated by the Company. The Exercise Notice shall be accompanied by payment of theaggregate Exercise Price as to all Exercised Shares together with any Tax-Related Items withholding (as defined in Section 8(a) below).This Option shall be deemed to be exercised upon receipt by the Company of such fully executed Exercise Notice accompanied bysuch aggregate Exercise Price and payment of any Tax-Related Items.(c) No Shares shall be issued pursuant to the exercise of this Option unless such issuance and exercise complies withall relevant provisions of law and the requirements of any stock exchange or quotation service upon which the Shares are then listedand any exchange control restrictions. Assuming such compliance, for income tax purposes the Exercised Shares shall be consideredtransferred to Participant on the date the Option is exercised with respect to such Exercised Shares.5.Method of Payment. Payment of the aggregate Exercise Price shall be by any of the following, or a combinationthereof, at the election of Participant:(a) cash;(b) check;(c) a “broker-assisted” or “same-day sale” (as described in Section 11(d) of the Plan); or(d) other method authorized by the Committee.6.Limited Transferability of Option. Except as set forth in this Section 6, this Option may not be transferred in anymanner other than by will or by the laws of descent or distribution or court order and may be exercised during the lifetime of Participantonly by the Participant or unless otherwise permitted by the Committee on a case-by-case basis. The terms of the Plan and thisAgreement shall be binding upon the executors, administrators, heirs, successors and assigns of Participant. Notwithstanding anythingelse in this Section 6, for U.S. Participants, a NQSO may be transferred by instrument to an inter vivos or testamentary trust in which theNQSO is to be passed to beneficiaries upon the death of the trustor (settlor), to a guardian on the disability or to an executor on death ofthe NQSO holder, or by gift or pursuant to domestic relations orders to Participant’s “Immediate Family” (as defined below), providedthat any such permitted transferees may not transfer NQSOs to parties other than Participant or Participant’s Immediate Family (transfersbetween a Participant’s Immediate Family and between a Participant’s Immediate Family and Participant are permitted). For the sake ofclarification, multiple transfers of NQSOs may be made, by gift or pursuant to domestic relations orders, back and forth betweenImmediate Family and a Participant pursuant to this Section 6. “Immediate Family” means any child, stepchild, grandchild, parent,stepparent, grandparent, spouse, former spouse, domestic partner sharing the same household, sibling, niece, nephew, mother-in-law,father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law (including adoptive relationships), a trust in which thesepersons have more than fifty percent of the beneficial interest, a foundation in which these persons (or Participant) control themanagement of assets, and any other entity in which these persons (or Participant) own more than fifty percent of the voting interests.The terms of the Plan and this Agreement shall be binding upon the executors, administrators, heirs, transferees, successors and assignsof Participant.7.Term of Option. This Option shall in any event expire on the expiration date set forth in the Notice, which date is10 years after the Date of Grant (five years after the Date of Grant if this option is designated as an ISO in the Notice and Section 5.3 ofthe Plan applies).8.Tax Consequences.(a) Exercising the Option. Participant acknowledges that, regardless of any action taken by the Company or a Parent orSubsidiary of the Company employing or retaining Participant (the “Employer”), the ultimate liability for all income tax, socialinsurance, payroll tax, fringe benefits tax, payment on account or other tax related items related to Participant’s participation in the Planand legally applicable to Participant (“Tax-Related Items”) is and remains Participant’s responsibility and may exceed the amountactually withheld by the Company or the Employer. Participant further acknowledges that the Company and/or the Employer (i) makeno representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of this Option,including, but not limited to, the grant, vesting or exercise of this Option, the subsequent sale of Shares acquired pursuant to suchexercise and the receipt of any dividends; and (ii) do not commit to and are under no obligation to structure the terms of the grant orany aspect of this Option to reduce or eliminate Participant’s liability for Tax-Related Items or achieve any particular tax result. Further,if Participant is subject to Tax-Related Items in more than one jurisdiction between the Date of Grant and the date of any relevanttaxable or tax withholding event, as applicable, Participant acknowledges that the Company and/or the Employer (or former employer,as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.Prior to the relevant taxable or tax withholding event, as applicable, Participant agrees to make adequate arrangementssatisfactory to the Company and/or the Employer to satisfy all Tax-Related Items. In this regard, Participant authorizes the Companyand/or the Employer, or their respective agents, at their discretion, to satisfy the obligations with regard to all Tax-Related Items by oneor a combination of the following:(i)withholding from Participant’s wages or other cash compensation paid to Participant by the Companyand/or the Employer;(ii)withholding from proceeds of the sale of Shares acquired at exercise of this Option either through avoluntary sale or through a mandatory sale arranged by the Company (on Participant’s behalf pursuantto this authorization) without further consent;(iii)withholding in Shares to be issued upon exercise of the Option, provided the Company only withholds fromthe amount of Shares necessary to satisfy the minimum statutory withholding amount; or(iv)any other arrangement approved by the Committee.Depending on the withholding method, the Company may withhold or account for Tax-Related Items by consideringapplicable minimum statutory withholding amounts or other applicable withholding rates, including maximum applicable rates, inwhich case Participant will receive a refund of any over-withheld amount in cash and will have no entitlement to the Common Stockequivalent. If the obligation for Tax‑Related Items is satisfied by withholding in Shares, for tax purposes, Participant is deemed to havebeen issued the full member of Shares issued upon exercise of the Options; notwithstanding that a member of the Shares are held backsolely for the purpose of paying the Tax‑Related Items. The Fair Market Value of these Shares, determined as of the effective date ofthe Option exercise, will be applied as a credit against the Tax-Related Items withholding.Finally, Participant agrees to pay to the Company or the Employer any amount of Tax-Related Items that the Companyor the Employer may be required to withhold or account for as a result of Participant’s participation in the Plan that cannot be satisfiedby the means previously described. The Company may refuse to issue or deliver the Shares or the proceeds of the sale of Shares, ifParticipant fails to comply with his or her obligations in connection with the Tax-Related Items.(b) Notice of Disqualifying Disposition of ISO Shares. For U.S. taxpayers, if Participant sells or otherwise disposes ofany of the Shares acquired pursuant to an ISO on or before the later of (i) two years after the grant date, or (ii) one year after theexercise date, Participant shall immediately notify the Company in writing of such disposition. Participant agrees that he or she may besubject to income tax withholding by the Company on the compensation income recognized from such early disposition of ISO Sharesby payment in cash or out of the current earnings paid to Participant.9.Nature of Grant. In accepting the Option, Participant acknowledges, understands and agrees that:(a)the Plan is established voluntarily by the Company, it is discretionary in nature, and may be amended,suspended or terminated by the Company at any time, to the extent permitted by the Plan;(b)the grant of the Option is voluntary and occasional and does not create any contractual or other right toreceive future grants of options, or benefits in lieu of options, even if options have been granted in the past;(c)all decisions with respect to future Option or other grants, if any, will be at the sole discretion of theCompany;(d)the Option grant and Participant’s participation in the Plan shall not create a right to employment or beinterpreted as forming an employment or service contract with the Company, the Employer or any Parent or Subsidiary;(e)Participant is voluntarily participating in the Plan;(f)the Option and any Shares acquired under the Plan and the income and value of same, are extraordinary itemsthat do not constitute compensation of any kind for services of any kind rendered to the Company or the Employer, and which isoutside the scope of Participant’s employment or service contract, if any;(g)the Option and any Shares acquired under the Plan and the income and value of same are not intended toreplace any pension rights or compensation;(h)the Option and any Shares acquired under the Plan and the income and value of same, are not part of normalor expected compensation for purposes of calculating any severance, resignation, termination, redundancy, dismissal, end-of-servicepayments, bonuses, long-service awards, pension or retirement or welfare benefits or similar payments;(i)the future value of the Shares underlying the Option is unknown, indeterminable, and cannot be predicted withcertainty;(j)if the underlying Shares do not increase in value, the Option will have no value;(k)if Participant exercises the Option and acquires Shares, the value of such Shares may increase or decrease invalue, even below the Exercise Price;(l)unless otherwise provided in the Plan or by the Company in its discretion, the Option and the benefitsevidenced by this Agreement do not create any entitlement to have the Option or any such benefits transferred to, or assumed by,another company nor to be exchanged, cashed out or substituted for, in connection with any corporate transaction affecting the Sharesof the Company; and(m)the following provisions apply only if Participant is providing services outside the United States:(i)the Option and the Shares subject to the Option are not part of normal or expected compensation orsalary for any purpose;(ii)Participant acknowledges and agrees that neither the Company, the Employer nor any Parent orSubsidiary shall be liable for any foreign exchange rate fluctuation between Participant’s local currencyand the United States Dollar that may affect the value of the Option or of any amounts due to Participantpursuant to the exercise of the Option or the subsequent sale of any Shares acquired upon exercise; and(iii)no claim or entitlement to compensation or damages shall arise from forfeiture of the Option resultingfrom Participant’s Termination, and in consideration of the grant of the Option to which Participant isotherwise not entitled, Participant irrevocably agrees never to institute any claim against the Company,any Parent or Subsidiary or the Employer, waives his or her ability, if any, to bring any such claim, andreleases the Company, any Parent or Subsidiary and the Employer from any such claim; if,notwithstanding the foregoing, any such claim is allowed by a court of competent jurisdiction, then, byparticipating in the Plan, Participant shall be deemed irrevocably to have agreed not to pursue such claimand agrees to execute any and all documents necessary to request dismissal or withdrawal of such claim.10.No Advice Regarding Grant. The Company is not providing any tax, legal or financial advice, nor is the Companymaking any recommendations regarding Participant’s participation in the Plan, or Participant’s acquisition or sale of the underlyingShares. Participant is hereby advised to consult with his or her own personal tax, legal and financial advisors regarding his or herparticipation in the Plan before taking any action related to the Plan.11.Data Privacy. Participant hereby explicitly and unambiguously consents to the collection, use and transfer, inelectronic or other form, of Participant’s personal data as described in this Agreement and any other Option grant materials by andamong, as applicable, the Employer, the Company and any Parent or Subsidiary of the Company for the exclusive purpose ofimplementing, administering and managing Participant’s participation in the Plan.Participant understands that the Company and the Employer may hold certain personal information about Participant,including, but not limited to, Participant’s name, home address and telephone number, date of birth, social insurance number or otheridentification number, salary, nationality, job title, any shares of stock or directorships held in the Company, details of all Options orany other entitlement to shares of stock awarded, canceled, exercised, vested, unvested or outstanding in Participant’s favor (“Data”),for the exclusive purpose of implementing, administering and managing the Plan. Participant understands that Data will be transferred to Fidelity Brokerage Services LLC or its affiliates or such other stockplan service provider as may be selected by the Company in the future, which is assisting the Company with the implementation,administration and management of the Plan. Participant understands that the recipients of the Data may be located in the UnitedStates or elsewhere, and that the recipient’s country (e.g., the United States) may have different data privacy laws and protections thanParticipant’s country. Participant understands that if he or she resides outside the United States, he or she may request a list with thenames and addresses of any potential recipients of the Data by contacting his or her local human resources representative.Participant authorizes the Company, Fidelity Brokerage Services LLC and its affiliates, and any other possible recipients which mayassist the Company (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use,retain and transfer the Data, in electronic or other form, for the sole purposes of implementing, administering and managingParticipant’s participation in the Plan. Participant understands that Data will be held only as long as is necessary to implement,administer and manage Participant’s participation in the Plan. Participant understands that if he or she resides outside the UnitedStates, he or she may, at any time, view Data, request additional information about the storage and processing of Data, require anynecessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing his or herlocal human resources representative. Further, Participant understands that he or she is providing the consents herein on a purelyvoluntary basis. If Participant does not consent, or if Participant later seeks to revoke his or her consent, his or her employment statusor service with the Employer will not be adversely affected; the only consequence of refusing or withdrawing Participant’s consent isthat the Company would not be able to grant Participant options or other equity awards or administer or maintain such awards.Therefore, Participant understands that refusing or withdrawing his or her consent may affect Participant’s ability to participate in thePlan. For more information on the consequences of Participant’s refusal to consent or withdrawal of consent, Participant understandsthat he or she may contact his or her local human resources representative.12.Language. If Participant has received this Agreement, or any other document related to the Option and/or the Plantranslated into a language other than English and if the meaning of the translated version is different than the English version, theEnglish version will control.13.Appendix. Notwithstanding any provisions in this Agreement, the Option grant shall be subject to any special termsand conditions set forth in any appendix to this Agreement for Participant’s country. Moreover, if Participant relocates to one of thecountries included in the Appendix, the special terms and conditions for such country will apply to Participant, to the extent theCompany determines that the application of such terms and conditions is necessary or advisable for legal or administrative reasons. TheAppendix constitutes part of this Agreement.14.Imposition of Other Requirements. The Company reserves the right to impose other requirements on Participant’sparticipation in the Plan, on the Option and on any Shares purchased upon exercise of the Option, to the extent the Companydetermines it is necessary or advisable for legal or administrative reasons, and to require Participant to sign any additional agreementsor undertakings that may be necessary to accomplish the foregoing.15.Acknowledgement. The Company and Participant agree that the Option is granted under and governed by the Notice,this Agreement (including the Appendix) and by the provisions of the Plan (incorporated herein by reference). Participant: (i)acknowledges receipt of a copy of the Plan and the Plan prospectus, (ii) represents that Participant has carefully read and is familiar withtheir provisions, and (iii) hereby accepts the Option subject to all of the terms and conditions set forth herein and those set forth in thePlan and the Notice.16.Entire Agreement; Enforcement of Rights. This Agreement (including the Appendix), the Plan and the Noticeconstitute the entire agreement and understanding of the parties relating to the subject matter herein and supersede all prior discussionsbetween them. Any prior agreements, commitments or negotiations concerning the purchase of the Shares hereunder are superseded.No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, shall be effective unless inwriting and signed by the parties to this Agreement. The failure by either party to enforce any rights under this Agreement shall not beconstrued as a waiver of any rights of such party.17.Compliance with Laws and Regulations. The issuance of Shares and any restriction on the sale of Shares will besubject to and conditioned upon compliance by the Company and Participant with all applicable state, federal and foreign laws andregulations and with all applicable requirements of any stock exchange or automated quotation system on which the Company’s Sharesmay be listed or quoted at the time of such issuance or transfer.18.Governing Law; Severability. If one or more provisions of this Agreement are held to be unenforceable, the partiesagree to renegotiate such provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceablereplacement for such provision, then (i) such provision shall be excluded from this Agreement, (ii) the balance of this Agreement shallbe interpreted as if such provision were so excluded and (iii) the balance of this Agreement shall be enforceable in accordance with itsterms. This Agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall begoverned, construed and interpreted in accordance with the laws of the State of Delaware, without giving effect to principles of conflictsof law. For purposes of litigating any dispute that arises directly or indirectly from the relationship of the parties evidenced by this grant,the parties hereby submit to and consent to the exclusive jurisdiction of the State of California and agree that such litigation shall beconducted only in the courts of San Jose, California, or the federal courts for the United States for the Northern District of California,and no other courts, where this grant is made and/or to be performed.19.No Rights as Employee, Director or Consultant. Nothing in this Agreement shall affect in any manner whatsoeverthe right or power of the Company, or a Parent or Subsidiary, to terminate Participant’s service, for any reason, with or without Cause.By Participant’s signature and the signature of the Company’s representative on the Notice, Participant and the Companyagree that this Option is granted under and governed by the terms and conditions of the Plan, the Notice and this Agreement (includingthe Appendix). Participant has reviewed the Plan, the Notice and this Agreement in their entirety, has had an opportunity to obtain theadvice of counsel prior to executing the Notice, and fully understands all provisions of the Plan, the Notice and this Agreement.Participant hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Committee upon any questionsrelating to the Plan, the Notice and this Agreement. Participant further agrees to notify the Company upon any change in the residenceaddress indicated on the Notice. By acceptance of this Option, Participant agrees to participate in the Plan through an on-line orelectronic system established and maintained by the Company or a third party designated by the Company and consents to theelectronic delivery of the Notice, the Appendix, this Agreement, the Plan, account statements, Plan prospectuses required by the U.S.Securities and Exchange Commission, U.S. financial reports of the Company, and all other documents that the Company is required todeliver to its security holders (including, without limitation, annual reports and proxy statements) or other communications orinformation related to the Option. Electronic delivery may include the delivery of a link to a Company intranet or the internet site of athird party involved in administering the Plan, the delivery of the document via e-mail or such other delivery determined at theCompany’s discretion.20.Insider Trading Restrictions/Market Abuse Laws. Depending on Participant’s country of residence, Participant maybe subject to insider trading restrictions and/or market abuse laws, which may affect his or her ability to acquire or sell Shares or rightsto Shares (e.g., Options) under the Plan during such times as Participant is considered to have “insider information” regarding theCompany (as defined by the laws in Participant’s country). Any restrictions under these laws or regulations are separate from and inaddition to any restrictions that may be imposed under any applicable Company insider trading policy. Participant is responsible forcomplying with any applicable restrictions and is advised to speak with a personal legal advisor on this matter.21.Foreign Asset/Account Reporting. Participant’s country of residence may have certain foreign asset and/or accountreporting requirements which may affect his or her ability to acquire or hold Shares under the Plan or cash received from participatingin the Plan (including the sales proceeds arising from the sale of Shares) in a brokerage or bank account outside Participant’s country.Participant may be required to report such amounts, assets or transactions to the tax or other authorities in his or her country. Participantis responsible for ensuring compliance with such regulations and should speak with his or her personal legal advisor regarding thismatter.APPENDIXSERVICENOW, INC.2012 EQUITY INCENTIVE PLANSTOCK OPTION AWARD AGREEMENTTerms and ConditionsThis Appendix includes additional terms and conditions that govern this Option granted to Participant under the Plan if Participantresides in one of the countries listed below. Certain capitalized terms used but not defined in this Appendix have the meanings set forthin the Plan and/or Agreement.NotificationsThis Appendix also includes information regarding exchange controls and certain other issues of which Participant should be awarewith respect to his or her participation in the Plan. The information is based on the securities, exchange control and other laws in effectin the respective countries as of December 2015. Such laws are often complex and change frequently. As a result, the Companystrongly recommends that Participant not rely on the information in this Appendix as the only source of information relating to theconsequences of Participant’s participation in the Plan because the information may be out of date at the time that Participant exercisesthis Option or sells Shares acquired under the Plan.In addition, the information contained herein is general in nature and may not apply to Participant’s particular situation and theCompany is not in a position to assure Participant of any particular result. Accordingly, Participant is advised to seek appropriateprofessional advice as to how the relevant laws in Participant’s country may apply to his or her situation.Finally, if Participant is a citizen or resident of a country other than the one in which he or she is currently working or transfers toanother country after the grant of this Option, or is considered a resident of another country for local law purposes, the informationcontained herein may not be applicable to Participant in the same manner. In addition, the Company shall, in its discretion, determine towhat extent the terms and conditions contained herein shall apply to Participant under these circumstances.AUSTRALIANotificationsSecurities Law Information. I acknowledge and agree that my rights to participate in the Plan and the offer of the Option are subject tothe terms and conditions in the Offer Document distributed to me with the Agreement and other Plan documents, and to therequirements of Class Order exemption 14/1000 of the Australian Securities and Investments Commission.Exchange Control Notification. If Participant is an Australian resident, exchange control reporting is required for cash transactionsexceeding A$10,000 and international fund transfers. If an Australian bank is assisting with the transaction, the bank will file the reporton Participant's behalf. If there is no Australian bank involved with the transfer, Participant will be required to file the report.BRAZILTerms and ConditionsCompliance with Law. By accepting the Option, Participant acknowledges that Participant agrees to comply with applicable Brazilianlaws and to pay any and all applicable taxes associated with participation in the Plan, including the exercise of the Option and the saleof Shares acquired under the Plan.NotificationsForeign Asset/Account Reporting Information. If Participant is resident or domiciled in Brazil, Participant will be required to submitan annual declaration of assets and rights held outside of Brazil to the Central Bank of Brazil if the aggregate value of such assets andrights equals or exceeds US$100,000. Assets and rights that must be reported include any Shares acquired under the Plan. Assets andrights that must be reported also include the following: (i) bank deposits; (ii) loans; (iii) financing transactions; (iv) leases; (v) directinvestments; (vi) portfolio investments, including Shares acquired under the Plan; (vii) financial derivatives investments; and (viii) otherinvestments, including real estate and other assets. Foreign individuals holding Brazilian visas are considered Brazilian residents forpurposes of this reporting requirement and must declare at least the assets held abroad that were acquired subsequent to the date ofadmittance as a resident of Brazil.CANADATerms and ConditionsPayment of Awards. Due to legal restrictions in Canada, Participant is prohibited from tendering Shares that he or she already owns topay the Exercise Price or any Tax-Related Items in connection with the Option.Termination. Participant's right to vest in the Option under the Plan will terminate effective as of the earlier of (a) the Termination Date,or (b) the date upon which Participant receives a Notice of Termination and the period during which Participant may exercise theOption after such termination of Participant's employment will commence on the same date.The following terms and conditions will apply if Participant is a resident of Quebec:Language Consent. The parties acknowledge that it is their express wish that the Agreement, as well as all documents, notices and legalproceedings entered into, given or instituted pursuant hereto or relating directly or indirectly hereto, be drawn up in English.Les parties reconnaissent avoir exigé la rédaction en anglais de cette convention, ainsi que de tous documents, avis et procéduresjudiciaires, exécutés, donnés ou intentés en vertu de, ou liés directement ou indirectement à, la présente convention.Data Privacy. The following provision supplements section 11 of the Agreement:Participant hereby authorizes the Company and the Company’s representatives to discuss with and obtain all relevant information fromall personnel, professional or not, involved in the administration and operation of the Plan. Participant further authorizes the Company,any Parent or Subsidiary and any stock plan service provider that may be selected by the Company to assist with the Plan to discloseand discuss the Plan with their respective advisors. Participant further authorizes the Company and any Parent or Subsidiary to recordsuch information and to keep such information in Participant’s employee file.NotificationsSecurities Law Information. Participant is permitted to sell Shares acquired through the Plan through the designated broker appointedunder the Plan, if any, provided the resale of Shares acquired under the Plan takes place outside Canada through the facilities of a stockexchange on which the Shares are listed on the New York Stock Exchange.Foreign Asset/Account Reporting Information. Participant may be required to report any foreign property on form T1135 (ForeignIncome Verification Statement) if the total cost of Participant’s foreign property exceeds C$100,000 at any time in the year. Foreignproperty includes Shares acquired under the Plan and their cost generally is the adjusted cost base (“ACB”) of the Shares. The ACBordinarily would equal the fair market value of the Shares at the time of acquisition, but if Participant owns shares of the samecompany, this ACB may have to be averaged with the ACB of the other shares. The form T1135 generally must be filed by April 30 ofthe following year. Canadian residents should consult with a personal advisor to ensure compliance with the applicable reportingrequirements.DENMARKNotificationsDanish Stock Option Act. By participating in the Plan, Participant acknowledges that he or she received an Employer Statementtranslated into Danish, which is being provided to comply with the Danish Stock Option Act. To the extent more favorable toParticipant and required to comply with the Stock Option Act, the terms set forth in the Employer Statement will apply to theParticipant’s participation in the Plan.Exclusion from Termination Indemnities and Other Benefits. This provision supplements Section 9 in the Agreement:In accepting the Option, Participant acknowledges that he or she understands and agrees that this grant relates to future services to beperformed and is not a bonus or compensation for past services.Exchange Control and Tax Reporting Information. Participant may hold Shares acquired under the Plan in a safety-deposit account(e.g., a brokerage account) with either a Danish bank or with an approved foreign broker or bank. If the Shares are held with a non-Danish broker or bank, Participant is required to inform the Danish Tax Administration about the safety-deposit account. For thispurpose, Participant must file a Declaration V (Erklaering V) with the Danish Tax Administration. Both Participant and the bank/brokermust sign the Declaration V. By signing the Declaration V, the bank/broker undertakes an obligation, without further request each yearnot later than on February 1 of the year following the calendar year to which the information relates, to forward certain information tothe Danish Tax Administration concerning the content of the safety-deposit account. In the event that the applicable broker or bankwith which the safety-deposit account is held does not wish to, or, pursuant to the laws of the country in question, is not allowed toassume such obligation to report, Participant acknowledges that he or she is solely responsible for providing certain details regardingthe foreign brokerage or bank account and any Shares acquired at exercise and held in such account to the Danish Tax Administrationas part of Participant’s annual income tax return. By signing the Form V, Participant at the same time authorizes the Danish TaxAdministration to examine the account. A sample of the Declaration V can be found at the following website:www.skat.dk/getFile.aspx?Id=47392. In addition, when Participant opens a deposit account or a brokerage account for the purpose of holding cash outside Denmark, thebank or brokerage account, as applicable, will be treated as a deposit account because cash can be held in the account. Therefore,Participant must also file a Declaration K (Erklaering K) with the Danish Tax Administration. Both Participant and the bank/brokermust sign the Declaration K. By signing the Declaration K, the bank/broker undertakes an obligation, without further request eachyear, not later than on February 1 of the year following the calendar year to which the information relates, to forward certaininformation to the Danish Tax Administration concerning the content of the deposit account. In the event that the applicable financialinstitution (broker or bank) with which the account is held, does not wish to, or, pursuant to the laws of the country in question, is notallowed to assume such obligation to report, Participant acknowledges that he or she is solely responsible for providing certain detailsregarding the foreign brokerage or bank account to the Danish Tax Administration as part of Participants annual income tax return. Bysigning the Declaration K, Participant at the same time authorizes the Danish Tax Administration to examine the account. A sample ofDeclaration K can be found at the following website: www.skat.dk/getFile.aspx?Id=42409&newwindow=true.If Participant uses the broker‑assisted, same‑day sale or cashless sell‑all method of exercise, Participant is not required to file a Form Vbecause he or she will not hold any Shares. However, if Participant opens a deposit account with a foreign broker or bank to hold thecash proceeds, he or she is required to file a Form K as described above.FRANCETerms and ConditionsConsent to Receive Information in English. By accepting the Option, Participant confirms having read and understood the documentsrelating to this grant (the Plan, the Agreement, the Notice and this Appendix) which were provided in English language. Participantaccepts the terms of those documents accordingly.Consentement pour recevoir les informations en langue anglaise. En acceptant l’Option, le Participant confirme avoir lu et compris lesdocuments relatifs à cette attribution (le Plan, le Contrat, l’Avis et cette Annexe) qui ont été communiqués en langue anglaise. LeParticipant accepte les termes de ces documents en connaissance de cause.NotificationsForeign Asset/Account Reporting Information. Participant must declare to the Customs Authorities the cash and securities he or sheimports or exports without the use of a financial institution when the value of such cash or securities exceeds €10,000. French residentswith foreign account balances exceeding €1,000,000 must report any transactions carried out on those accounts to the Bank of Franceon a monthly basis. Participant must also report all foreign bank and brokerage accounts on an annual basis (including accounts openedor closed during the tax year) on a specific form together with his or her annual income tax return. Failure to comply could triggersignificant penalties.GERMANYNotificationsExchange Control Notification. Cross-border payments in excess of €12,500 in connection with the sale of securities must be reportedmonthly to the Servicezentrum Außenwirtschaftsstatistik, which is the competent federal office of the Deutsche Bundesbank (theGerman Central Bank) for such notifications in Germany. In case of payments in connection with securities (including proceedsrealized upon the sale of Shares), the report must be made by the 5th day of the month following the month in which the payment wasreceived. The report must be filed electronically. The form of report (Allgemeine Meldeportal Statistik) can be accessed via theBundesbank’s website (www.bundesbank.de) and is available in both German and English. Participant is responsible for obtaining theappropriate form from the bank and complying with the applicable reporting obligations. HONG KONGNotificationsSecurities Law Notice: The Option and any Shares issued pursuant to the Option do not constitute a public offering of securities underHong Kong law and are available only to employees of the Company, the Employer and any Parent or Subsidiary. The Agreement,including this Appendix, the Plan, the Notice and other incidental communication materials have not been prepared in accordance withand are not intended to constitute a “prospectus” for a public offering of securities under the applicable securities legislation in HongKong, nor have the documents been reviewed by any regulatory authority in Hong Kong. The Option and any related documentationare intended only for Participant’s personal use and may not be distributed to any other person. If Participant is in any doubt aboutany of the contents of the Agreement, including this Appendix, the Plan or the Notice, Participant is advised to obtain independentprofessional advice.Sale of Shares. Shares received at exercise are accepted as a personal investment. In the event that the Shares are issued in respect ofthe Options within six (6) months of the Date of Grant, Participant agrees that that he or she will not offer to the public or otherwisedispose of the Shares issued upon exercise of the Option prior to the six-month anniversary of the Date of Grant.Nature of Scheme. The Company specifically intends that the Plan will not be an occupational retirement scheme for purposes of theOccupational Retirement Schemes Ordinance (“ORSO”). Notwithstanding the foregoing, if the Plan is deemed to constitute anoccupational retirement scheme for purposes of ORSO, then the Participant's grant shall be void.INDIATerms and ConditionsMethod of Payment. The following provision supplements section 5 of the Agreement.Due to legal restrictions in India, Participant will not be permitted to pay the Exercise Price by a broker assisted partial cashless exercisesuch that a certain number of Shares subject to the exercised Option are sold immediately upon exercise and the proceeds of the saleremitted to the Company to cover the aggregate Exercise Price and any Tax-Related Items. However, payment of the Exercise Pricemay be made by any of the other methods of payment set forth in section 5 of the Agreement. The Company reserves the right toprovide Participant with this method of payment depending on the development of local law.NotificationsExchange Control Notification. Due to exchange control restrictions in India, Participant understands that he or she is required torepatriate any cash dividends received in connection with the Shares to India within 180 days of receipt and any proceeds from the saleof Shares acquired under the Plan to India within 90 days of receipt. Participant must obtain a foreign inward remittance certificate(“FIRC”) from the bank where Participant deposits the funds and must maintain the FIRC as evidence of the repatriation of funds in theevent the Reserve Bank of India or the Employer requests proof of repatriation.Foreign Asset/Account Reporting Information. Participant understands that he or she is required to declare (a) any foreign assets heldby Participant or (b) any foreign bank accounts for which Participant has signing authority in his or her annual tax return.ISRAELTerms and ConditionsThe following provisions apply to Participants who are in Israel on the Date of Grant.Trustee Arrangement. Participant hereby agrees that the Option, as shall be granted to him or her by the Company under the IsraeliSubplan to the Plan, shall be allocated under the provisions of the track referred to as the “Capital Gains Track,” according to Section102(b)(2) and 102(b)(3) of the Israeli Income Tax Ordinance and shall be held by the trustee (the “Trustee”) for the periods stated inSection 102 (the “Holding Period”).Participant hereby declares that:1.Participant understands the provisions of Section 102 and the applicable tax track of this grant of Options.2.Subject to the provisions of Section 102, Participant hereby confirms that Participant shall not sell and/or transfer theOptions, or any Shares or additional rights associated with the Options, before the end of the Holding Period. In theevent that Participant elects to sell or release the Shares or additional rights, as the case may be, prior to the expiration ofthe Holding Period, the sanctions under Section 102 shall apply to and shall be borne solely by Participant.3.Participant understands that this grant of Options is conditioned upon the receipt of all required approvals from Israeli taxauthorities.4.Participant agrees to be bound by the provisions of the trust agreement with the Trustee.5.Participant hereby confirms that he or she has: (i) read and understands this Agreement; (ii) received all the clarificationsand explanations that he or she has requested; and (iii) had the opportunity to consult with his or her advisers beforeaccepting this Agreement.Written Acceptance. If Participant has not already executed a Section 102 Capital Gains Award Confirmation Letter (“ConfirmationLetter”) in connection with grants made under the Israeli Subplan to the Plan, Participant must print, sign and deliver the signed copy ofthe attached Confirmation Letter within 45 days to the Trustee at the following address and the attention of: Vicky Harman, AccountManager, ESOP Trust Company, Aviv Tower, 7 Jabotinsky St. Ramat Gan, 52520 Israel. If the Trustee does not receive the signedConfirmation Letter within 45 days, the Options shall not qualify for preferential tax treatment.The following provision applies to Participants who transfer into Israel after the Date of Grant.Exercise of Option. The following provision supplements section 4 of the Agreement.Participant will be restricted to exercising his or her Option using the broker-assisted, same-day sale or cashless sell-all exercise method,pursuant to which all Shares are sold immediately upon exercise of the Option and Participant receives the sale proceeds less theExercise Price, Tax-Related Items and any applicable broker fees or commissions. Participant will not be entitled to hold any Sharesacquired at exercise.ITALYExercise of Option. The following provision supplements section 4 of the Agreement.Due to regulatory requirements and notwithstanding any terms or conditions of the Plan or the Agreement to the contrary, Participantwill be restricted to a broker assisted cashless sell-all method of exercising his or her Option. To complete a cashless sell-all exercise,the Optionee should instruct the broker to (i) sell all the Shares issued upon exercise; (ii) use the proceeds to pay the Exercise Price,brokerage fees and any Tax-Related Items; and (iii) remit the balance in cash to Participant. The Company reserves the right to provideadditional methods of exercise depending on the development of local laws.Terms and ConditionsData Privacy Notice. This provision replaces in its entirety the Data Privacy provision in section 11 of the Agreement:Participant understands that the Company, the Employer and any Parent or Subsidiary may hold certain personal information aboutParticipant, including, but not limited to, Participant’s name, home address and telephone number, date of birth, social insurance (tothe extent permitted under Italian law) or other identification number, salary, nationality, job title, any Shares or directorships held inthe Company or any Parent or Subsidiary, details of all RSUs or other entitlement to Shares granted, awarded, canceled, exercised,vested, unvested or outstanding in Participant’s favor, and that the Company and the Employer will process said data and other datalawfully received from third parties (“Data”) for the exclusive purpose of implementing, managing and administering Participant’sparticipation in the Plan and complying with applicable laws, including community legislation.Participant also understands that providing the Company with Data is necessary to effectuate Participant’s participation in the Planand that Participant’s refusal to do so would make it impossible for the Company to perform its contractual obligations and mayaffect Participant’s ability to participate in the Plan. The controllers of Data processing are ServiceNow, Inc. with registered offices at2225 Lawson Lane, Santa Clara, CA 95054, U.S.A. and ServiceNow Italy S.R.L., which is also the Company’s representative in Italyfor privacy purposes pursuant to Legislative Decree no. 192/2003.Participant understands that Data will not be publicized, but it may be accessible by the Employer as the privacy representative of theCompany and within the Employer’s organization by its internal and external personnel in charge of processing such Data and thedata processor (“Processor”). An updated list of Processors and other transferees of Data is available upon request from theEmployer.Furthermore, Data may be transferred to banks, other financial institutions, or brokers involved in the management andadministration of the Plan. Participant understands that Data may also be transferred to the Company’s stock plan service provider,Fidelity Brokerage Services LLC, or such other administrator that may be engaged by the Company in the future. Participant furtherunderstands that the Company and/or any Parent or Subsidiary will transfer Data among themselves as necessary for the purpose ofthe implementation, administration and management of Participant’s participation in the Plan. The Data recipients may receive,possess, use, retain, and transfer Data in electronic or other form, for the purpose of implementing, administering, and managingParticipant’s participation in the Plan. Participant understands that these recipients may be acting as Controllers, Processors orpersons in charge of processing, as the case may be, according to applicable privacy laws, and that they may be located in or outsidethe European Economic Area, such as in the United States or elsewhere, in countries that do not provide an adequate level of dataprotection as intended under Italian privacy law. Should the Company exercise its discretion in suspending or terminating the Plan, itwill delete Data as soon as it has accomplished all the necessary legal obligations connected with the management and administrationof the Plan.Participant understands that Data processing for the purposes specified in the Agreement shall take place under automated or non-automated conditions, anonymously when possible, and with confidentiality and security provisions, as set forth by Applicable Laws,with specific reference to Legislative Decree no. 196/2003.The processing activity, including the transfer of Data abroad, including outside the European Economic Area, as specified in theAgreement does not require Participant’s consent thereto as the processing is necessary for the performance of legal and contractualobligations related to implementation, administration and management of the Plan. Participant understands that, pursuant to section 7of the Legislative Decree no. 196/2003, Participant has the right at any moment to, without limitation, obtain information on Dataheld, access and verify its contents, origin and accuracy, delete, update, integrate, correct, block or stop, for legitimate reason, theData processing by contacting your local human resources representative. Finally, Participant is aware that Data will not be used fordirect marketing purposes.Plan Document Acknowledgement. Participant acknowledges that by accepting the Option, Participant has been given access to thePlan document, has reviewed the Plan and the Agreement in their entirety and fully understands and accepts all provisions of the Planand the Agreement. Further, Participant specifically and expressly approves the following clauses of the Agreement: (i) section 2 –Termination Period; (ii) section 4 – Exercise of Option; (iii) section 5 – Method of Payment; (iv) section 8 – Tax Consequences; (v)section 9 – Nature of Grant; (vi) section 16 – Entire Agreement; Enforcement of Rights; (vii) section 18 – Governing Law; Severabilityand the Data Privacy Notice set forth above in this Appendix.NotificationsForeign Asset/Account Reporting Information. Italian residents who, at any time during the fiscal year, hold investments abroad orforeign financial assets (such as cash, shares, stock options) that may generate income taxable in Italy are required to report these assetson their annual tax returns (UNICO Form, RW Schedule) for the year during which the assets are held, or on a special form if no taxreturn is due, irrespective of their value. These reporting obligations will also apply to Italian residents who are the beneficial owners offoreign financial assets under Italian money laundering provisions.Tax on Foreign Financial Assets. The value of any Shares (and certain other foreign assets) Participant holds outside Italy will besubject to a foreign financial assets tax at a rate of 0.2%. The taxable amount is equal to the fair market value of the Shares onDecember 31 or on the last day the Shares were held (in such case, or when the Shares are acquired during the course of the year, thetax is levied in proportion to the number of days the Shares were held over the calendar year). If Participant is subject to this foreignfinancial assets tax, Participant will need to report the value of Participant’s financial assets held abroad in Form RM of Participant’sannual tax return. Participant should contact Participant’s personal tax advisor for additional information about the foreign financialassets tax.JAPANTerms and ConditionsExchange Control Information. If Participant pays more than ¥30,000,000 for the purchase of Shares in any one transaction,Participant must file an ex post facto Payment Report with the Ministry of Finance (through the Bank of Japan or the bank carrying outthe transaction). The precise reporting requirements vary depending on whether the relevant payment is made through a bank in Japan.If Participant acquires Shares whose value exceeds ¥100,000,000 in a single transaction, Participant must also file an ex post factoReport Concerning Acquisition of Shares with the Ministry of Finance through the Bank of Japan within 20 days of acquiring theShares. The forms to make these reports can be acquired at the Bank of Japan.A Payment Report is required independently of a Report Concerning Acquisition of Securities. Consequently, if the total amount thatyou pay on a one-time basis at exercise of the Option exceeds ¥100,000,000, Participant must file both a Payment Report and a ReportConcerning Acquisition of Securities.Foreign Asset/Account Reporting Information. Participant is required to report details of any assets held outside Japan as ofDecember 31 (including Shares acquired under the Plan), to the extent such assets have a total net fair market value exceeding¥50,000,000. Such report will be due by March 15 each year. Participant should consult with Participant’s personal tax advisor todetermine if the reporting obligation applies to Participant’s personal situation.MEXICOTerms and ConditionsNo Entitlement or Claims for Compensation. These provisions supplement section 9 of the Agreement:Modification. By accepting the Option, Participant understands and agrees that any modification of the Plan or the Agreement or itstermination shall not constitute a change or impairment of the terms and conditions of employment.Policy Statement. The Option grant the Company is making under the Plan is unilateral and discretionary and, therefore, the Companyreserves the absolute right to amend it and discontinue it at any time without any liability.The Company, with registered offices at 2225 Lawson Lane, Santa Clara, CA 95054, U.S.A., is solely responsible for the administrationof the Plan and participation in the Plan and the acquisition of Shares does not, in any way, establish an employment relationshipbetween Participant and the Company since Participant is participating in the Plan on a wholly commercial basis, nor does it establishany rights between Participant and the Employer.Plan Document Acknowledgment. By accepting the Option, Participant acknowledges that Participant has received copies of the Plan,has reviewed the Plan and the Agreement in their entirety and fully understands and accepts all provisions of the Plan and theAgreement.In addition, by signing the Agreement, Participant further acknowledges that Participant has read and specifically and expresslyapproved the terms and conditions in section 9 of the Agreement, in which the following is clearly described and established: (i)participation in the Plan does not constitute an acquired right; (ii) the Plan and participation in the Plan is offered by the Company on awholly discretionary basis; (iii) participation in the Plan is voluntary; and (iv) the Company and any Parent or Subsidiary are notresponsible for any decrease in the value of the Shares underlying the Option.Finally, Participant hereby declares that Participant does not reserve any action or right to bring any claim against the Company for anycompensation or damages as a result of Participant’s participation in the Plan and therefore grants a full and broad release to theEmployer, the Company and any Parent or Subsidiary with respect to any claim that may arise under the Plan.Spanish TranslationSin derecho a compensación o reclamaciones por compensación. Estas disposiciones complementan el sección 9 del Contrato:Modificación. Al aceptar la Opción, el Participante entiende y acuerda que cualquier modificación al Plan o al Contrato o suterminación no constituirá un cambio o perjuicio a los términos y condiciones de empleo.Declaración de Política. El otorgamiento de la Opción que la Compañía está haciendo de conformidad con el Plan es unilateral ydiscrecional y, por lo tanto, la Compañía se reserva el derecho absoluto de modificar y discontinuar el mismo en cualquier momento,sin responsabilidad alguna.La Compañía, con oficinas registradas ubicadas en 2225 Lawson Lane, Santa Clara, CA 95054, EE.UU. es únicamente responsable dela administración del Plan y la participación en el Plan y la adquisición de Acciones no establece, de forma alguna, establecer unarelación de trabajo entre el Participante y la Compañía, ya que el Participante está participa en el Plan de una base totalmentecomercial, y tampoco establece ningún derecho entre el Participante y el Patrón.Reconocimiento del Documento del Plan. Al aceptar la Opción, el Participante reconoce que el Participante ha recibido copias delPlan, ha revisado el Plan y el Contrato en su totalidad y entiende y acepta completamente todas las disposiciones contenidas en elPlan y en el Contrato.Adicionalmente, mediante la firma del Contrato de Opción, el Participante reconoce que el Participante ha leído y específica yexpresamente ha aprobado los términos y condiciones del sección 9 del Contrato, en el que claramente se ha descrito y establecidoque: (i) la participación en el Plan no constituye un derecho adquirido; (ii) el Plan y la participación en el Plan es ofrecida por laCompañía de forma enteramente discrecional; (iii) la participación en el Plan es voluntaria; y (iv) la Compañía y cualquier empresaMatriz, Subsidiaria o afiliada no son responsables por cualquier disminución en el valor de las Acciones subyacentes a la Opción.Finalmente, el Participante de acuerdo en que el Participante no se reserva ninguna acción o derecho para interponer cualquierdemanda o reclamación en contra de la Compañía por compensación, daño o perjuicio alguno como resultado de su participación enel Plan y, por lo tanto, otorga finiquito al Patrón, la Compañía y cualquier empresa Matriz, Subsidiaria o afiliada con respecto acualquier demanda o reclamación que pudiera surgir en virtud del Plan.NETHERLANDSThere are no country-specific provisions.SINGAPORENotificationsSecurities Law Information. To the extent Participant sells, offers to sell or otherwise disposes of Shares under the Plan within sixmonths from the Date of Grant, Participant is permitted to dispose of such Shares through the designated broker under the Plan, if any,provided the resale of Shares under the Plan takes place outside Singapore through the facilities of a stock exchange on which theShares are listed. The Shares are currently listed on the New York Stock Exchange.The grant of the Option is being made pursuant to the “Qualifying Person” exemption under section 273(1)(f) of the SingaporeSecurities and Futures Act (Chapter 289, 2006 Ed.) (“SFA”). The Plan has not been lodged or registered as a prospectus with theMonetary Authority of Singapore. Participant should note that the Option is subject to section 257 of the SFA and Participant should notmake any subsequent sale of Shares in Singapore or any offer of such subsequent sale of Shares subject to the Option in Singapore,unless such sale or offer is made (i) after six (6) months from the Date of Grant or (ii) pursuant to the exemptions under Part XIIIDivision (1) Subdivision (4) (other than section 280) of the SFA.Chief Executive Officer and Director Notification Obligation. If Participant is a Chief Executive Officer (“CEO”) or a director,associate director or shadow director of the Company’s Singapore Parent or Subsidiary, Participant is subject to certain notificationrequirements under the Singapore Companies Act. Among these requirements is an obligation to notify the Company’s SingaporeParent or Subsidiary in writing when Participant receives an interest (e.g., Options or Shares) in the Company or any Parent orSubsidiary within two business days of (i) its acquisition or disposal, (ii) any change in a previously disclosed interest (e.g., whenShares are sold), or (iii) becoming a CEO, director, associate director or shadow director.SOUTH AFRICATerms and ConditionsTax Consequences. The following provision supplements section 8 of the Agreement:By accepting the Option, Participant agrees that, immediately upon exercise of the Option, Participant will notify the Employer of theamount of any gain realized. If Participant fails to advise the Employer of the gain realized upon exercise, Participant may be liable fora fine. Participant will be solely responsible for paying any difference between the actual tax liability and the amount withheld by theEmployer.NotificationsTax Clearance Certificate Requirement. If Participant uses cash to exercise the Option, rather than a cashless exercise method,Participant must first obtain and provide to the Employer, or any third party designated by the Employer or the Company, a TaxClearance Certificate (with respect to Foreign Investments) bearing the official stamp and signature of the Exchange ControlDepartment of the South African Revenue Service (“SARS”). Participant must renew this Tax Clearance Certificate every 12 months, orsuch other period as may be required by the SARS. Participant must also complete a transfer of funds application form to transfer thefunds. If Participant exercises the Option by a cashless exercise whereby no funds are remitted offshore for the purchase of Shares, noTax Clearance Certificate is required.Exchange Control Information. To participate in the Plan, Participant must comply with exchange control regulations and rulings inSouth Africa. Because the exchange control regulations are subject to change, Participant should consult Participant’s personal legaladvisor prior to exercising the Option to ensure compliance with current regulations. Participant is responsible for ensuring compliancewith all exchange control laws in South Africa.Securities Law Information. In compliance with South African Securities Law, I acknowledge that I have been notified that thedocuments listed below are available for my review at the ServiceNow intranet site at the web addresses listed below.1.ServiceNow Inc.'s most recent Annual Report (Form 10-K), Quarterly Report (Form 10-Q) and financial statements are availableon the Company's website (www.servicenow.com) (Company ˆ About ServiceNow ˆ Investor Relations ˆ SEC Filings).2.ServiceNow Inc.'s Plan, Plan prospectus and the Agreement are available on the Company's designated broker website(www.fidelity.com). Participant must log in to his or her brokerage account to access these materials.A copy of the above materials will be provided to Participant free of charge upon request to ServiceNow, Inc., Stock Administration,2225 Lawson Lane, Santa Clara, California 95054, U.S.A.SWITZERLANDNotificationsSecurities Law Information. The grant of Options is not intended to be publicly offered in Switzerland. Because this is a privateoffering in Switzerland, the Shares are not subject to registration in Switzerland. Neither this document nor any materials relating to theShares constitutes a prospectus as such term is understood pursuant to article 652a of the Swiss Code of Obligations, and neither thisdocument nor any materials relating to the Shares may be publicly distributed or otherwise made publicly available in Switzerland.UNITED KINGDOMTerms and ConditionsThe following terms and conditions apply only if Participant is an Employee. No grants under this Agreement shall be made toConsultants or Directors resident in the United Kingdom.Responsibility for Taxes. The following provisions supplement section 8(a) of the Agreement:Participant agrees that, if Participant does not pay or the Employer or the Company does not withhold from Participant the full amountof income tax that Participant owes at exercise of the Option, or the release or assignment of the Option for consideration, or the receiptof any other benefit in connection with the Option within 90 days of the end of the tax year in which the event giving rise to the liabilityoccurred, or such other period specified in Section 222(1)(c) of the U.K. Income Tax (Earnings and Pensions) Act 2003 (the “DueDate”), the amount that should have been withheld shall constitute a loan owed by Participant to the Employer, effective 90 days afterthe Due Date. Participant agrees that the loan will bear interest at Her Majesty’s Revenue and Customs (“HMRC”) official rate and willbe immediately due and repayable by Participant, and the Company and/or the Employer may recover it at any time thereafter bywithholding the funds from salary, bonus or any other funds due to Participant by the Employer, by withholding in Shares issued uponexercise of the Option or from the cash proceeds from the sale of Shares or by demanding cash or a cheque from Participant. Participantalso authorizes the Company to delay the issuance of any Shares unless and until the loan is repaid in full.Notwithstanding the foregoing, if Participant is an executive officer or director (as within the meaning of Section 13(k) of the ExchangeAct), the terms of the immediately foregoing provision will not apply. In the event that Participant is an executive officer or director andincome tax is not collected from or paid by Participant within 90 days of the Due Date, the amount of any uncollected income tax mayconstitute a benefit to Participant on which additional income tax and National Insurance Contributions (“NICs”) (including EmployerNICs, as defined below) may be payable. Participant acknowledges that the Company or the Employer may recover any such additionalincome tax and NICs (including Employer NICs, as defined below) at any time thereafter by any of the means referred to in section 8(a)of the Agreement, although Participant acknowledges that he or she ultimately will be responsible for reporting and paying any incometax due on this additional benefit directly to HMRC under the self-assessment regime and for reimbursing the Employer for the value ofthe NICs (including Employer NICs, as defined below) due on this additional benefit.National Insurance Contributions Acknowledgment. As a condition of participation in the Plan and the exercise of the Option,Participant agrees to accept any liability for secondary Class 1 NICs which may be payable by the Company and/or the Employer inconnection with the Option and any event giving rise to Tax-Related Items (the “Employer NICs”). Without limitation to the foregoing,Participant agrees to execute a joint election with the Company, the form of such joint election being formally approved by HMRC (the“Joint Election”), and any other required consent or election. Participant further agrees to execute such other joint elections as may berequired between Participant and any successor to the Company and/or the Employer. Participant further agrees that the Companyand/or the Employer may collect the Employer NICs from Participant by any of the means set forth in section 8(a) of the Agreement.If Participant does not enter into a Joint Election prior to exercising the Option or if approval of the Joint Election has been withdrawnby HMRC, the Option shall become null and void without any liability to the Company and/or the Employer and may not be exercisedby Participant.SERVICENOW, INC.2012 EQUITY INCENTIVE PLANISRAELIf you have not already executed a Section 102 Capital Gains Award Confirmation Letter (“Confirmation Letter”) in connectionwith grants made under the Israeli Subplan to the 2012 Equity Incentive Plan (the “Plan”), you must print, sign and deliver thesigned copy of this Confirmation Letter within 45 days to the Trustee at the following address and the attention of: VickyHarman, Account Manager, ESOP Trust Company, Aviv Tower, 7 Jabotinsky St. Ramat Gan, 52520 Israel. If the Trustee doesnot receive the signed Confirmation Letter within 45 days, the stock options and/or restricted stock units will not qualify forpreferential tax treatment.Section 102 Capital Gains Award Confirmation LetterI hereby confirm and agree that the stock options and/or restricted stock units granted to me by ServiceNow, Inc. (the “Company”)under the Israeli Subplan to the Plan that have been designated by the board of directors (or a committee thereof) of the Company asawards subject to the “Capital Gains Track”, according to Section 102(b)(2) and 102(b)(3) and the Income Tax Rules issued thereunder(“Section 102”) of the Israel Income Tax Ordinance (the “Awards”), shall be subject to the terms and conditions of the “Capital GainsTrack” set forth in said Section 102 and shall be held by ESOP Management and Trust Services Ltd. as trustee (the “Trustee”) inaccordance with the requirements of Section 102 (the “Holding Period”).I hereby declare that:1.I understand and accept the provisions of Section 102 and the “Capital Gains Track” as they apply to Awards.2.Subject to the provisions of Section 102, I hereby confirm that I shall not sell and/or transfer the Awards, or any shares oradditional rights associated with the Awards, before the “end of the Holding Period” (as defined in Section 102). In the eventthat I shall elect to sell or release the shares or additional rights, as the case may be, prior to the “end of the Holding Period,”the provisions of Section 102 shall apply and the applicable tax consequences shall be borne solely by me.3.I understand that the grant of Awards is subject to the receipt of all required approvals from Israeli tax authorities andcompliance with the requirements of Section 102.4.I agree to be bound by the provisions of the Company’s trust agreement with the Trustee.5.I hereby confirm that I have: (i) read and understand this letter; (ii) received all the clarifications and explanations that I haverequested; and (iii) had the opportunity to consult with my advisers before signing this confirmation letter.6.I hereby confirm that, in addition to my confirmation and agreement hereunder, the acceptance or settlement of any suchAwards shall be deemed as irrevocable confirmation of my acknowledgements and undertakings herein with respect to suchspecific Award.Name of Employee: ___________________________ID : ________________________________________Signature: ___________________________________SPECIAL NOTICE FOR EMPLOYEES IN DENMARKEMPLOYER STATEMENTPursuant to Section 3(1) of the Act on Stock Options in employment relations (the "Stock Option Act"), you are entitled to receive the following informationregarding participation in the ServiceNow, Inc. 2012 Equity Incentive Plan (the “Plan”) in a separate written statement.This statement contains only the information mentioned in the Stock Option Act, while the other terms and conditions of your grant of stock options topurchase shares of the common stock of ServiceNow, Inc. (the “Company”) are described in detail in the Plan, the Notice of Global Stock Option Grant (the“Notice”), the Global Stock Option Award Agreement (the “Agreement”) and the applicable country-specific supplement, which have been made available toyou.1.Date of grant of stock optionsThe grant date of your stock option is the date that the Company approved a grant for you, which is set forth in the Notice.2.Terms or conditions for grant of stock optionsOnly persons identified in Section 3 of the Plan are eligible to participate in the Plan. The grant of stock options under the Plan is offered at the solediscretion of the Company and is intended to achieve the purposes identified in Section 1 of the Plan, including (among other things) encouragingstock ownership in the Company by employees of the Company and any parents and subsidiaries that exist now or in the future. The Company maydecide, in its sole discretion, not to make any grants of stock options to you in the future. Under the terms of the Plan, the Agreement and theapplicable country-specific supplement, you have no entitlement or claim to receive future grants of stock options or awards in lieu of stock options.3.Exercise DateYour stock option shall vest and become exercisable over a period of time (“vesting period”), provided you remain employed by or in the service ofthe Company or a subsidiary or parent on each of the vesting dates set forth in the Notice, unless the stock option vests or is terminated earlier for thereasons set forth in the Plan or Agreement and subject to section 5 of this statement. Your vested stock options are exercisable any time after vestingand before the stock option is terminated or expires (“exercise period”).4.Exercise PriceDuring the exercise period, the stock options can be exercised to purchase common stock in the Company at a price per share not less than the fairmarket value of the stock on the date the stock option is granted, as determined in accordance with the Plan, and which is set forth in the Agreement.5.Your rights upon termination of employmentThe treatment of your stock option upon termination of employment will be determined under Sections 4 and 5 of the Stock Option Act unless theterms contained in the Plan, the Agreement and the applicable country-specific supplement are more favorable to you than Sections 4 and 5 of theStock Option Act. If the terms contained in the Plan, the Agreement and the applicable country-specific supplement are more favorable to you, thensuch terms will govern the treatment of your stock option upon termination of employment.6.Financial aspects of participating in the PlanThe grant of stock options has no immediate financial consequences for you. The value of the stock options is not taken into account whencalculating holiday allowances, pension contributions or other statutory consideration calculated on the basis of salary.Shares of stock are financial instruments and investing in stock will always have financial risk. The possibility of gain at the time of exercise will notonly be dependent on the Company’s financial development, but also on the general development of the stock market. In addition, before or afteryou exercise your stock options, the shares of Company stock could decrease in value even below the exercise price.SERVICENOW, INC.2225 Lawson LaneSanta Clara, CA 95054U.S.A.SÆRLIG MEDDELELSE TIL MEDARBEJDERE I DANMARKARBEJDSGIVERERKLÆRINGI henhold til § 3, stk. 1, i lov om brug af køberet eller tegningsret m.v. i ansættelsesforhold ("Aktieoptionsloven") er du berettiget til i en særskilt skriftligerklæring at modtage følgende oplysninger om deltagelse i ServiceNow, Inc.'s incitamentsordning - 2012 Equity Incentive Plan ("Planen").Denne erklæring indeholder kun de oplysninger, der er nævnt i Aktieoptionsloven, mens de øvrige vilkår og betingelser for din tildeling af aktieoptioner tilkøb af ordinære aktier i ServiceNow, Inc. ("Selskabet") er nærmere beskrevet i Planen, Notice of Global Stock Option Grant ("Meddelelsen"), Global StockOption Award Agreement ("Aftalen") og det gældende landespecifikke tillæg, som du har modtaget.1.TildelingstidspunktTidspunktet for tildeling af aktieoptioner er den dato, hvor Selskabet godkendte din tildeling som anført i Meddelelsen.2.Kriterier og betingelser for tildelingen af aktieoptionerKun de i Planens pkt. 3 anførte personer kan deltage i Planen. Tildelingen af aktieoptioner i henhold til Planen sker efter Selskabets eget skøn medhenblik på at gennemføre de i Planens pkt. 1 anførte formål, herunder bl.a. at tilskynde medarbejdere i Selskabet samt dets nuværende og fremtidigedatterselskaber og moderselskab til at eje aktier i Selskabet. Selskabet kan frit vælge ikke at tildele dig aktieoptioner fremover. I henhold til Planen,Aftalen og det gældende landespecifikke tillæg har du ikke nogen ret til eller noget krav på fremover at få tildelt aktieoptioner eller modtage øvrigetildelinger i stedet for aktieoptioner.3.Udnyttelsestidspunkt Dine aktieoptioner modnes og vil kunne udnyttes over en periode ("modningsperioden"), forudsat at du fortsat er ansat i eller arbejder for Selskabet,et datterselskab eller moderselskab på hver af de modningsdatoer, som er angivet i Meddelelsen, medmindre aktieoptionen modner eller bortfalderpå et tidligere tidspunkt af de i Planen eller Aftalen anførte årsager, og med forbehold for pkt. 5 i denne erklæring. Dine modnede aktieoptioner kanudnyttes til enhver tid fra modningstidspunktet indtil optionernes udløb eller ophør (udnyttelsesperiode).4.UdnyttelseskursI udnyttelsesperioden kan aktieoptionerne udnyttes til køb af ordinære aktier i Selskabet til en kurs pr. aktie, som ikke er lavere end aktiernesmarkedskurs på tildelingstidspunktet som fastsat i henhold til Planen og angivet i Aftalen.5.Din retsstilling i forbindelse med fratrædenDine aktieoptioner vil i tilfælde af din fratræden blive behandlet i overensstemmelse med Aktieoptionslovens §§ 4 og 5, medmindre bestemmelsernei Planen, Aftalen og det gældende landespecifikke tillæg er mere fordelagtige for dig end Aktieoptionslovens §§ 4 og 5. Hvis bestemmelserne iPlanen, Aftalen og det gældende landespecifikke tillæg er mere fordelagtige for dig, vil disse bestemmelser være gældende for, hvordan dineaktieoptioner behandles i forbindelse med din fratræden.6.Økonomiske aspekter ved at deltage i Planen.Tildelingen af aktieoptioner har ingen umiddelbare økonomiske konsekvenser for dig. Værdien af aktieoptionerne indgår ikke i beregningen afferiepenge, pensionsbidrag eller øvrige lovpligtige, vederlagsafhængige ydelser.Aktier er finansielle instrumenter, og investering i aktier vil altid være forbundet med en økonomisk risiko. Således afhænger gevinstmuligheden påudnyttelsestidspunktet ikke kun af Selskabets økonomiske udvikling, men også af den generelle udvikling på aktiemarkedet. Derudover kanSelskabets aktier både før og efter udnyttelsestidspunktet falde til en værdi, der måske endda ligger under udnyttelseskursen.SERVICENOW, INC.2225 Lawson LaneSanta Clara, CA 95054U.S.A. SERVICENOW, INC.2012 EQUITY INCENTIVE PLANUNITED KINGDOMElection To Transfer the Employer’s National Insurance Liability to the EmployeeThis Election is between:A.The individual who has obtained authorised access to this Election (the “Employee”), who is employed by one of theemploying companies listed in the attached schedule (the “Employer”) and who is eligible to receive a stock option (“Option”)pursuant to the 2012 Equity Incentive Plan (the “Plan”), andB.ServiceNow, Inc., 2225 Lawson Lane, Santa Clara, CA 95054, U.S.A. (the “Company”), which may grant Options under thePlan and is entering into this Election on behalf of the Employer.1. Introduction1.1This Election relates to all Options granted to the Employee under the Plan on or after June 18, 2012, up to the termination dateof the Plan.1.2In this Election the following words and phrases have the following meanings:(a)“Chargeable Event” means, in relation to the Options:(i)the acquisition of securities pursuant to stock options (within section 477(3)(a) of ITEPA);(ii)the assignment (if applicable) or release of the stock options in return for consideration (within section 477(3)(b)of ITEPA);(iii)the receipt of a benefit in connection with the stock options, other than a benefit within (i) or (ii) above (withinsection 477(3)(c) of ITEPA);(iv)post-acquisition charges relating to the shares acquired pursuant to the stock options (within section 427 ofITEPA); and/or(v)post-acquisition charges relating to the shares acquired pursuant to the stock options (within section 439 ofITEPA).(b) “ITEPA” means the Income Tax (Earnings and Pensions) Act 2003.(c) “SSCBA” means the Social Security Contributions and Benefits Act 1992.1.3This Election relates to the employer’s secondary Class 1 National Insurance Contributions (the “Employer’s Liability”) whichmay arise on the occurrence of a Chargeable Event in respect of the Options pursuant to section 4(4)(a) and/or paragraph3B(1A) of Schedule 1 of the SSCBA.1.4This Election does not apply in relation to any liability, or any part of any liability, arising as a result of regulations being givenretrospective effect by virtue of section 4B(2) of either the SSCBA, or the Social Security Contributions and Benefits (NorthernIreland) Act 1992. 1.5This Election does not apply to the extent that it relates to relevant employment income which is employment income of theearner by virtue of Chapter 3A of Part VII of ITEPA (employment income: securities with artificially depressed market value).2. The ElectionThe Employee and the Company jointly elect that the entire liability of the Employer to pay the Employer’s Liability onthe Chargeable Event is hereby transferred to the Employee. The Employee understands that, by signing or electronicallyaccepting this Election, he or she will become personally liable for the Employer’s Liability covered by this Election. ThisElection is made in accordance with paragraph 3B(1) of Schedule 1 of the SSCBA.3. Payment of the Employer’s Liability3.1The Employee hereby authorises the Company and/or the Employer to collect the Employer’s Liability from the Employee atany time after the Chargeable Event:(i)by deduction from salary or any other payment payable to the Employee at any time on or after the date of theChargeable Event; and/or(ii)directly from the Employee by payment in cash or cleared funds; and/or(iii)by arranging, on behalf of the Employee, for the sale of some of the securities which the Employee is entitled to receivein respect of the Options, the proceeds of which must be delivered to the Employer in sufficient time for payment to bemade to HMRC by the due date; and/or(iv)where the proceeds of the gain are to be made through a third party, the Employee will authorize that party to withholdan amount from the payment or to sell some of the securities which the Employee is entitled to receive in respect of theOptions, such amount to be paid in sufficient time to enable the Company to make payment to HMRC by the due date;and/or(v)through any other method as set forth in the applicable Option agreements entered into between the Employee and theCompany.3.2The Company hereby reserves for itself and the Employer the right to withhold the transfer of any securities to the Employee inrespect of the Options until full payment of the Employer’s Liability is received.3.3The Company agrees to remit the Employer’s Liability to HM Revenue & Customs on behalf of the Employee within 14 daysafter the end of the UK tax month during which the Chargeable Event occurs (or within 17 days if payments are madeelectronically).4. Duration of Election4.1The Employee and the Company agree to be bound by the terms of this Election regardless of whether the Employee istransferred abroad or is not employed by the Employer on the date on which the Employer’s Liability becomes due.4.2This Election will continue in effect until the earliest of the following:(i)the Employee and the Company agree in writing that it should cease to have effect; (ii)on the date the Company serves written notice on the Employee terminating its effect;(iii)on the date HMRC withdraws approval of this Election; or(iv)after due payment of the Employer’s Liability in respect of the entirety of the Options to which this Election relates orcould relate, such that the Election ceases to have effect in accordance with its terms.Acceptance by the EmployeeThe Employee acknowledges that by clicking on the “ACCEPT” box where indicated on the grant acceptance screen, theEmployee agrees to be bound by the terms of this Election as stated above.Acceptance by the CompanyThe Company acknowledges that, by signing this Election or arranging for the scanned signature of an authorised representativeto appear on this Election, the Company agrees to be bound by the terms of this Election.Signature for and onbehalf of the Company ____________________________Name Matthew Kelly Position Vice President, LegalDate ____________________________ SCHEDULE OF EMPLOYER COMPANIESThe following are employer companies to which this Election may apply:Service-now.com UK LimitedRegistered Office:Standard House, Weyside Park, Catteshall Lane,Godalming,Surrey, Gu7 1XECompany Registration Number:6299383Corporation Tax District:201 South LondonCorporation Tax Reference:6359720602PAYE Reference:581/LA08194 SERVICENOW, INC.2012 EQUITY INCENTIVE PLANNOTICE OF GLOBAL RESTRICTED STOCK UNIT AWARDUnless otherwise defined herein, the terms defined in the ServiceNow, Inc. (the “Company”) 2012 Equity Incentive Plan (the “Plan”)shall have the same meanings in this Notice of Global Restricted Stock Unit Award (the “Notice”).Name:As set forth in the electronic representation of this Notice of Global Restricted Stock Unit Award.Address:The address you have provided to the administrator of the PlanI.You (“Participant”) have been granted an award of Restricted Stock Units (“RSUs”) under the Plan subject to the terms andconditions of the Plan, this Notice and the Global Restricted Stock Unit Award Agreement, including any appendix to the GlobalRestricted Stock Unit Award Agreement for Participant’s country (the “Appendix”) (the Restricted Stock Unit Award Agreement andthe Appendix are collectively referred to as the “Agreement”).Number of RSUs:_________ is the “Total Number of Shares”Date of Grant:The “Grant Date” as set forth in the electronic representation of this Notice of GlobalRestricted Stock Unit Award.Expiration Date:The date on which settlement of all RSUs granted hereunder occurs, with earlier expirationupon the Termination DateVestingSchedule:Subject to the limitations set forth in this Notice, the Plan and the Agreement, the RSUs will vest in accordancewith the following schedule:[ServiceNow to insert vesting schedule]By accepting (whether in writing, electronically or otherwise) the RSUs, Participant acknowledges and agrees to the following:Participant understands that Participant’s employment or consulting relationship or service with the Company or a Parent or Subsidiaryis for an unspecified duration and that nothing in this Notice, the Agreement or the Plan changes the nature of that relationship.Participant acknowledges that the vesting of the RSUs pursuant to this Notice is earned only by continuing service as an Employee,Director or Consultant of the Company or Parent or Subsidiary. Participant also understands that this Notice is subject to the terms andconditions of both the Agreement and the Plan, both of which are incorporated herein by reference. Participant has read both theAgreement and the Plan. By accepting this RSU, Participant consents to the electronic delivery as set forth in the Agreement. SERVICENOW, INC.2012 EQUITY INCENTIVE PLANGLOBAL RESTRICTED STOCK UNIT AWARD AGREEMENTUnless otherwise defined herein, the terms defined in the ServiceNow, Inc. (the “Company”) 2012 Equity Incentive Plan (the“Plan”) shall have the same defined meanings in this Global Restricted Stock Unit Award Agreement (the “Agreement”).Participant has been granted Restricted Stock Units (“RSUs”) subject to the terms, restrictions and conditions of the Plan, theNotice of Global Restricted Stock Unit Award (the “Notice”) and this Agreement, including any appendix to this Agreement forParticipant’s country (the “Appendix”).1.Settlement. The RSUs shall be settled on or as soon as administratively practicable following each vest date under the vestingschedule set forth in the Notice (and in no event later than 2 1/2 months following the end of the year in which such vest date occurs),provided that Participant continues to provide services to the Company or any Subsidiary or Affiliate through such vest date. Settlementof RSUs shall be in Shares.2. No Stockholder Rights. Unless and until such time as Shares are issued in settlement of vested RSUs, Participant shall have noownership of the Shares allocated to the RSUs and shall have no right dividends or to vote such Shares.3. Dividend Equivalents. Dividends, if any (whether in cash or Shares), shall not be credited to Participant.4. Non-Transferability of RSUs. RSUs may not be transferred in any manner other than by will or by the laws of descent ordistribution or court order or unless otherwise permitted by the Committee on a case-by-case basis.5. Termination. If Participant’s service Terminates for any reason, all unvested RSUs shall be forfeited to the Company forthwith, andall rights of Participant to such RSUs shall immediately terminate. In case of any dispute as to whether Termination has occurred, theCommittee shall have sole discretion to determine whether such Termination has occurred and the effective date of such Termination.6. Withholding Taxes. Participant acknowledges that, regardless of any action taken by the Company or, if different, Participant’semployer (the “Employer”) the ultimate liability for all income tax, social insurance, payroll tax, fringe benefits tax, payment onaccount or other tax-related items related to Participant’s participation in the Plan and legally applicable to Participant (“Tax-RelatedItems”), is and remains Participant’s responsibility and may exceed the amount actually withheld by the Company or the Employer.Participant further acknowledges that the Company and/or the Employer (1) make no representations or undertakings regarding thetreatment of any Tax-Related Items in connection with any aspect of the RSU, including, but not limited to, the grant, vesting orsettlement of the RSU and the subsequent sale of Shares acquired pursuant to such settlement; and (2) do not commit to and are underno obligation to structure the terms of the grant or any aspect of the RSU to reduce or eliminate Participant’s liability for Tax-RelatedItems or achieve any particular tax result. Further, if Participant is subject to Tax-Related Items in more than one jurisdiction betweenthe date of grant and the date of any relevant taxable or tax withholding event, as applicable, Participant acknowledges that theCompany and/or the Employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items inmore than one jurisdiction. Prior to any relevant taxable or tax withholding event, as applicable, Participant agrees to make adequate arrangementssatisfactory to the Company and/or the Employer to satisfy all Tax-Related Items. In this regard, Participant authorizes the Companyand/or the Employer, or their respective agents, at their discretion, to satisfy the obligations with regard to all Tax-Related Items by oneor a combination of the following:(i)withholding from Participant’s wages or other cash compensation paid to Participant by the Company and/or theEmployer;(ii)withholding from proceeds of the sale of Shares acquired upon settlement of the RSU either through a voluntarysale or through a mandatory sale arranged by the Company (on Participant’s behalf pursuant to thisauthorization);(iii)withholding in Shares to be issued upon settlement of the RSU, provided the Company only withholds theamount of Shares necessary to satisfy the minimum statutory withholding amounts; or(iv)any other arrangement approved by the Committee.Depending on the withholding method, the Company may withhold or account for Tax-Related Items by considering applicableminimum statutory withholding amounts or other applicable withholding rates, including maximum applicable rates, in which caseParticipant will receive a refund of any over-withheld amount in cash and will have no entitlement to the Common Stock equivalent. Ifthe obligation for Tax-Related Items is satisfied by withholding in Shares, for tax purposes, Participant is deemed to have been issuedthe full number of Shares subject to the vested RSU, notwithstanding that a number of the Shares are held back solely for the purpose ofpaying the Tax-Related Items. The Fair Market Value of these Shares, determined as of the effective date when taxes otherwise wouldhave been withheld in cash, will be applied as a credit against the Tax-Related Items withholding.Finally, Participant agrees to pay to the Company or the Employer any amount of Tax-Related Items that the Company or theEmployer may be required to withhold or account for as a result of Participant’s participation in the Plan that cannot be satisfied by themeans previously described. The Company may refuse to issue or deliver the Shares or the proceeds of the sale of Shares, if Participantfails to comply with Participant’s obligations in connection with the Tax-Related Items.7. Nature of Grant. In accepting the grant, Participant acknowledges, understands and agrees that:(a) the Plan is established voluntarily by the Company, it is discretionary in nature and it may be modified, amended,suspended or terminated by the Company at any time, to the extent permitted by the Plan;(b) the grant of the RSU is voluntary and occasional and does not create any contractual or other right to receive future grantsof RSUs, or benefits in lieu of RSUs, even if RSUs have been granted in the past;(c) all decisions with respect to future RSU or other grants, if any, will be at the sole discretion of the Company;(d) the RSU grant and Participant’s participation in the Plan shall not create a right to employment or be interpreted as formingan employment or services contract with the Company, the Employer or any Parent or Subsidiary;(e) Participant is voluntarily participating in the Plan; (f) the RSUs and the Shares subject to the RSUs, and the income and value of same, are extraordinary items that do notconstitute compensation of any kind for services of any kind rendered to the Company or the Employer, and which is outside the scopeof the Participant’s employment or service contract, if any;(g) the RSU and the Shares subject to the RSU, and the income and value of same, are not intended to replace any pensionrights or compensation;(h) the RSU and the Shares subject to the RSU, and the income and value of same, are not part of normal or expectedcompensation for purposes of calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments,bonuses, long-service awards, pension or retirement or welfare benefits or similar payments;(i) the future value of the underlying Shares is unknown, indeterminable and cannot be predicted with certainty;(j) unless otherwise provided in the Plan or by the Company in its discretion, the RSU and the benefits evidenced by thisAgreement do not create any entitlement to have the RSU or any such benefits transferred to, or assumed by, another company nor tobe exchanged, cashed out or substituted for, in connection with any Corporate Transaction affecting the shares of the Company; and(k) the following provisions apply only if Participant is providing services outside the United States:(i)the RSU and the Shares subject to the RSU are not part of normal or expected compensation or salary for anypurpose;(ii)Participant acknowledges and agrees that neither the Company, the Employer nor any Parent or Subsidiary shallbe liable for any foreign exchange rate fluctuation between Participant’s local currency and the United StatesDollar that may affect the value of the RSU or of any amounts due to Participant pursuant to the settlement of theRSU or the subsequent sale of any Shares acquired upon settlement; and(iii)no claim or entitlement to compensation or damages shall arise from forfeiture of the RSU resulting fromParticipant’s Termination, and in consideration of the grant of the RSU to which Participant is otherwise notentitled, Participant irrevocably agrees never to institute any claim against the Company, or any Parent orSubsidiary or the Employer, waives his or her ability, if any, to bring any such claim, and releases the Company,any Parent or Subsidiary and the Employer from any such claim; if, notwithstanding the foregoing, any suchclaim is allowed by a court of competent jurisdiction, then, by participating in the Plan, Participant shall bedeemed irrevocably to have agreed not to pursue such claim and agrees to execute any and all documentsnecessary to request dismissal or withdrawal of such claim.8. No Advice Regarding Grant. The Company is not providing any tax, legal or financial advice, nor is the Company making anyrecommendations regarding Participant’s participation in the Plan, or Participant’s acquisition or sale of the underlying Shares.Participant is hereby advised to consult with his or her own personal tax, legal and financial advisors regarding his or her participationin the Plan before taking any action related to the Plan.9. Data Privacy. Participant hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or otherform, of Participant’s personal data as described in this Agreement and any other RSU grant materials by and among, as applicable,the Employer, the Company and any Parent or Subsidiary for the exclusive purpose of implementing, administering and managingParticipant’s participation in the Plan. Participant understands that the Company and the Employer may hold certain personal information about Participant,including, but not limited to, Participant’s name, home address and telephone number, date of birth, social insurance number or otheridentification number, salary, nationality, job title, any shares of stock or directorships held in the Company, details of all RSUs orany other entitlement to shares of stock awarded, canceled, exercised, vested, unvested or outstanding in Participant’s favor (“Data”),for the exclusive purpose of implementing, administering and managing the Plan.Participant understands that Data will be transferred to Fidelity Brokerage Services LLC or its affiliates or such other stockplan service provider as may be selected by the Company in the future, which is assisting the Company with the implementation,administration and management of the Plan. Participant understands that the recipients of the Data may be located in the UnitedStates or elsewhere, and that the recipients’ country (e.g., the United States) may have different data privacy laws and protections thanParticipant’s country. Participant understands that if he or she resides outside the United States, he or she may request a list with thenames and addresses of any potential recipients of the Data by contacting his or her local human resources representative.Participant authorizes the Company, Fidelity Brokerage Services LLC and its affiliates, and any other possible recipients which mayassist the Company (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use,retain and transfer the Data, in electronic or other form, for the sole purpose of implementing, administering and managing his or herparticipation in the Plan. Participant understands that Data will be held only as long as is necessary to implement, administer andmanage Participant’s participation in the Plan. Participant understands if he or she resides outside the United States, he or she may,at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendmentsto Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing his or her local human resourcesrepresentative. Further, Participant understands that he or she is providing the consents herein on a purely voluntary basis. IfParticipant does not consent, or if Participant later seeks to revoke his or her consent, his or her employment status or service with theEmployer will not be adversely affected; the only consequence of refusing or withdrawing Participant’s consent is that the Companywould not be able to grant Participant RSUs or other equity awards or administer or maintain such awards. Therefore, Participantunderstands that refusing or withdrawing his or her consent may affect Participant’s ability to participate in the Plan. For moreinformation on the consequences of Participant’s refusal to consent or withdrawal of consent, Participant understands that he or shemay contact his or her local human resources representative.10. Language. If Participant has received this Agreement or any other document related to the Plan translated into a language otherthan English and if the meaning of the translated version is different than the English version, the English version will control.11. Appendix. Notwithstanding any provisions in this Agreement, the RSU grant shall be subject to any special terms and conditionsset forth in any appendix to this Agreement for Participant’s country. Moreover, if Participant relocates to one of the countries includedin the Appendix, the special terms and conditions for such country will apply to Participant, to the extent the Company determines thatthe application of such terms and conditions is necessary or advisable for legal or administrative reasons. The Appendix constitutes partof this Agreement.12. Imposition of Other Requirements. The Company reserves the right to impose other requirements on Participant’s participation inthe Plan, on the RSU and on any Shares acquired under the Plan, to the extent the Company determines it is necessary or advisable forlegal or administrative reasons, and to require Participant to sign any additional agreements or undertakings that may be necessary toaccomplish the foregoing. 13. Acknowledgement. The Company and Participant agree that the RSUs are granted under and governed by the Notice, thisAgreement (including the Appendix) and the provisions of the Plan. Participant: (i) acknowledges receipt of a copy of the Plan and thePlan prospectus, (ii) represents that Participant has carefully read and is familiar with their provisions, and (iii) hereby accepts the RSUssubject to all of the terms and conditions set forth herein and those set forth in the Plan and the Notice.14. Entire Agreement; Enforcement of Rights. This Agreement (including the Appendix), the Plan and the Notice constitute theentire agreement and understanding of the parties relating to the subject matter herein and supersede all prior discussions between them.Any prior agreements, commitments or negotiations concerning the purchase of the Shares hereunder are superseded. The failure byeither party to enforce any rights under this Agreement shall not be construed as a waiver of any rights of such party.15. Conditions to Issuance; Compliance with Laws and Regulations. The issuance of Shares and any restriction on the sale of Shareswill be subject to and conditioned upon compliance by the Company and Participant with all applicable state, federal and foreign lawsand regulations, with all applicable requirements of any stock exchange or automated quotation system on which the Company’s Sharesmay be listed or quoted at the time of such issuance or transfer and with any exchange control restrictions. Further, notwithstanding anyother provision of this Agreement, the Company shall not be required to issue Shares following the lapse of any such reasonable periodof time following the vest date as the Company may from time to time establish for reasons of administrative convenience inaccordance with Section 409A of the Code.16. Governing Law; Severability. If one or more provisions of this Agreement are held to be unenforceable, the parties agree torenegotiate such provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement forsuch provision, then (i) such provision shall be excluded from this Agreement, (ii) the balance of this Agreement shall be interpreted asif such provision were so excluded and (iii) the balance of this Agreement shall be enforceable in accordance with its terms. ThisAgreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construedand interpreted in accordance with the laws of the State of Delaware, without giving effect to principles of conflicts of law. For purposesof litigating any dispute that arises directly or indirectly from the relationship of the parties evidenced by this grant, the parties herebysubmit to and consent to the exclusive jurisdiction of the State of California and agree that such litigation shall be conducted only in thecourts of San Jose, California, or the federal courts for the United States for the Northern District of California, and no other courts,where this grant is made and/or to be performed.17. No Rights as Employee, Director or Consultant. Nothing in this Agreement shall affect in any manner whatsoever the right orpower of the Company, or a Parent or Subsidiary, to terminate Participant’s service, for any reason, with or without Cause. By Participant’s acceptance (whether in writing, electronically or otherwise) of the Notice, Participant and the Company agreethat this RSU is granted under and governed by the terms and conditions of the Plan, the Notice and this Agreement (including theAppendix). Participant has reviewed the Plan, the Notice and this Agreement in their entirety, has had an opportunity to obtain theadvice of counsel prior to executing this Agreement, and fully understands all provisions of the Plan, the Notice and this Agreement.Participant hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Committee upon any questionsrelating to the Plan, the Notice and this Agreement. Participant further agrees to notify the Company upon any change in Participant’sresidence address. By acceptance of this RSU, Participant agrees to participate in the Plan through an on-line or electronic systemestablished and maintained by the Company or a third party designated by the Company and consents to the electronic delivery of theNotice, the Appendix, this Agreement, the Plan, account statements, Plan prospectuses required by the U.S. Securities and ExchangeCommission, U.S. financial reports of the Company, and all other documents that the Company is required to deliver to its securityholders (including, without limitation, annual reports and proxy statements) or other communications or information related to the RSU.Electronic delivery may include the delivery of a link to a Company intranet or the internet site of a third party involved inadministering the Plan, the delivery of the document via e-mail or such other delivery determined at the Company’s discretion.18. Insider Trading Restrictions/Market Abuse Laws. Depending on Participant’s country of residence, Participant may be subjectto insider trading restrictions and/or market abuse laws, which may affect his or her ability to acquire or sell Shares or rights to Shares(e.g., RSUs) under the Plan during such times as Participant is considered to have “inside information” regarding the Company (asdefined by the laws in Participant’s country). Any restrictions under these laws or regulations are separate from and in addition to anyrestrictions that may be imposed under any applicable Company insider trading policy. Participant is responsible for complying withany applicable restrictions and is advised to speak with a personal legal advisor on this matter.19. Foreign Asset/Account Reporting. Participant’s country of residence may have certain foreign asset and/or account reportingrequirements which may affect his or her ability to acquire or hold RSUs under the Plan or cash received from participating in the Plan(including sales proceeds arising from the sale of Shares) in a brokerage or bank account outside Participant’s country. Participant maybe required to report such amounts, assets or transactions to the tax or other authorities in his or her country. Participant is responsiblefor ensuring compliance with such regulations and should speak with her or her personal legal advisor regarding this matter. APPENDIXSERVICENOW, INC.2012 EQUITY INCENTIVE PLANGLOBAL RESTRICTED STOCK UNIT AWARD AGREEMENTTerms and ConditionsThis Appendix includes additional terms and conditions that govern the Restricted Stock Units granted to Participant under the Plan ifParticipant resides in one of the countries listed below. Certain capitalized terms used but not defined in this Appendix have themeanings set forth in the Plan and/or the Agreement.NotificationsThis Appendix also includes information regarding exchange controls and certain other issues of which Participant should be awarewith respect to Participant’s participation in the Plan. The information is based on the securities, exchange control and other laws ineffect in the respective countries as of December 2015. Such laws are often complex and change frequently. As a result, the Companystrongly recommends that Participant not rely on the information in this Appendix as the only source of information relating to theconsequences of Participant’s participation in the Plan because the information may be out of date at the time that Participant receivesShares or sells Shares acquired under the Plan.In addition, the information contained herein is general in nature and may not apply to Participant’s particular situation and theCompany is not in a position to assure Participant of any particular result. Accordingly, Participant is advised to seek appropriateprofessional advice as to how the relevant laws in Participant’s country may apply to Participant’s situation.Finally, if Participant is a citizen or resident of a country other than the one in which Participant is currently working, is considered aresident of another country for local law purposes or transfers employment and/or residency between countries after the Date of Grant,the information contained herein may not be applicable in the same manner to Participant. In addition, the Company shall, in its solediscretion, determine to what extent the additional terms and conditions included herein will apply to Participant under thesecircumstances.AUSTRALIANotificationsSecurities Law Information. If Participant acquires Shares under the Plan upon the vesting of the RSUs and subsequently offers theShares for sale to a person or entity resident in Australia, such an offer may be subject to disclosure requirements under Australian law,and Participant should obtain legal advice regarding any applicable disclosure requirements prior to making any such offerAustralian Addendum. The RSUs are granted pursuant to the Australian Addendum. Participation in the Plan and the RSUs grantedunder the Plan are subject to the terms and conditions stated in the Australian Addendum, in addition to the Plan, the Agreement andthis Appendix. The Plan is intended tocomply with the provisions of the Australian Corporations Act 2001, ASIC Regulatory Guide 49 and ASIC Instrument 13-0821, signedon 27 June 2013 and gazetted on 2 July 2013.Exchange Control Notification. If Participant is an Australian resident, exchange control reporting is required for cash transactionsexceeding A$10,000 and international fund transfers. If an Australian bank is assisting with the transaction, the bank will file the reporton Participant’s behalf. If there is no Australian bank involved in the transfer, Participant will be required to file the report. AUSTRIANotificationsConsumer Protection Information. Participant may be entitled to revoke acceptance of the award of RSUs on the basis of the AustrianConsumer Protection Act (the “Act”) under the conditions listed below, if the Act is considered to be applicable to the Agreement andthe Plan:(i) If Participant accepts the award of RSUs outside the business premises of the Company, Participant may be entitled to revoke his orher acceptance of the RSUs, provided the revocation is made within one (1) week after such acceptance of the RSUs.(ii) The revocation must be in written form to be valid. It is sufficient if Participant returns the Agreement to the Company or theCompany’s representative with language which can be understood as a refusal to conclude or honor the Agreement, provided therevocation is sent within the period discussed above.Foreign Asset/Account Reporting Information. If Participant holds Shares acquired under the Plan outside Austria, Participant may berequired to submit a report to the Austrian National Bank. An exemption applies if the value of the Shares as of any given quarter doesnot exceed €30,000,000 or if the value of the Shares in any given year as of December 31 does not exceed €5,000,000. If the formerthreshold is exceeded, quarterly obligations are imposed, whereas if the latter threshold is exceeded, annual reports must be given. Theannual reporting date is December 31 and the deadline for filing the annual report is March 31 of the following year.A separate reporting requirement applies when Participant sells Shares acquired under the Plan or receives a dividend. In that case, theremay be exchange control obligations if the cash proceeds are held outside Austria. If the transaction volume of all accounts abroadexceeds €10,000,000, the movements and balances of all accounts must be reported monthly, as of the last day of the month, on orbefore the 15th day of the following month, on the prescribed form (Meldungen SI-Forderungen und/oder SI-Verpflichtungen).BELGIUMNotificationsForeign Asset/Account Reporting Information. If Participant is a Belgian resident, he or she is required to report any bank orsecurities accounts, including an account in which Shares are held, opened outside Belgium in his or her annual tax return. In a separatereport certain details regarding such foreign accounts (including the account number, bank name and country in which such accountwas opened) must be provided to the Central Contact Point of the National Bank of Belgium. The forms to complete this report, as wellas additional information on how to complete the forms are available on the website of the National Bank of Belgium, www.nbb.be,under the Kredietcentrales / Centrales des crédits caption.BRAZILTerms and ConditionsCompliance with Law. By accepting the RSUs, Participant acknowledges that Participant agrees to comply with applicable Brazilianlaws and to report and pay any and all applicable taxes associated with participation in the Plan, including the vesting of the RSUs andthe sale of Shares acquired under the Plan. NotificationsForeign Asset/Account Reporting Information. If Participant is resident or domiciled in Brazil, Participant will be required to submitan annual declaration of assets and rights held outside Brazil to the Central Bank of Brazil if the aggregate value of such assets andrights equals or exceeds US$100,000. Assets and rights that must be reported include any Shares acquired under the Plan. Assets andrights that must be reported also include the following: (i) bank deposits; (ii) loans; (iii) financing transactions; (iv) leases; (v) directinvestments; (vi) portfolio investments, including Shares acquired under the Plan; (vii) financial derivatives investments; and (viii) otherinvestments, including real estate and other assets. Foreign individuals holding Brazilian visas are considered Brazilian residents forpurposes of this reporting requirement and must declare at least the assets held abroad that were acquired subsequent to the date ofadmittance as a resident of Brazil.CANADATerms and ConditionsVesting/Termination. Participant's right to vest in the RSUs shall terminate effective as of the earlier of (a) the Termination Date or (b)the date upon which the Participant receives a notice of Termination.The following terms and conditions will apply if Participant is a resident of Quebec:Language Consent. The parties acknowledge that it is their express wish that the Agreement, as well as all documents, notices and legalproceedings entered into, given or instituted pursuant hereto or relating directly or indirectly hereto, be drawn up in English.Les parties reconnaissent avoir exigé la rédaction en anglais de cette convention, ainsi que de tous documents, avis et procéduresjudiciaires, exécutés, donnés ou intentés en vertu de, ou liés directement ou indirectement à, la présente convention.Data Privacy. The following provision supplements section 9 of the Agreement:Participant hereby authorizes the Company and the Company’s representatives to discuss with and obtain all relevant information fromall personnel, professional or not, involved in the administration and operation of the Plan. Participant further authorizes the Company,any Parent or Subsidiary and any stock plan service provider that may be selected by the Company to assist with the Plan to discloseand discuss the Plan with their respective advisors. Participant further authorizes the Company and any Parent or Subsidiary to recordsuch information and to keep such information in Participant’s employee file. NotificationsSecurities Law Information. Participant is permitted to sell Shares acquired through the Plan through the designated broker appointedunder the Plan, if any, provided the resale of Shares acquired under the Plan takes place outside Canada through the facilities of a stockexchange on which the Shares are listed on the New York Stock Exchange.Foreign Asset/Account Reporting Information. Participant may be required to report any foreign property on form T1135 (ForeignIncome Verification Statement) if the total cost of Participant’s foreign property exceeds C$100,000 at any time in the year. Thus,Shares and RSUs must be reported - generally at nil cost - if the C$100,000 cost threshold is exceeded because of other foreignproperty held by Participant. When the Shares are acquired, their cost is generally the adjusted cost base (“ACB”) of the Shares. TheACB ordinarily would equal the fair market value of the Shares at the time of acquisition but if Participant owns shares of the samecompany, this ACB may have to be averaged with the ACB of other shares. The form T1135 generally must be filed by April 30 of thefollowing year. Canadian residents should consult with a personal advisor to ensure compliance with the applicable reportingrequirements.DENMARKTerms and ConditionsDanish Stock Option Act. In accepting the RSUs, Participant acknowledges that he or she has received an Employer Statementtranslated into Danish, which is being provided to comply with the Danish Stock Option Act. To the extent more favorable toParticipant and required to comply with the Stock Option Act, the terms set forth in the Employer Statement will apply to Participant’sparticipation in the Plan.Exclusion from Termination Indemnities and Other Benefits. This provision supplements section 7 in the Agreement:In accepting the RSU, Participant acknowledges that he or she understands and agrees that this grant relates to future services to beperformed and is not a bonus or compensation for past services.NotificationsExchange Control and Tax Reporting Information. Participant may hold Shares acquired under the Plan in a safety-deposit account(e.g., a brokerage account) with either a Danish bank or with an approved foreign broker or bank. If the Shares are held with a non-Danish broker or bank, Participant is required to inform the Danish Tax Administration about the safety-deposit account. For thispurpose, Participant must file a Declaration V (Erklaering V) with the Danish Tax Administration. Both Participant and the bank/brokermust sign the Declaration V. By signing the Declaration V, the bank/broker undertakes an obligation, without further request each yearnot later than on February 1 of the year following the calendar year to which the information relates, to forward certain information tothe Danish Tax Administration concerning the content of the safety-deposit account. In the event that the applicable broker or bankwith which the safety-deposit account is held does not wish to, or, pursuant to the laws of the country in question, is not allowed toassume such obligation to report, Participant acknowledges that he or she is solely responsible for providing certain details regardingthe foreign brokerage or bank account and any Shares acquired at exercise and held in such account to the Danish Tax Administrationas part of Participant’s annual income tax return. By signing the Form V, Participant at the same time authorizes the Danish TaxAdministration to examine the account. A sample of the Declaration V can be found at the following website:www.skat.dk/getFile.aspx?Id=47392.In addition, when Participant opens a deposit account or a brokerage account for the purpose of holding cash outside Denmark, thebank or brokerage account, as applicable, will be treated as a deposit account because cash can be held in the account. Therefore,Participant must also file a Declaration K (Erklaering K) with the Danish Tax Administration. Both Participant and the bank/broker must sign the Declaration K. By signing the DeclarationK, the bank/broker undertakes an obligation, without further request each year, not later than on February 1 of the year following thecalendar year to which the information relates, to forward certain information to the Danish Tax Administration concerning the contentof the deposit account. In the event that the applicable financial institution (broker or bank) with which the account is held does notwish to, or, pursuant to the laws of the country in question, is not allowed to assume such obligation to report, Participant acknowledgesthat he or she is solely responsible for providing certain details regarding the foreign brokerage or bank account to the Danish TaxAdministration as part of Participants annual income tax return. By signing the Declaration K, Participant at the same time authorizesthe Danish Tax Administration to examine the account. A sample of Declaration K can be found at the following website:www.skat.dk/getFile.aspx?Id=42409&newwindow=true.FINLANDThere are no country-specific provisions.FRANCETerms and ConditionsConsent to Receive Information in English. By accepting the RSUs, Participant confirms having read and understood the documentsrelating to this grant (the Plan, the Agreement, the Notice and this Appendix) which were provided in English language. Participantaccepts the terms of those documents accordingly.Consentement pour recevoir les informations en langue anglaise. En acceptant l’attribution, le Participant confirme avoir lu etcompris les documents relatifs à cette attribution (le Plan, le Contrat, l’Avis et cette Annexe) qui ont été communiqués en langueanglaise. Le Participant accepte les termes de ces documents en connaissance de cause.NotificationsForeign Asset/Account Reporting Information. Participant must declare to the Customs Authorities the cash and securities he or sheimports or exports without the use of a financial institution when the value of such cash or securities exceeds €10,000. With respect toany foreign account balances exceeding €1,000,000, Participant must report any transactions carried out on those accounts to the Bankof France on a monthly basis. Participant must also report all foreign bank and brokerage accounts on an annual basis (includingaccounts opened or closed during the tax year) on a specific form together with the income tax return. Failure to comply could triggersignificant penalties.Participant may hold Shares acquired under the Plan outside France provided that Participant declares all foreign accounts (includingany accounts that were opened or closed during the tax year) on his or her annual income tax return. GERMANYNotificationsExchange Control Notification. Cross-border payments in excess of €12,500 in connection with the sale of securities must be reportedmonthly to the Servicezentrum Außenwirtschaftsstatistik, which is the competent federal office of the Deutsche Bundesbank (theGerman Central Bank) for such notifications in Germany. In case of payments in connection with securities (including proceedsrealized upon the sale of Shares), the report must be made by the 5th day of the month following the month in which the payment wasreceived. The report must be filed electronically. The form of report (Allgemeine Meldeportal Statistik) can be accessed via theBundesbank’s website (www.bundesbank.de) and is available in both German and English. Participant is responsible for obtaining theappropriate form from the bank and complying with the applicable reporting obligations.HONG KONGTerms & ConditionsNature of Scheme. Participant acknowledges that the Company specifically intends that the Plan will not be an occupational retirementscheme for purposes of the Occupational Retirement Schemes Ordinance (“ORSO”). Notwithstanding the foregoing, if the Plan isdeemed to constitute an occupational retirement scheme for purposes of ORSO, the RSUs granted shall be void.NotificationsSecurities Law Information. Shares received pursuant to the RSUs are accepted as a personal investment. To facilitate compliance withsecurities laws in Hong Kong, Participant agrees not to sell the Shares issued in settlement of the RSUs within six (6) months of the Dateof Grant.Securities Warning: The contents of the Plan, the Agreement and this Appendix have not been reviewed by any regulatory authority inHong Kong. Participant is advised to exercise caution in relation to the offer of RSUs. If there is any doubt about any of the contents ofthe Plan, the Agreement or this Appendix, Participant should obtain independent professional advice. The Plan, the Agreement,including this Appendix, the Notice and other incidental communication materials have not been prepared in accordance with and arenot intended to constitute a “prospectus” for a public offering of securities under the applicable securities legislation in Hong Kong.The RSUs and any related documentation are intended only for Participant’s personal use and may not be distributed to any otherperson.INDIANotificationsExchange Control Notification. Due to exchange control restrictions in India, Participant understands that he or she is required torepatriate any proceeds from the sale of Shares acquired under the Plan to India and convert the proceeds into local currency withinninety (90) days of receipt, and any proceeds from the receipt of any dividends within one hundred eighty (180) days of receipt.Participant must obtain a foreign inward remittance certificate (“FIRC”) from the bank where Participant deposits the funds and mustmaintain the FIRC as evidence of the repatriation of funds in the event the Reserve Bank of India or the Employer requests proof ofrepatriation. Foreign Asset/Account Reporting Information. Participant understands that he or she is required to declare (a) any foreign assets(including Shares held outside India) held by Participant or (b) any foreign bank accounts for which Participant has signing authority inhis or her annual tax return. Participant is responsible for complying with this reporting obligation and is advised to confer with his orher personal tax advisor in this regard.IRELANDThere are no country-specific provisions. ISRAELTerms and ConditionsThe following provisions apply to Participants who are in Israel on the Date of Grant.Trustee Arrangement. Participant hereby agrees that the RSUs, as shall be granted to him or her by the Company under the IsraeliSubplan to the Plan, shall be allocated under the provisions of the track referred to as the “Capital Gains Track,” according to Section102(b)(2) and 102(b)(3) of the Israeli Income Tax Ordinance and shall be held by the trustee (the “Trustee”) for the periods stated inSection 102 (the “Holding Period”).Participant hereby declares that:1.Participant understands the provisions of Section 102 and the applicable tax track of this grant of RSUs.5. 2.Subject to the provisions of Section 102, Participant hereby confirms that Participant shall not sell and/or transfer theRSUs, or any Shares or additional rights associated with the RSUs, before the end of the Holding Period. In the eventthat Participant elects to sell or release the Shares or additional rights, as the case may be, prior to the expiration of theHolding Period, the sanctions under Section 102 shall apply to and shall be borne solely by Participant.6. 3.Participant understands that this grant of RSUs is conditioned upon the receipt of all required approvals from Israeli taxauthorities.7. 4.Participant agrees to be bound by the provisions of the trust agreement with the Trustee.8. 5.Participant hereby confirms that he or she has: (i) read and understands this Agreement; (ii) received all the clarificationsand explanations that he or she has requested; and (iii) had the opportunity to consult with his or her advisers beforeaccepting this Agreement.Written Acceptance. If Participant has not already executed a Section 102 Capital Gains Award Confirmation Letter (“ConfirmationLetter”) in connection with grants made under the Israeli Subplan to the Plan, Participant must print, sign and deliver the signed copy ofthe attached Confirmation Letter within 45 days to the Trustee at the following address and the attention of: Vicky Harman, AccountManager, ESOP Trust Company, Aviv Tower, 7 Jabotinsky St. Ramat Gan, 52520 Israel. If the Trustee does not receive the signedConfirmation Letter within 45 days, the RSUs shall not qualify for preferential tax treatment.The following provisions apply to Participants who transfer into Israel after the Date of Grant.Settlement. The following provision replaces section 1 of the Agreement.Settlement of RSUs shall be made within 30 days following the applicable date of vesting under the vesting schedule set forth in theNotice. Participant will be subject to an immediate forced sale restriction, pursuant to which all Shares acquired at vesting will beimmediately sold and Participant will receive the sale proceeds less Tax-Related Items and applicable broker fees and commissions.Participant will not be entitled to hold any Shares acquired at vesting. ITALYTerms and ConditionsData Privacy Notice. This provision replaces in its entirety the Data Privacy provision in section 9 of the Agreement:Participant understands that the Company, the Employer and any Parent or Subsidiary may hold certain personal information aboutParticipant, including, but not limited to, Participant’s name, home address and telephone number, date of birth, social insurance (tothe extent permitted under Italian law) or other identification number, salary, nationality, job title, any Shares or directorships held inthe Company or any Parent or Subsidiary, details of all RSUs or other entitlement to Shares granted, awarded, canceled, exercised,vested, unvested or outstanding in Participant’s favor, and that the Company and the Employer will process said data and other datalawfully received from third parties (“Data”) for the exclusive purpose of implementing, managing and administering Participant’sparticipation in the Plan and complying with applicable laws, including community legislation.Participant also understands that providing the Company with Data is necessary to effectuate Participant’s participation in the Planand that Participant’s refusal to do so would make it impossible for the Company to perform its contractual obligations and mayaffect Participant’s ability to participate in the Plan. The controllers of Data processing are ServiceNow, Inc. with registered offices at2225 Lawson Lane, Santa Clara, CA 95054, U.S.A. and ServiceNow Italy S.R.L., which is also the Company’s representative in Italyfor privacy purposes pursuant to Legislative Decree no. 192/2003.Participant understands that Data will not be publicized, but it may be accessible by the Employer as the privacy representative of theCompany and within the Employer’s organization by its internal and external personnel in charge of processing such Data and thedata processor (“Processor”). An updated list of Processors and other transferees of Data is available upon request from theEmployer.Furthermore, Data may be transferred to banks, other financial institutions, or brokers involved in the management andadministration of the Plan. Participant understands that Data may also be transferred to the Company’s stock plan service provider,Fidelity Brokerage Services LLC, or such other administrator that may be engaged by the Company in the future. Participant furtherunderstands that the Company and/or any Parent or Subsidiary will transfer Data among themselves as necessary for the purpose ofthe implementation, administration and management of Participant’s participation in the Plan. The Data recipients may receive,possess, use, retain, and transfer Data in electronic or other form, for the purpose of implementing, administering, and managingParticipant’s participation in the Plan. Participant understands that these recipients may be acting as Controllers, Processors orpersons in charge of processing, as the case may be, according to applicable privacy laws, and that they may be located in or outsidethe European Economic Area, such as in the United States or elsewhere, in countries that do not provide an adequate level of dataprotection as intended under Italian privacy law. Should the Company exercise its discretion in suspending or terminating the Plan, itwill delete Data as soon as it has accomplished all the necessary legal obligations connected with the management and administrationof the Plan.Participant understands that Data processing for the purposes specified in the Agreement shall take place under automated or non-automated conditions, anonymously when possible, and with confidentiality and security provisions, as set forth by Applicable Laws,with specific reference to Legislative Decree no. 196/2003. The processing activity, including the transfer of Data abroad, including outside the European Economic Area, as specified in theAgreement does not require Participant’s consent thereto as the processing is necessary for the performance of legal and contractualobligations related to implementation, administration and management of the Plan. Participant understands that, pursuant to section 7of the Legislative Decree no. 196/2003, Participant has the right at any moment to, without limitation, obtain information on Dataheld, access and verify its contents, origin and accuracy, delete, update, integrate, correct, block or stop, for legitimate reason, theData processing by contacting your local human resources representative. Finally, Participant is aware that Data will not be used fordirect marketing purposes.Plan Document Acknowledgement. Participant acknowledges that by accepting the RSUs, Participant has been given access to the Plandocument, has reviewed the Plan and the Agreement in their entirety and fully understands and accepts all provisions of the Plan andthe Agreement. Further, Participant specifically and expressly approves the following clauses of the Agreement: (i) section 1 –Settlement; (ii) section 6 – Withholding Taxes; (iii) section 7 – Nature of Grant; (iv) section 14 – Entire Agreement; Enforcement ofRights; (v) section 16 – Governing Law; Severability and the Data Privacy Notice set forth above in this Appendix.NotificationsForeign Asset/Account Reporting Information. Italian residents who, at any time during the fiscal year, hold investments abroad orforeign financial assets (such as cash, shares, stock options) that may generate income taxable in Italy are required to report these assetson their annual tax returns (UNICO Form, RW Schedule) for the year during which the assets are held, or on a special form if no taxreturn is due, irrespective of their value. These reporting obligations will also apply to Italian residents who are the beneficial owners offoreign financial assets under Italian money laundering provisions.Tax on Foreign Financial Assets. The value of any Shares (and certain other foreign assets) Participant holds outside Italy will besubject to a foreign financial assets tax at a rate of 0.2%. The taxable amount is equal to the fair market value of the Shares onDecember 31 or on the last day the Shares were held (in such case, or when the Shares are acquired during the course of the year, thetax is levied in proportion to the number of days the Shares were held over the calendar year).Participant will need to report the value of Participant’s financial assets held abroad in Form RW of Participant’s annual tax return inorder to either comply with the Foreign Asset/Account Reporting obligations and in order to calculate the foreign financial assets tax.Unless the RSUs are transferable, no tax is levied on the RSUs. No tax payment duties arise if the amount of the foreign financial assetstax calculated on all financial assets held abroad does not exceed €12,000. Participant should contact Participant’s personal tax advisorfor additional information about the foreign financial assets tax. JAPANNotificationsForeign Asset/Account Reporting Information. Participant is required to report details of any assets held outside Japan as ofDecember 31 (including Shares acquired under the Plan), to the extent such assets have a total net fair market value exceeding ¥50million. Such report will be due by March 15 each year. Participant should consult with Participant’s personal tax advisor to determineif the reporting obligation applies to Participant’s personal situation.MEXICOTerms and ConditionsNo Entitlement or Claims for Compensation. These provisions supplement section 7 of the Agreement:Modification. By accepting the RSUs, Participant understands and agrees that any modification of the Plan or the Agreement or itstermination shall not constitute a change or impairment of the terms and conditions of employment.Policy Statement. The grant of RSUs the Company is making under the Plan is unilateral and discretionary and, therefore, theCompany reserves the absolute right to amend it and discontinue it at any time without any liability.The Company, with registered offices at 2225 Lawson Lane, Santa Clara, CA 95054, U.S.A., is solely responsible for the administrationof the Plan and participation in the Plan and the acquisition of Shares does not, in any way, establish an employment relationshipbetween Participant and the Company since Participant is participating in the Plan on a wholly commercial basis, nor does it establishany rights between Participant and the Employer.Plan Document Acknowledgment. By accepting the RSUs, Participant acknowledges that Participant has received a copy of the Plan,has reviewed the Plan and the Agreement in their entirety and fully understands and accepts all provisions of the Plan and theAgreement.In addition, by accepting the Agreement, Participant further acknowledges that Participant has read and specifically and expresslyapproved the terms and conditions in paragraph 7 of the Agreement, in which the following is clearly described and established: (i)participation in the Plan does not constitute an acquired right; (ii) the Plan and participation in the Plan is offered by the Company on awholly discretionary basis; (iii) participation in the Plan is voluntary; and (iv) the Company and any Parent or Subsidiary are notresponsible for any decrease in the value of the Shares underlying the RSUs.Finally, Participant hereby declares that Participant does not reserve any action or right to bring any claim against the Company for anycompensation or damages as a result of Participant’s participation in the Plan and therefore grants a full and broad release to theEmployer, the Company and any Parent or Subsidiary with respect to any claim that may arise under the Plan. Spanish TranslationSin derecho a compensación o reclamaciones por compensación. Estas disposiciones complementan el sección 7 al Contrato:Modificación. Al aceptar las Unidades de Acciones Restringidas, el Empleado entiende y acuerda que cualquier modificación al Plano al Contrato o su terminación no constituirá un cambio o perjuicio a los términos y condiciones de empleo.Declaración de Política. El otorgamiento de Unidades de Acciones Restringidas que la Compañía está haciendo de conformidad con elPlan es unilateral y discrecional y, por lo tanto, la Compañía se reserva el derecho absoluto de modificar y discontinuar el mismo encualquier momento, sin responsabilidad alguna.La Compañía, con oficinas registradas ubicadas en 2225 Lawson Lane, Santa Clara, CA 95054, EE.UU. es únicamente responsable dela administración del Plan y la participación en el Plan y la adquisición de Acciones no establece, de forma alguna, establecer unarelación de trabajo entre el Empleado y la Compañía, ya que el Empleado está participa en el Plan de una base totalmente comercial,y tampoco establece ningún derecho entre el Empleado y el Patrón.Reconocimiento del Documento del Plan. Al aceptar el Otorgamiento de las Unidades de Acciones Restringidas, el Empleadoreconoce que el Empleado ha recibido copias del Plan, ha revisado el Plan y el Contrato en su totalidad y entiende y aceptacompletamente todas las disposiciones contenidas en el Plan y en el Contrato.Adicionalmente, mediante la firma del Contrato, el Empleado reconoce que el Empleado ha leído y específica y expresamente haaprobado los términos y condiciones del sección 7 del Contrato, en el que claramente se ha descrito y establecido que: (i) laparticipación en el Plan no constituye un derecho adquirido; (ii) el Plan y la participación en el Plan es ofrecida por la Compañía deforma enteramente discrecional; (iii) la participación en el Plan es voluntaria; y (iv) la Compañía y cualquier empresa Matriz,Subsidiaria o afiliada no son responsables por cualquier disminución en el valor de las Acciones subyacentes a las Unidades deAcciones Restringidas.Finalmente, el Empleado de acuerdo en que el Empleado no se reserva ninguna acción o derecho para interponer cualquier demandao reclamación en contra de la Compañía por compensación, daño o perjuicio alguno como resultado de su participación en el Plan y,por lo tanto, otorga finiquito al Patrón, la Compañía y cualquier empresa Matriz, Subsidiaria o afiliada con respecto a cualquierdemanda o reclamación que pudiera surgir en virtud del Plan.NETHERLANDSThere are no country-specific provisions. NEW ZEALANDNotificationsSecurities Law Information. In compliance with New Zealand securities laws, you are hereby notified that the documents listed beloware available for review on the ServiceNow intranet site at the following web address: http://investors.servicenow.com/phoenix.zhtml?c=251291&p=irol-sec.1.This Agreement, including this Appendix, which sets forth the terms and conditions regarding the RSUs you are being offeredwhich, upon vesting in accordance with the Agreement and the Plan, will be converted into Shares in ServiceNow, Inc.;2.a copy of the Company's most recent annual report and most recent financial statements;3.a copy of the Plan and its accompanying prospectusYou are advised to carefully read the available materials before making a decision whether to participate in the Plan. When reading thematerials, you should not that all references to the value of Shares are listed in U.S. dollars. Additionally, you are advised to contactyour tax advisor for specific information concerning your personal tax situation with regard to Plan participation.NORWAYThere are no country-specific provisions.SINGAPORENotificationsSecurities Law Information. The RSUs are being granted to Participant pursuant to the “Qualifying Person” exemption under section273(1)(f) of the Singapore Securities and Futures Act (Chapter 289, 2006 Ed.) (“SFA”). The Plan has not been lodged or registered as aprospectus with the Monetary Authority of Singapore. Participant should note that the RSU grant is subject to section 257 of the SFAand Participant should not make any subsequent sale of the Shares in Singapore or any offer of such subsequent sale of the Shares inSingapore, unless such sale or offer is made (1) after six (6) months from the Date of Grant or (2) pursuant to the exemptions under PartXIII Division (1) Subdivision (4) (other than section 280) of the SFA.Chief Executive Officer and Director Notification Obligation. If Participant is a Chief Executive Officer (“CEO”) or a director,associate director or shadow director of the Company’s Singapore Parent or Subsidiary, Participant is subject to certain notificationrequirements under the Singapore Companies Act. Among these requirements is an obligation to notify the Company’s SingaporeParent or Subsidiary in writing when Participant receives an interest (e.g., unvested RSUs, Shares, etc.) in the Company or any Parent orSubsidiary within two business days of (i) its acquisition or disposal, (ii) any change in a previously disclosed interest (e.g., whenShares acquired at vesting are sold), or (iii) becoming a CEO, director, associate director or shadow director. SOUTH AFRICATerms and ConditionsWithholding Taxes. The following provision supplements section 6 of the Agreement:By accepting the RSUs, Participant agrees that, immediately upon vesting and settlement of the RSUs, Participant will notify theEmployer of the amount of any gain realized. If Participant fails to advise the Employer of the gain realized upon vesting andsettlement, Participant may be liable for a fine. Participant will be solely responsible for paying any difference between the actual taxliability and the amount withheld by the Employer.NotificationsExchange Control Information. To participate in the Plan, Participant must comply with exchange control regulations and rulings inSouth Africa. Because the exchange control regulations are subject to change, Participant should consult Participant’s personal legaladvisor prior to vesting and settlement of the RSUs to ensure compliance with current regulations. Participant is responsible for ensuringcompliance with all exchange control laws in South Africa.Securities Law Information. In compliance with South African Securities Law, I acknowledge that I have been notified that thedocuments listed below are available for my review at the ServiceNow intranet site at the web addresses listed below:1.ServiceNow Inc.'s most recent Annual Report (Form 10-K), Quarterly Report (Form 10-Q) and financial statements are availableon the Company's website (www.servicenow.com) (Company ˆ About ServiceNow ˆ Investor Relations ˆ SEC Filings).2.ServiceNow Inc.'s Plan, Plan prospectus and the Agreement are available on the Company's designated broker website(www.fidelity.com). Participant must log into his or her brokerage account to access these materials.A copy of the above materials will be provided to Participant free of charge upon request to ServiceNow, Inc., Stock Administration,2225 Lawson Lane, Santa Clara, California 95054, U.S.A.SPAINTerms and ConditionsTermination and Nature of Grant. This provision supplements sections 5 and 7 of the Agreement:In accepting the RSUs, Participant consents to participate in the Plan and acknowledges that he or she has received a copy of the Plan.Participant understands and agrees that, as a condition of the grant of the RSUs, Termination for any reason (including the reasons listedbelow) will automatically result in the loss of the RSUs that may have been granted to Participant and that have not vested as ofParticipant’s Termination Date. In particular, Participant understands and agrees that any unvested RSUs as of the Termination Date will be forfeited without entitlementto the underlying Shares or to any amount of indemnification in the event of a Termination by reason of, but not limited to, resignation,retirement, disciplinary dismissal adjudged to be with cause, disciplinary dismissal adjudged or recognized to be without good cause(i.e., subject to a “despido improcedente”), individual or collective dismissal on objective grounds, whether adjudged or recognized tobe with or without cause, material modification of the terms of employment under Article 41 of the Workers’ Statute, relocation underArticle 40 of the Workers’ Statute, Article 50 of the Workers’ Statute, unilateral withdrawal by the Employer and under Article 10.3 ofthe Royal Decree 1382/1985. Participant acknowledges that he or she has read and specifically accept the conditions referred to insection 5 and 7 of the Agreement.Participant understands that the Company has unilaterally, gratuitously and discretionally decided to grant RSUs under the Plan toindividuals who may be employees or service providers of the Company or a Parent or Subsidiary throughout the world. The decision isa limited decision that is entered into upon the express assumption and condition that any grant will not economically or otherwise bindthe Company or any Parent or Subsidiary on an ongoing basis other than as set forth in this Agreement. Consequently, Participantunderstands that the RSUs are granted on the assumption and condition that the RSUs and any Shares issued upon vesting of the RSUsare not part of any employment or service contract (either with the Company or any Parent or Subsidiary) and shall not be considered amandatory benefit, salary for any purposes (including severance compensation) or any other right whatsoever. Further, Participantunderstands that the RSUs would not be granted to Participant but for the assumptions and conditions referred to herein; thus,Participant acknowledges and freely accepts that should any or all of the assumptions be mistaken or should any of the conditions notbe met for any reason, then the grant of the RSUs and any right to the RSUs shall be null and void.NotificationsSecurities Law Notification. The grant of RSUs and the Shares issued pursuant to the vesting of RSUs are considered a privateplacement outside the scope of Spanish laws on public offerings and issuances of securities. The Plan and the Agreement, including thisAppendix, have not been nor will they be registered with the Comisión Nacional del Mercado de Valores (Spanish Securities ExchangeCommission), and they do not constitute a public offering prospectus.Exchange Control Information. Participant must declare the acquisition, ownership and sale of Shares to the Spanish DirecciónGeneral de Comercio e Inversiones (the “DGCI”) of the Ministry of Economy and Competitiveness for statistical purposes. Generally,the declaration must be filed in January for Shares acquired or sold during (or held as of December 31 of) the prior year; however, if thevalue of the Shares purchased under the Plan or the amount of the sale proceeds exceeds €1,502,530, the declaration must be filedwithin one month of the purchase or sale, as applicable.Foreign Asset/Account Reporting Information. To the extent Participant holds assets (e.g., cash or Shares held in a bank orbrokerage account) outside Spain with a value in excess of €50,000 per type of asset (e.g., Shares, cash, and so on) as of December 31each year, Participant is required to report information on such rights and assets on his or her tax return for such year. After such rightsor assets are initially reported, the reporting obligation will only apply for subsequent years if the value of any previously-reportedrights or assets increases by more than €20,000 or if the ownership of the asset is transferred or relinquished during the year. Thereporting must be completed by March 31. Failure to comply with this reporting requirement may result in penalties. Accordingly,Participant is advised to consult with his or her personal tax and legal advisors to ensure that Participant is properly complying with hisor her reporting obligations.Further, Participant is required to declare electronically to the Bank of Spain any securities accounts (including brokerage accounts heldabroad), as well as the securities held in such accounts if the value of the transactions for all such accounts during the relevant year orthe balances in such accounts as of December 31st of the relevant year exceeds €1,000,000. SWEDENThere are no country-specific provisions.SWITZERLANDNotificationsSecurities Law Information. The grant of RSUs is not intended to be publicly offered in Switzerland. Because this is a private offeringin Switzerland, the Shares are not subject to registration in Switzerland. Neither this document nor any materials relating to the Sharesconstitutes a prospectus as such term is understood pursuant to article 652a of the Swiss Code of Obligations, and neither this documentnor any materials relating to the Shares may be publicly distributed or otherwise made publicly available in Switzerland.TURKEYNotificationsSecurities Law Information. Under Turkish law, Participant is not permitted to sell any Shares acquired under the Plan in Turkey. TheShares are currently traded on the New York Stock Exchange, which is located outside Turkey, under the ticker symbol “NOW” andthe Shares may be sold through this exchange.Exchange Control Information. Participant will likely be required to engage a Turkish financial intermediary to assist with the sale ofShares acquired under the Plan and may also need to engage a Turkish financial intermediary with respect to the acquisition of suchShares, although this is less certain. As Participant is solely responsible for complying with the financial intermediary requirements andtheir application to participation in the Plan is uncertain, Participant should consult his or her personal legal advisor for furtherinformation regarding these requirements to ensure compliance.UNITED ARAB EMIRATESNotificationsSecurities Law Information. The Plan is an employee equity incentive plan and is only being offered to eligible employees of theCompany and its Subsidiaries in the United Arab Emirates.UNITED KINGDOMTerms and ConditionsThe following terms and conditions apply only if Participant is an Employee. No grants under this Agreement shall be made toConsultants or Directors resident in the United Kingdom. Responsibility for Taxes. The following provisions supplement section 6 of the Agreement:Participant agrees that, if Participant does not pay or the Employer or the Company does not withhold from Participant the full amountof income tax that Participant owes at vesting, or the release or assignment of the RSUs for consideration, or the receipt of any otherbenefit in connection with the RSUs within ninety days of the end of the tax year in which the event giving rise to the liability occurredor such other period specified in Section 222(1)(c) of the U.K. Income Tax (Earnings and Pensions) Act 2003 (the “Due Date”), theamount of any uncollected income tax will constitute a loan owed by Participant to the Employer, effective on the Due Date. Participantagrees that the loan will bear interest at the Her Majesty’s Revenue and Customs (“HMRC”) official rate and will be immediately dueand repayable by Participant, and the Company and/or the Employer may recover it at any time thereafter by withholding the fundsfrom salary, bonus or any other funds due to Participant by the Company or Employer, by withholding in Shares issued at settlement orfrom the cash proceeds from the sale of Shares or by demanding cash or a cheque from Participant. Participant also authorizes theCompany to delay the issuance of any Shares unless and until the loan is repaid in full.Notwithstanding the foregoing, if Participant is an executive officer or director (as within the meaning of Section 13(k) of the ExchangeAct), the terms of the immediately foregoing provision will not apply. In the event that Participant is an executive officer or director andincome tax is not collected from or paid by Participant within 90 days of the Due Date, the amount of any uncollected income tax mayconstitute a benefit to Participant on which additional income tax and National Insurance Contributions (“NICs”) (including EmployerNICs, as defined below) may be payable. Participant acknowledges that the Company or the Employer may recover any such additionalincome tax and NICs (including Employer NICs, as defined below) at any time thereafter by any of the means referred to in section 6 ofthe Agreement, although Participant acknowledges that he or she ultimately will be responsible for reporting and paying any income taxdue on this additional benefit directly to HMRC under the self-assessment regime and for reimbursing the Employer for the value of anyNICs (including Employer NICs, as defined below) due on this additional benefit.National Insurance Contributions Acknowledgment. As a condition of participation in the Plan and the vesting of the RSUs,Participant agrees to accept any liability for secondary Class 1 NICs which may be payable by the Company and/or the Employer inconnection with the RSUs and any event giving rise to Tax-Related Items (the “Employer NICs”). Without limitation to the foregoing,Participant agrees to execute a joint election with the Company, the form of such joint election being formally approved by HMRC (the“Joint Election”), and any other required consent or election. Participant further agrees to execute such other joint elections as may berequired between Participant and any successor to the Company and/or the Employer. Participant further agrees that the Companyand/or the Employer may collect the Employer NICs from Participant by any of the means set forth in section 6 of the Agreement.If Participant does not enter into a Joint Election prior to the vesting of the RSUs or if approval of the Joint Election has been withdrawnby HMRC, the RSUs shall become null and void without any liability to the Company and/or the Employer. SERVICENOW, INC.2012 EQUITY INCENTIVE PLANISRAELIf you have not already executed a Section 102 Capital Gains Award Confirmation Letter (“Confirmation Letter”) in connectionwith grants made under the Israeli Subplan to the 2012 Equity Incentive Plan (the “Plan”), you must print, sign and deliver thesigned copy of this Confirmation Letter within 45 days to the Trustee at the following address and the attention of: VickyHarman, Account Manager, ESOP Trust Company, Aviv Tower, 7 Jabotinsky St. Ramat Gan, 52520 Israel. If the Trustee doesnot receive the signed Confirmation Letter within 45 days, the stock options and/or restricted stock units will not qualify forpreferential tax treatment.Section 102 Capital Gains Award Confirmation LetterI hereby confirm and agree that the stock options and/or restricted stock units granted to me by ServiceNow, Inc. (the “Company”)under the Israeli Subplan to the Plan that have been designated by the board of directors (or a committee thereof) of the Company asawards subject to the “Capital Gains Track”, according to Section 102(b)(2) and 102(b)(3) and the Income Tax Rules issued thereunder(“Section 102”) of the Israel Income Tax Ordinance (the “Awards”), shall be subject to the terms and conditions of the “Capital GainsTrack” set forth in said Section 102 and shall be held by ESOP Management and Trust Services Ltd. as trustee (the “Trustee”) inaccordance with the requirements of Section 102 (the “Holding Period”).I hereby declare that:7.I understand and accept the provisions of Section 102 and the “Capital Gains Track” as they apply to Awards.8.Subject to the provisions of Section 102, I hereby confirm that I shall not sell and/or transfer the Awards, or any shares oradditional rights associated with the Awards, before the “end of the Holding Period” (as defined in Section 102). In the eventthat I shall elect to sell or release the shares or additional rights, as the case may be, prior to the “end of the Holding Period,”the provisions of Section 102 shall apply and the applicable tax consequences shall be borne solely by me.9.I understand that the grant of Awards is subject to the receipt of all required approvals from Israeli tax authorities andcompliance with the requirements of Section 102.10.I agree to be bound by the provisions of the Company’s trust agreement with the Trustee.11.I hereby confirm that I have: (i) read and understand this letter; (ii) received all the clarifications and explanations that I haverequested; and (iii) had the opportunity to consult with my advisers before signing this confirmation letter.12.I hereby confirm that, in addition to my confirmation and agreement hereunder, the acceptance or settlement of any suchAwards shall be deemed as irrevocable confirmation of my acknowledgements and undertakings herein with respect to suchspecific Award.Name of Employee:_____________________________ID :__________________________________________Signature: ____________________________________SERVICENOW, INC.2012 EQUITY INCENTIVE PLANUNITED KINGDOMElection To Transfer the Employer’s National Insurance Liability to the EmployeeThis Election is between:A.The individual who has obtained authorised access to this Election (the “Employee”), who is employed by one of theemploying companies listed in the attached schedule (the “Employer”) and who is eligible to receive restricted stock units(“RSUs”) pursuant to the 2012 Equity Incentive Plan (the “Plan”), andB.ServiceNow, Inc., 2225 Lawson Lane, Santa Clara, CA 95054, U.S.A. (the “Company”), which may grant RSUs under thePlan and is entering into this Election on behalf of the Employer.1. Introduction1.6This Election relates to all RSUs granted to the Employee under the Plan on or after June 18, 2012, up to the termination date ofthe Plan.1.7In this Election the following words and phrases have the following meanings:(a)“Chargeable Event” means, in relation to the RSUs:(i)the acquisition of securities pursuant to restricted stock units (within section 477(3)(a) of ITEPA);(ii)the assignment (if applicable) or release of the restricted stock units in return for consideration (within section477(3)(b) of ITEPA);(iii)the receipt of a benefit in connection with the restricted stock units, other than a benefit within (i) or (ii) above(within section 477(3)(c) of ITEPA);(iv)post-acquisition charges relating to the shares acquired pursuant to the restricted stock units (within section 427 ofITEPA); and/or(v)post-acquisition charges relating to the shares acquired pursuant to the restricted stock units (within section 439 ofITEPA).(b) “ITEPA” means the Income Tax (Earnings and Pensions) Act 2003.(c) “SSCBA” means the Social Security Contributions and Benefits Act 1992.1.8This Election relates to the employer’s secondary Class 1 National Insurance Contributions (the “Employer’s Liability”) whichmay arise on the occurrence of a Chargeable Event in respect of the RSUs pursuant to section 4(4)(a) and/or paragraph 3B(1A)of Schedule 1 of the SSCBA.1.9This Election does not apply in relation to any liability, or any part of any liability, arising as a result of regulations being givenretrospective effect by virtue of section 4B(2) of either the SSCBA, or the Social Security Contributions and Benefits (NorthernIreland) Act 1992.1.10This Election does not apply to the extent that it relates to relevant employment income which is employment income of theearner by virtue of Chapter 3A of Part VII of ITEPA (employment income: securities with artificially depressed market value).2. The ElectionThe Employee and the Company jointly elect that the entire liability of the Employer to pay the Employer’s Liability onthe Chargeable Event is hereby transferred to the Employee. The Employee understands that, by signing or electronicallyaccepting this Election, he or she will become personally liable for the Employer’s Liability covered by this Election. ThisElection is made in accordance with paragraph 3B(1) of Schedule 1 of the SSCBA.3. Payment of the Employer’s Liability3.4The Employee hereby authorises the Company and/or the Employer to collect the Employer’s Liability from the Employee atany time after the Chargeable Event:(i)by deduction from salary or any other payment payable to the Employee at any time on or after the date of theChargeable Event; and/or(ii)directly from the Employee by payment in cash or cleared funds; and/or(iii)by arranging, on behalf of the Employee, for the sale of some of the securities which the Employee is entitled to receivein respect of the RSUs, the proceeds of which must be delivered to the Employer in sufficient time for payment to bemade to Her Majesty’s Revenue & Customs (“HMRC”) by the due date; and/or(iv)where the proceeds of the gain are to be made through a third party, the Employee will authorize that party to withholdan amount from the payment or to sell some of the securities which the Employee is entitled to receive in respect of theRSUs, such amount to be paid in sufficient time to enable the Company to make payment to HMRC by the due date;and/or(v)through any other method as set forth in the applicable RSU agreements entered into between the Employee and theCompany.3.5The Company hereby reserves for itself and the Employer the right to withhold the transfer of any securities to the Employee inrespect of the RSUs until full payment of the Employer’s Liability is received.3.6The Company agrees to remit the Employer’s Liability to HMRC on behalf of the Employee within 14 days after the end of theUK tax month during which the Chargeable Event occurs (or within 17 days if payments are made electronically).4. Duration of Election4.3The Employee and the Company agree to be bound by the terms of this Election regardless of whether the Employee istransferred abroad or is not employed by the Employer on the date on which the Employer’s Liability becomes due.4.4This Election will continue in effect until the earliest of the following:(i)the Employee and the Company agree in writing that it should cease to have effect;(ii)on the date the Company serves written notice on the Employee terminating its effect;(iii)on the date HMRC withdraws approval of this Election; or(iv)after due payment of the Employer’s Liability in respect of the entirety of the RSUs to which this Election relates orcould relate, such that the Election ceases to have effect in accordance with its terms.Acceptance by the EmployeeThe Employee acknowledges that by clicking on the “ACCEPT” box where indicated on the grant acceptance screen, theEmployee agrees to be bound by the terms of this Election as stated above.Acceptance by the CompanyThe Company acknowledges that, by signing this Election or arranging for the scanned signature of an authorised representativeto appear on this Election, the Company agrees to be bound by the terms of this Election.Signature for and onbehalf of the Company ____________________________Name Matthew Kelly Position Vice President, LegalDate ____________________________SCHEDULE OF EMPLOYER COMPANIESThe following are employer companies to which this Election may apply:Service-now.com UK LimitedRegistered Office:Standard House, Weyside Park, Catteshall Lane, Godalming,Surrey, Gu7 1XECompany Registration Number:6299383Corporation Tax District:201 South LondonCorporation Tax Reference:6359720602PAYE Reference:581/LA08194EXHIBIT 10.6UK Participants:Note that by clicking on “I Agree” you hereby agree to accept all liability for secondary Class 1 NICsthat may be payable by the Company and/or the Employer in connection with your participation in theESPP and any event giving rise to Tax-Related Items. You further agree to the “Election To Transferthe Employer’s National Insurance Liability to the Employee” agreement with the Company in theform attached to the Enrollment Form below (the “Joint Election Agreement”) as if you had manuallysigned and returned the Joint Election Agreement to the Company.Israeli Participants:Note that by clicking on “I Agree” you hereby acknowledge that you must sign and return thedeclaration in the form attached to the Enrollment Form below (the “Joint Election Agreement”) to theCompany within 45 days of the beginning of the next offering period.SERVICENOW, INC. (the “Company”)Enrollment/Change Form2012 EMPLOYEE STOCK PURCHASE PLAN (“ESPP”)(Capitalized terms not defined in this form shall have the meaning set forth in the ESPP.)SECTION 1:ACTIONSCHECK DESIRED ACTION: AND COMPLETE SECTIONS: Enroll in the ESPP 2 + 3 + 4 + 18 Change Contribution Percentage 2 + 4 + 18 Discontinue Contributions 2 + 5 + 18SECTION 2:PERSONAL DATAName: _________________________________________________Home Address: _________________________________________________________________________________________________Social Security / Identification No.: __________________________Department:______________SECTION 3:ENROLLI hereby elect to participate in the ESPP, effective at the beginning of the next Offering Period. I elect topurchase shares of the Common Stock of the Company subject to the terms and conditions of the ESPPand this Enrollment/Change Form, including any applicable country-specific provisions in the Appendixattached hereto (together, the “Enrollment/Change Form”). I understand that shares of Common Stockpurchased on my behalf will be issued in street name and deposited directly into my brokerage accountwith Fidelity Brokerage Services LLC or its affiliates. I hereby agree to take all steps, and sign all forms,required to establish an account with Fidelity Brokerage Services LLC or its affiliates for this purpose.My participation will continue as long as I remain eligible, unless I withdraw from the ESPP by filing anew Enrollment/Change Form with the Company. If I transfer from the Company to a ParticipatingCorporation or visa-versa or between Participating Corporations, my contributions as of the date oftransfer will be used to purchase shares on the next Purchase Date unless I choose to have such fundsrefunded to me. I understand that I cannot resume participation following my transfer until the start ofthe next Offering Period and must timely file a new enrollment form to do so. I understand that if I am aU.S. taxpayer, I must notify the Company of any disposition of shares of Common Stock purchasedunder the ESPP.SECTION 4:ELECT CONTRIBUTIONPERCENTAGEI hereby authorize the Company to withhold from each of my paychecks such amount as is necessary toequal at the end of the applicable Offering Period __% of my Compensation (as defined in the ESPP)paid during such Offering Period as long as I continue to participate in the ESPP. That amount will beapplied to the purchase of shares of the Company’s Common Stock pursuant to the ESPP. If I am paid ina currency other than U.S. dollars, my contributions will be converted into U.S. dollars prior to thepurchase of the Common Stock. The percentage must be a whole number (from 1%, up to amaximum of 15%).Please -increase -decrease my contribution percentage.Note: You may change your contribution percentage only once within a Purchase Period to be effectiveduring such Purchase Period and such change can only be to decrease your contributionpercentage. An increase in your contribution percentage can only take effect with the nextOffering Period. Each change will become effective as soon as reasonably practicable after theform is received by the Company.SECTION 5:DISCONTINUECONTRIBUTIONS I hereby elect to stop my contributions under the ESPP, effective as soon as reasonably practicable afterthis form is received by the Company. Please -refund all contributions to me in cash, without interestOR - use my contributions to purchase shares on the next Purchase Date. I understand that Icannot resume participation until the start of the next Offering Period and must timely file anew enrollment form to do so.SECTION 6:RESPONSIBILITY FORTAXESI acknowledge that, regardless of any action taken by the Company or, if different, my employer (the“Employer”), the ultimate liability for all income tax, social insurance, payroll tax, fringe benefits tax,payment on account or other tax-related items related to my participation in the ESPP and legallyapplicable to me (“Tax-Related Items”) is and remains my responsibility and may exceed any amountactually withheld by the Company or the Employer. If I am subject to Tax-Related Items in more thanone jurisdiction between the date of grant and the date of any relevant taxable or tax withholding event,as applicable, I acknowledge that Tax-Related Items may be owed by me in more than one jurisdictionand the Company or the Employer may be required to withhold in multiple jurisdictions.I agree to make adequate arrangements to satisfy all Tax-Related Items. In this regard, I authorize theCompany and/or the Employer to satisfy any withholding obligations with regard to all Tax-RelatedItems by withholding from my wages or other cash compensation payable to me by the Company and/orthe Employer. If the obligations for Tax-Related Items cannot be satisfied by withholding from my wagesor other cash compensation as contemplated herein, then I authorize the Company and/or the Employeror their respective agents to satisfy any obligations with regard to all Tax-Related Items by withholdingfrom proceeds of the sale of shares of Common Stock acquired upon exercise of the option, eitherthrough a voluntary sale or through a mandatory sale arranged by the Company (on my behalf pursuantto this authorization without further consent).Finally, I agree to pay to the Company or the Employer any amount of Tax-Related Items that theCompany or the Employer may be required to withhold or account for as a result of my participation inthe ESPP that cannot be satisfied by the means previously described. The Company may refuse topurchase or deliver the shares or the proceeds of the sale of shares of Common Stock, if I fail to complywith my obligations in connection with the Tax-Related Items.SECTION 7:NATURE OF GRANTBy enrolling and participating in the ESPP, I acknowledge, understand and agree that: (a) the ESPP isestablished voluntarily by the Company and it is discretionary in nature; (b) the grant of the option isvoluntary and does not create any contractual or other right to receive future options to purchase sharesof Common Stock, or benefits in lieu of options, even if options have been granted in the past; (c) alldecisions with respect to future options or other grants, if any, will be at the sole discretion of theCompany; (d) the grant of the option and my participation in the ESPP shall not create a right toemployment or be interpreted as forming an employment or service contract with the Company, theEmployer or any Subsidiary and shall not interfere with the ability of the Company, the Employer or anySubsidiary to terminate my employment relationship (if any); (e) I am voluntarily participating in theESPP; (f) the ESPP and the shares of Common Stock purchased under the ESPP and the income andvalue of same, are extraordinary items that do not constitute compensation of any kind for services ofany kind rendered to the Company or Employer, and which is outside the scope of my employment orservice contract, if any; (g) the ESPP and the shares of Common Stock subject to the ESPP and theincome and value of same are not intended to replace any pension rights or compensation; (h) the ESPPand the shares of Common Stock subject to the ESPP and the income and value of same, are not part ofnormal or expected compensation for purposes of calculating any severance, resignation, termination,redundancy, dismissal, end-of-service payments, bonuses, long-service awards, pension or retirement orwelfare benefits or similar payments; (i) the future value of the underlying shares of Common Stock isunknown, indeterminable and cannot be predicted with certainty; (j) and the value of the shares ofCommon Stock purchased under the ESPP may increase or decrease in the future, even below thepurchase price; (k) in the event of termination of my employment (for any reason whatsoever, whether ornot later found to be invalid or in breach of employment laws in the jurisdiction where I am employed orthe terms of my employment agreement, if any), except for certain leave of absences set forth in Section12 of the ESPP, my right to participate in the ESPP will terminate effective as of the date I cease toactively provide services and will not be extended by any notice period (e.g., employment would notinclude any contractual notice or any period of “garden leave” or similar period mandated underemployment laws in the jurisdiction where I am employed or the terms of my employment agreement, ifany); the Committee shall have exclusive discretion to determine when I am no longer actively employedfor purposes of my option; and (l) unless otherwise provided in the ESPP or by the Company in itsdiscretion, the option to purchase shares of Common Stock and the benefits evidenced by thisAgreement do not create any entitlement to have the ESPP or any such benefits granted thereunder,transferred to, or assumed by, another company nor to be exchanged, cashed out or substituted for, inconnection with any corporate transaction affecting the shares of the Company; and (m) the followingprovisions apply only if I am providing services outside the United States: (A) the ESPP and the shares ofCommon Stock subject to the ESPP are not part of normal or expected compensation or salary for anypurpose; (B) I acknowledge and agree that neither the Company, the Employer nor any Subsidiary, shallbe liable for any foreign exchange rate fluctuation between my local currency and the U.S. dollar thatmay affect the value of the shares of Common Stock or any amounts due pursuant to the purchase of theshares or the subsequent sale of any shares of Common Stock purchased under the ESPP; and (C) noclaim or entitlement to compensation or damages shall arise when I withdraw from the ESPP due to mytermination of employment (for any reason whatsoever, whether or not later found to be invalid or inbreach of employment laws in the jurisdiction where I am employed or the terms of my employmentagreement, if any) and in consideration of the grant of the option and the issuance of shares of CommonStock under the ESPP to which I am otherwise not entitled, I irrevocably agree never to institute anyclaim against the Company, its Subsidiaries or the Employer, waive my ability, if any, to bring any suchclaim, and release the Company, its Subsidiaries and the Employer from any such claim; if,notwithstanding the foregoing, any such claim is allowed by a court of competent jurisdiction, then, byparticipating in the ESPP, I shall be deemed irrevocably to have agreed not to pursue such claim andagree to execute any and all documents necessary to request dismissal or withdrawal of such claim.SECTION 8:NO ADVICEREGARDING GRANTThe Company is not providing any tax, legal or financial advice, nor is the Company making anyrecommendations regarding my participation in the ESPP, or my acquisition or sale of the underlyingshares of Common Stock. I am hereby advised to consult with my own personal tax, legal and financialadvisors regarding my participation in the ESPP before taking any action related to the ESPP.SECTION 9:DATA PRIVACYI hereby explicitly and unambiguously consent to the collection, use and transfer, in electronic orother form, of my personal data as described in this Agreement and any other ESPP participationmaterials by and among, as applicable, the Employer, the Company and its Subsidiaries for theexclusive purpose of implementing, administering and managing my participation in the ESPP.I understand that the Company and the Employer may hold certain personal information about me,including, but not limited to, my name, home address and telephone number, date of birth, socialinsurance number or other identification number, salary, nationality, job title, any shares of stock ordirectorships held in the Company, details of all options under the ESPP or any other entitlement toshares of stock awarded, cancelled, exercised, vested, unvested, or outstanding in my favor (“Data”),for the exclusive purpose of implementing, administering and managing the ESPP.I understand that Data will be transferred to Fidelity Brokerage Services LLC or its affiliates or suchother stock plan service provider as may be selected by the Company in the future, which is assistingthe Company, with the implementation, administration and management of the ESPP. I understandthat the recipients of the Data may be located in the United States or elsewhere, and that therecipients’ country (e.g., the United States) may have different data privacy laws and protections thanmy country. I understand that if I reside outside the United States, I may request a list with the namesand addresses of any potential recipients of the Data by contacting my local human resourcesrepresentative. I authorize the Company, Fidelity Brokerage Services LLC and its affiliates, and anyother possible recipients which may assist the Company, (presently or in the future) withimplementing, administering and managing the ESPP to receive, possess, use, retain and transfer theData, in electronic or other form, for the sole purpose of implementing, administering and managingmy participation in the ESPP. I understand that Data will be held only as long as is necessary toimplement, administer and manage my participation in the ESPP. I understand that if I reside outsidethe United States I may, at any time, view Data, request additional information about the storage andprocessing of Data, require any necessary amendments to Data or refuse or withdraw the consentsherein, in any case without cost, by contacting in writing my local human resources representative.Further, I understand that I am providing the consents herein on a purely voluntary basis. If I do notconsent, or if I later seek to revoke my consent, my employment status or service with the Employerwill not be adversely affected; the only consequence of refusing or withdrawing my consent is that theCompany would not be able to grant me the option to purchase shares of Common Stock under theESPP or other equity awards or administer or maintain such awards. Therefore, I understand thatrefusing or withdrawing my consent may affect my ability to participate in the ESPP. For moreinformation on the consequences of my refusal to consent or withdrawal of consent, I understandthat I may contact my local human resources representative.SECTION 10:LANGUAGEIf I have received this Enrollment/Change Form or any other document related to the ESPP translated intoa language other than English and if the meaning of the translated version is different than the Englishversion, the English version will control.SECTION 11:ELECTRONICDELIVERY ANDACCEPTANCE.The Company may, in its sole discretion, decide to deliver any documents related to current or futureparticipation in the ESPP by electronic means. I hereby consent to receive such documents by electronicdelivery and agree to participate in the ESPP through an on-line or electronic system established andmaintained by the Company or a third party designated by the Company.SECTION 13:SEVERABILITYThe provisions of this Enrollment/Change Form are severable and if any one or more provisions aredetermined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shallnevertheless be binding and enforceable.SECTION 14:APPENDIXNotwithstanding any provisions in this Enrollment/Change Form, the right to participate in the ESPP shallbe subject to any special terms and conditions set forth in any Appendix to this Enrollment/Change Formfor my country. Moreover, if I relocate to one of the countries included in the Appendix, the specialterms and conditions for such country will apply to me, to the extent the Company determines that theapplication of such terms and conditions is necessary or advisable for legal or administrative reasons.The Appendix constitutes part of this Enrollment/Change Form.SECTION 15:IMPOSITION OF OTHERREQUIREMENTSThe Company, at its option, may elect to terminate, suspend or modify the terms of the ESPP at any time,to the extent permitted by the ESPP. I agree to be bound by such termination, suspension or modificationregardless of whether notice is given to me of such event, subject in any case to my right to timelywithdraw from the ESPP in accordance with the ESPP withdrawal procedures then in effect. In addition,the Company reserves the right to impose other requirements on my participation in the ESPP, on anyshares of Common Stock purchased under the ESPP, to the extent the Company determines it isnecessary or advisable for legal or administrative reasons, and to require me to sign any additionalagreements or undertakings that may be necessary to accomplish the foregoing.SECTION 16:GOVERNING LAWThe interpretation, performance and enforcement of this Enrollment/Change Form shall be governed bythe laws of the State of Delaware without resort to that State’s conflict-of-laws rules. For purposes oflitigating any dispute that arises directly or indirectly from the relationship of the parties evidenced bythis grant or the Enrollment/Change Form, the parties hereby submit to and consent to the exclusivejurisdiction of the State of California and agree that such litigation shall be conducted only in the courtsof San Jose, California, or the federal courts for the United States for the Northern District of California,and no other courts, where this grant is made and/or to be performed.SECTION 17:WAIVERI acknowledge that a waiver by the Company of breach of any provision of thisEnrollment/Change Form shall not operate or be construed as a waiver of any other provision of thisEnrollment/Change Form or of any subsequent breach by me or any other Participant.SECTION 18:INSIDER TRADINGRESTRICTIONS /MARKET ABUSE LAWSI acknowledge that depending on my country of residence, I may be subject to insidertrading restrictions and/or market abuse laws, which may affect my ability to acquire or sell shares ofCommon Stock or rights to shares of Common Stock (e.g., purchase rights) under the ESPP during suchtimes as I am considered to have “inside information” regarding the Company (as defined by the laws inmy country). Any restrictions under these laws or regulations are separate from and in addition to anyrestrictions that may be imposed under any applicable Company insider trading policy. I am responsiblefor complying with any applicable restrictions and am advised to speak with a personal legal advisor onthis matter.SECTION 19:FOREIGNASSET/ACCOUNTREPORTINGI acknowledge that depending on my country of residence, I may be subject to certainforeign asset and/or account reporting requirements which may affect my ability to acquire or hold sharesof Common Stock under the ESPP in a brokerage or bank account outside of my country of residence.Further, I may be required to report such amounts, assets or transactions to the tax or other authorities inmy country. I am responsible for ensuring compliance with such regulations and am advised to speakwith a personal legal advisor regarding this matter.SECTION 20:ACKNOWLEDGMENTAND SIGNATUREI acknowledge that I have received a copy of the ESPP and of the Prospectus (whichsummarizes the major features of the ESPP). I have read the Prospectus and my signature below (or myclicking on the Accept box if this is an electronic form) indicates that I hereby agree to be bound by theterms of the ESPP and this Enrollment/Change Form.Signature: __________________________________ Date: ________________APPENDIXSERVICENOW, INC. 2012 EMPLOYEE STOCK PURCHASE PLANCOUNTRY SPECIFIC PROVISIONS FOR NON-U.S. EMPLOYEESI understand that this Appendix includes special terms and conditions applicable to me if I reside in one of the countries below. Unlessotherwise stated, these terms and conditions are in addition to those set forth in the Enrollment/Change Form. Any capitalized term usedin this Appendix without definition shall have the meaning ascribed to it in the Enrollment/Change Form or the ESPP, as applicable.I further understand that this Appendix also includes information relating to exchange control and other issues of which I should beaware with respect to my participation in the ESPP. The information is based on the laws in effect in the respective countries as ofDecember 2015. Such laws are often complex and change frequently. As a result, I understand that the Company strongly recommendsthat I not rely on the information herein as the only source of information relating to the consequences of my participation in the ESPPbecause the information may be out of date at the time that I purchase shares of Common Stock or sell shares of Common Stockpurchased under the ESPP.Finally, I understand that if I am a citizen or resident of a country other than the one in which I am currently working, transferemployment after enrolling in the ESPP, or am considered a resident of another country for local law purposes, the informationcontained herein may not apply to me, and the Company shall, in its discretion, determine to what extent the terms and conditionscontained herein shall apply.AUSTRALIASecurities Law Notification.I acknowledge and agree that my rights to participate in the ESPP and purchase shares of Common Stock are subject to the terms andconditions stated in the Offer Document distributed to me with the Agreement and other ESPP documents, and to the requirements ofClass Order exemption 14/1000 of the Australian Securities and Investments Commission.Exchange Control Notification.I understand that if I am an Australian resident, exchange control reporting is required for cash transactions exceeding A$10,000 andinternational fund transfers. If an Australian bank is assisting with the transaction, the bank will file the report on my behalf. If there isno Australian bank involved in the transfer, I will be required to file the report.BRAZILAuthorization for ESPP Participation.I hereby authorize the Employer to make payroll deductions from each of my paychecks in that percentage of my Compensation (up to15%) that I have specified in the Agreement and I authorize the Employer to remit such accumulated payroll deductions, on my behalf,to the United States of America, to purchase the shares of Common Stock, as provided by Circular No. 3,280/05 of the Central Bank,under the terms of the ESPP.Upon request by the Company or the Employer, I agree to execute a letter of authorization and any other agreements or consents thatmay be required to enable the Employer, the Company, any Subsidiary or any third party designated by the Employer or the Companyto remit my accumulated payroll deductions from Brazil for the purchase of shares of Common Stock. I understand that if I fail toexecute a letter of authorization or any other form of agreement or consent that is required for the remittance of my payroll deductions,I will not be able to participate in the ESPP.Compliance with Law.By participating in the ESPP, I agree to comply with applicable Brazilian laws and to report and pay any and all Tax-Related Itemsassociated with participation in the ESPP, including the purchase and subsequent sale of shares of Common Stock acquired under theESPP.Foreign Asset/Account Reporting Information.If I am resident or domiciled in Brazil, I understand that I will be required to submit an annual declaration of assets and rights heldoutside Brazil to the Central Bank of Brazil if the aggregate value of such assets and rights equals or exceeds US$100,000. Assets andrights that must be reported include any shares of Common Stock acquired under the ESPP. Assets and rights that must be reported alsoinclude the following: (i) bank deposits; (ii) loans; (iii) financing transactions; (iv) leases; (v) direct investments; (vi) portfolioinvestments, including shares of Common Stock acquired under the ESPP; (vii) financial derivatives investments; and (viii) otherinvestments, including real estate and other assets. Foreign individuals holding Brazilian visas are considered Brazilian residents forpurposes of this reporting requirement and must declare at least the assets held abroad that were acquired subsequent to the date ofadmittance as a resident of Brazil.CANADATermination of Service.This provision replaces section 7(j) of the Enrollment/Change Form:In the event of termination of my employment (for any reason whatsoever, whether or not later found to be invalid or in breach ofemployment laws in the jurisdiction where I am employed or the terms of my employment agreement, if any), except for certain leaveof absences set forth in Section 12 of the ESPP, my right to participate in the ESPP, if any, will terminate effective as of the earlier of (i)the date upon which I receive notice of termination, or (ii) the date on which I am not longer actively providing services to theEmployer, regardless of any notice period under Canadian provincial laws (including, but not limited to, statutory law, regulatory lawand/or common law); the Committee shall have exclusive discretion to determine when I am no longer actively providing services forpurposes of my option.Securities Law Notification.I understand that I am permitted to sell shares of Common Stock purchased under the ESPP through the designated broker appointedunder the ESPP, provided the resale of shares of Common Stock takes place outside Canada through the facilities of a stock exchangeon which the shares are listed. The shares are currently listed on New York Stock Exchange.Foreign Asset/Account Reporting Information.I am required to report any foreign property on form T1135 (Foreign Income Verification Statement) if the total cost of my foreignproperty exceeds C$100,000 at any time in the year. Foreign property includes shares of Common Stock acquired under the ESPP andtheir cost generally is the adjusted cost base of the Common Stock acquired under the Plan. The form T1135 must be filed by April 30of the following year. I am advised to consult with a personal advisor to ensure that I comply with the applicable requirements.THE FOLLOWING PROVISIONS WILL APPLY IF I AM A RESIDENT OF QUEBEC:Language Consent.The parties acknowledge that it is their express wish that the Enrollment/Change Form, as well as all documents, notices and legalproceedings entered into, given or instituted pursuant hereto or relating directly or indirectly hereto, be drawn up in English.Les parties reconnaissent avoir exigé la rédaction en anglais de la convention, ainsi que de tous documents exécutés, avis donnés etprocédures judiciaires intentées, directement ou indirectement, relativement à ou suite à la convention.Data Privacy.This provision supplements section 9 of the Enrollment/Change Form:I hereby authorize the Company, its Subsidiaries and any Company representatives to discuss with and obtain all relevant informationfrom all personnel, professional or not, involved in the administration and operation of the ESPP. I further authorize the Company, itsSubsidiaries and the administrators of the ESPP to disclose and discuss the ESPP with their advisors. I further authorize the Companyand its Subsidiaries to record such information and to keep such information in my employee file.DENMARKDanish Stock Option Act.I acknowledge that I have received an Employer Statement translated into Danish, which is being provided to comply with the DanishStock Option Act. To the extent more favorable and required to comply with the Stock Option Act, I understand that the terms setforth in the Employer Statement will apply to my participation in the ESPP.Exchange Control and Tax Reporting Notification and Agreement. I understand that I may hold shares of Common Stock acquired under the ESPP in a safety-deposit account (e.g., a brokerage account)with either a Danish bank or with an approved foreign broker or bank. If the shares are held with a non-Danish broker or bank, I amrequired to inform the Danish Tax Administration about the safety-deposit account. For this purpose, I must file a Declaration V(Erklaering V) with the Danish Tax Administration. The bank/broker and I must sign the Declaration V. By signing the Declaration V,the bank/broker undertakes an obligation, without further request each year not later than on February 1 of the year following thecalendar year to which the information relates, to forward certain information to the Danish Tax Administration concerning the contentof the safety-deposit account. In the event that the applicable broker or bank with which the safety-deposit account is held does notwish to, or, pursuant to the laws of the country in question, is not allowed to assume such obligation to report, I acknowledge that I amsolely responsible for providing certain details regarding the foreign brokerage or bank account and any shares of Common Stockacquired at purchase and held in such account to the Danish Tax Administration as part of my annual income tax return. By signing theForm V, I at the same time authorize the Danish Tax Administration to examine the account. A sample of the Declaration V can befound at the following website: www.skat.dk/getFile.aspx?Id=47392.In addition, when I open a deposit account or a brokerage account for the purpose of holding cash outside Denmark, the bank orbrokerage account, as applicable, will be treated as a deposit account because cash can be held in the account. Therefore, I must alsofile a Declaration K (Erklaering K) with the Danish Tax Administration. The bank/broker and I must sign the Declaration K. Bysigning the Declaration K, the bank/broker undertakes an obligation, without further request each year, not later than on February 1 ofthe year following the calendar year to which the information relates, to forward certain information to the Danish Tax Administrationconcerning the content of the deposit account. In the event that the applicable financial institution (broker or bank) with which theaccount is held, does not wish to, or, pursuant to the laws of the country in question, is not allowed to assume such obligation to report,I acknowledge that I am solely responsible for providing certain details regarding the foreign brokerage or bank account to the DanishTax Administration as part of my annual income tax return. By signing the Declaration K, I at the same time authorize the Danish TaxAdministration to examine the account. A sample of Declaration K can be found at the following website: www.skat.dk/getFile.aspx?Id=42409&newwindow=true.Securities Law Requirements.I understand that if I work in a country located in the European Economic Area (“EEA”), my participation in the ESPP is subject tospecial offering terms and may be further limited as a result of applicable securities laws. Specifically, contributions from all Participantsworking in the EEA will be limited to less than an aggregate amount of €5 million on an annual basis. It is also possible that certainother equity awards in the EEA will count against this €5 million threshold. I understand that, if Participants in the EEA elect tocontribute more than this amount during any year, participation rates will be prorated to ensure that this threshold is not exceeded. If myparticipation will be prorated, I understand that I will receive a notice from the Company explaining the proration.FRANCEFRENCH TRANSLATIONS OF PROVISIONS CONCERNING AUTHORIZATION TO PARTICIPATE IN ESPPParticipation in the ESPP (section 6 of the ESPP).(a) Any employee who is an eligible employee determined in accordance with section 4 of the ESPP immediately prior to theinitial Offering Period will be automatically enrolled in the initial Offering Period under the ESPP. With respect to subsequent OfferingPeriods, any eligible employee determined in accordance with section 4 of the ESPP will be eligible to participate in the ESPP, subject tothe requirement of Section (b) hereof and the other terms and provisions of the ESPP.(b) Notwithstanding the foregoing, (i) an eligible employee may elect to decrease the number of shares of Common Stock thatsuch employee would otherwise be permitted to purchase for the initial Offering Period under the ESPP and/or purchase shares ofCommon Stock for the initial Offering Period through payroll deductions by delivering a Enrollment/Change Form to the Companywithin thirty (30) days after the filing of an effective registration statement pursuant to Form S-8 and (ii) the Committee may set a latertime for filing the Enrollment/Change Form authorizing payroll deductions for all eligible employees with respect to a given OfferingPeriod. With respect to Offering Periods after the initial Offering Period, a Participant may elect to participate in the ESPP by submittingan Enrollment/Change Form prior to the commencement of the Offering Period (or such earlier date as the Committee may determine)to which such agreement relates.(c) Once an employee becomes a Participant in an Offering Period, then such Participant will automatically participate in theOffering Period commencing immediately following the last day of such prior Offering Period unless the Participant withdraws or isdeemed to withdraw from the ESPP or terminates further participation in the Offering Period as set forth in section 11 of the ESPP. SuchParticipant is not required to file any additional Enrollment / Change Form in order to continue participation in the ESPP.Participation dans l’ESPP (section 6 du ESPP).(a) Tout salarié qui est un salarié éligible conformément à la section 4 de l’ESPP immédiatement avant la Période initialed’Offre participera automatiquement à la Période intiale d’Offre de l’ESPP. Concernant les Périodes d’Offres suivantes, tout salariééligible conformément à la Section 4 de l’ESPP sera éligible pour participer à l’ESPP, à la condition de respecter les conditionsénoncées Section (b) des présentes et tous les autres termes et conditions de l’ESPP.(b) Nonobstant ce qui précède, (i) un salarié éligible peut choisir de diminuer le nombre d’Actions Ordinaires dont il auraitpu être autorisé à faire l’acquisition au titre de la Période initiale d’Offre de l’ESPP, et/ou d’acquérir des Actions Ordinaires au titrede la Période initiale d’Offre par prélèvement sur son salaire par la remise d’un Formulaire de Participation/Modification à la Sociétédans les trente (30) jours suivant le dépôt d’une déclaration d’enregistrement conformément au Formulaire S-8, et, (ii) le Comité peutdécider, concernant une Période d’Offre donnée, que le dépôt du Formulaire de Participation/Modification, autorisant le prélèvementsur salaire de tout salarié éligible, peut être repoussé. Concernant les Périodes d’Offres qui suivent la Période initiale d’Offre, unParticipant peut choisir de participer à l’ESPP par le dépôt d’un Formulaire de Participation/Modification avant le début de laPériode d’Offre concernée (ou toute date antérieure décidée par le Comité).(c) Dès lors qu’un salarié devient un Participant pour une Période d’Offre, alors ledit Participant participeraautomatiquement à la Période d’Offre commençant immédiament après le dernier jour de la Période d’Offre antérieure à moins que leParticipant se retire, ou soit considéré comme se retirant de l’ESPP, ou cesse sa participation à la Période d’Offre tel que cela estprévu à la Section 11 de l’ESPP. Ledit Participant n’a pas à déposer de Formulaire pour continuer à participer à l’ESPP.Payroll Deduction Authorization.This provision replaces Section 4 of the Enrollment/Change Form:I hereby authorize the Company to withhold from each of my paychecks such amount as is necessary to equal at the end of theapplicable Offering Period __% of my Compensation (as defined in the ESPP) paid during such Offering Period as long as I continue toparticipate in the ESPP. That amount will be applied to the purchase of shares of the Company’s Common Stock pursuant to the ESPP.If I am paid in a currency other than U.S. dollars, my contributions will be converted into U.S. dollars prior to the purchase of theCommon Stock. The percentage must be a whole number (from 1%, up to a maximum of 5%).Please -increase -decrease my contribution percentage.Note:You may change your contribution percentage only once within a Purchase Period to be effective during such Purchase Periodand such change can only be to decrease your contribution percentage. An increase in your contribution percentage can onlytake effect with the next Offering Period. Each change will become effective as soon as reasonably practicable after the form isreceived by the Company.Autorisation du Prélèvement sur Salaire.Cette disposition remplace Section 4 du Formulaire de Participation/Modification: Par les présentes, j’autorise la Société à prélever sur chacun de mes salaires le montant nécessaire afin d’égaler, à la fin deladite Période d’Offre, __% de ma Rémunération (telle que définie dans l’ESPP) payée pendant ladite Période d’Offre et ce, aussilongtemps que je continuerais à participer à l’ESPP. Ce montant servira à l’acquisition d’Actions Ordinaires de la Sociétéconformément à l’ESPP. Si je suis payé dans une devise autre que le dollar U.S., mes contributions devront être converties en dollarsU.S. avant l’acquisition des Actions Ordinaires. Le pourcentage doit être un chiffre entier (de 1% à un maximum de 5%). Veuillez -augmenter- diminuer mon pourcentage de contribution. Remarque : Vous pouvez modifier le pourcentage de votre contribution seulement une fois lors d’une Période d’Acquisition pour quecette modification soit effective lors de cette même Période d’Acquisition, et cette modification ne peut que diminuer votre pourcentagede contribution. Une augmentation de votre pourcentage de contribution ne peut prendre effet que lors de la Période d’Offre suivante.Toute modification deviendra effective aussitôt que cela sera raisonnablement pratiquement possible après réception du formulaire parla Société.Limitations on Shares of Common Stock to be Purchased.Notwithstanding anything in Section 10 of the ESPP to the contrary, I understand that I am subject to the following additionalrequirements: (i) I may not purchase more than two hundred (200) whole shares of Common Stock in any individual Purchase Period;and (ii) I will not be granted a right to purchase Common Stock under the ESPP at a rate which exceeds one thousand two hundred andfifty dollars ($1,250) of the fair market value of such shares of Common Stock (determined at the time such right is granted) for eachcalendar year in which such right is outstanding at any time.Language Consent.By signing and returning or by otherwise accepting the Enrollment/Change Form, I confirm having read and understood the documentsrelating to the ESPP (the ESPP, the Enrollment/Change Form and this Appendix) which were provided to me in the English language,except for the payroll authorization set forth in French above. I accept the terms of those documents accordingly.Consentement relatif à la Langue utilisée. En signant et en renvoyant le présent Formulaire de Participation/Modification ou en l’approuvant d’une quelconquemanière, je confirme avoir lu et compris les documents relatifs à cette attribution de droits d’achat d’actions qui m’ont été remis enlangue anglaise hormis l’autorisation du prélèvement sur salaire tel que stipulé en français ci-dessus (l’ESPP, le Formulaire deParticipation/Modification ainsi que la présente Annexe). J’accepte les conditions afférentes à ces documents en connaissance decause.Exchange Control Notification.I acknowledge and understand that I may hold shares of Common Stock acquired under the ESPP outside France provided that I declareall foreign accounts, whether open, current, or closed in my income tax return.GERMANYExchange Control Notification.Cross-border payments in excess of €12,500 in connection with the sale of securities must be reported monthly to the ServicezentrumAußenwirtschaftsstatistik, which is the competent federal office of the Deutsche Bundesbank (the German Central Bank) for suchnotifications in Germany. In case of payments in connection with securities (including proceeds realized upon the sale of CommonStock), the report must be made electronically by the 5th day of the month following the month in which the payment was received.The form of the report (Allgemeine Meldeportal Statistik) can be accessed via the Bundesbank's website (www.bundesbank.de) and isavailable in both German and English. I am responsible for obtaining the appropriate form from the bank and complying with theapplicable reporting obligations.HONG KONGSecurities Law Information.WARNING: The contents of the ESPP, the Agreement and this Appendix have not been reviewed by any regulatory authority in HongKong. I am advised to exercise caution in relation to the offer. If there is any doubt about any of the contents of the ESPP, theAgreement, including this Appendix, or any other communication materials, I should obtain independent professional advice. TheESPP, the Agreement, including this Appendix, and other incidental communication materials have not been prepared in accordancewith and are not intended to constitute a “prospectus” for a public offering of securities under the applicable securities legislation inHong Kong. I understand that the option to purchase shares and any shares of Common Stock to be issued under the ESPP areintended only for the personal use of each Participant and may not be distributed to any other person.INDIAExchange Control Notification.Due to exchange control restrictions in India, I understand that I am required to repatriate any cash dividends paid on shares ofCommon Stock acquired under the ESPP within 180 days of receipt and any proceeds from the sale of shares of Common Stockacquired under the ESPP to India within 90 days of receipt. I understand I must obtain a foreign inward remittance certificate (“FIRC”)from the bank where I deposit the funds and must maintain the FIRC as evidence of the repatriation of funds in the event the ReserveBank of India or the Employer requests proof of repatriation. I understand that it is my responsibility to comply with exchange controllaws in India.Foreign Asset/Account Reporting Information.I understand that I am required to declare (a) any foreign assets (including shares of Common Stock held outside of India) held by meor (b) any foreign bank accounts for which I have signing authority in my annual tax return. I am responsible for complying with thisreporting obligation and acknowledge that I am advised to confer with my personal tax advisor in this regard.ISRAELTax Ruling.The Company has an Agreed Advanced Tax Ruling (the “Tax Ruling”) from the Israel Tax Authority (“ITA”) with respect to the ESPPoffered to Israeli resident employees of ServiceNow A.B. Israel 2012 Ltd. (“ServiceNow Israel”). A copy of the Ruling (in Hebrew withan English translation) is attached to this Appendix for Israel as Exhibit A.If I am an Israeli resident employee of ServiceNow Israel and have not already executed a declaration to agree to the terms of the TaxRuling, I must print and execute the declaration attached to this Appendix for Israel as Exhibit B, and submit the declaration to:Michelle Giampaoli, Stock Plan Administrator, ServiceNow, michelle.giampaoli@servicenow.com by the date that is 45 days from thebeginning of the applicable offering period. I may print and execute either the Hebrew or the English version of the declaration.If I do not submit the attached declaration to: Michelle Giampaoli, Stock Plan Administrator, ServiceNow,michelle.giampaoli@servicenow.com by the date that is 45 days from the beginning of the applicable offering period, my participationin the ESPP will be automatically withdrawn, subject to the Committee’s discretion for unforeseen circumstances, and any accumulatedpayroll deductions will be returned to me as soon as practicable.I understand that I must also acknowledge acceptance of the Enrollment/Change Form following the procedures and within the timeframe indicated on the Fidelity website. The execution and submission of the declaration regarding the Tax Ruling described herein is aseparate process that is unique to Israel.EXHIBIT ADepartment of Employee OptionsFebruary 4, 2013Epstein Rosenblum Maoz (ERM) Law OfficesAttn: Yair BenjaminiRe: Agreed Tax Ruling– Calculation of Tax re the Benefit to Employees under the ServiceNow, Inc.2012 Employee Stock Purchase Plan – ServiceNow A.B. Israel 2012 Ltd.(With reference to your request of June 16, 2012)1.The facts as presented by you:1.1Service Now A.B. Israel 2012 Ltd., company no. 514760099, withholding file 943293324 (hereinafter: the“Company”) is an Israeli resident private company that was founded in 2012 and employs one (1) employee in Israel.1.2The Company is a subsidiary of ServiceNow, Inc. (hereinafter: the “Parent”), a US public corporation whose shares aretraded on the New York Stock Exchange (NYSE). The Parent provides cloud-based software and services that help ITorganizations automate and integrate various enterprise technologies.1.3As part of its employee incentive policy, the Parent approved the 2012 Employee Stock Purchase Plan (hereinafter: the“ESPP”). Among others, employees of the Company who are not “controlling shareholders” as defined in section102(a) of the Income Tax Ordinance (hereinafter: the “Ordinance”) are eligible to participate in the ESPP.1.4The main provisions of the ESPP are as follows:1.4.1The ESPP provides for consecutive or overlapping offering periods (hereinafter: the “Offering Periods”),during which eligible employees can participate in the ESPP and be granted the right to purchase sharesin the Parent (hereinafter: the “Shares”). The first day of each Offering Period is referred to as theoffering date (hereinafter: the “Offering Date”). The first business day of the initial Offering Period wasJune 28, 2012, which was the date the Parent’s stock was initially offered to the public. Each OfferingPeriod is comprised of one six-month purchase period at the end of which the employee is eligible topurchase Shares (hereinafter: the “Purchase Period”). The first Offering Period will take place from June28, 2012 until approximately January 31, 2013, and the first Purchase Period will take place from June28, 2012 until January 31, 2013.1.4.2Subsequent Offering Periods will consist of a single six-month Purchase Period, beginning on eachFebruary 1 and August 1 and ending on the following July 31 and January 31, respectively. Thecommittee that administers the ESPP may change the length of the Offering Periods or the PurchasePeriods, provided that no Offering Period has a duration exceeding 27 months. The relevant date onwhich Shares will be purchased will be the last business day of the relevant Offering Period (each ofthese dates will be referred to hereinafter as: the “Purchase Date”).1.4.3Employees of the Company are eligible to purchase Shares at a 15% discount of the lower of:a.the closing price of the Shares on the Offering Date; orb.the closing price of the Shares on the Purchase Date (hereinafter: the “Exercise Price”).1.4.4For the first Offering Period, the employees that participated in the ESPP automatically received the rightto purchase Shares with monthly sums deducted from their salary, where the default was that 15% of theemployee’s net salary during the Purchase Period was saved toward the purchase (hereinafter: the“Savings Amount”). The Savings Amount will be used solely for the purchase of Shares and will notexceed 15% of the employee’s monthly base salary. The employee may elect to decrease the percentageof cash compensation that he authorizes for use during the first Offering Period by delivering a form tothe Parent prior to the first Purchase Date. Neither the Company nor the Parent will pay interest on theSavings Amount.1.4.5The employee may withdraw from the ESPP at any time in a manner determined by the Parent. Shouldthe employee withdraw from the ESPP prior to the end of the Offering Period or during any other timedesignated by the committee, all accrued salary deductions will be returned to him, without interest, atthe earliest possible date. The employee may not withdraw less than all of his accrued salary deductions.Even if the employee withdraws from the ESPP, the employee may resume participation in the ESPP inany future Offering Period by submitting a new enrollment form to the Parent prior to the beginning ofthe subsequent Offering Period or at an earlier date, as provided by the committee.1.4.6The ESPP contains quantitative limitations regarding the number of Shares that each employee is entitledto purchase. In any event, an employee may not purchase more than 1,500 Shares during each OfferingPeriod.1.4.7Attached as Appendix A hereto is the ESPP and its conditions per your submissions.2.The Request:1The employee’s enrollment in the ESPP will not constitute a tax event and will not be subject to tax on that date.2.1On the date the options are exercised and the employee purchases the Shares, the employee will be subject to tax for thebenefit resulting from the difference between the market value of the Shares at the close of trading on the Purchase Dateand the Exercise Price the employee paid from the Savings Amount. The tax rate will be the employee’s marginal taxrate according to the tax liability for employee grants under the non-trustee track. The tax will be withheld at the sourceby the Company.2.2On the date of sale of the Shares by the employee, the Parent and/or the Company will not withhold tax at source, andthe employee will be taxed according to Section E of the Ordinance.3.The tax arrangement and its conditions:Relying on the facts provided by you and detailed in section 1 above, the Income Tax Authority approves the tax arrangementrelating to the ESPP on compliance with the following conditions:3.1This tax arrangement applies to the ESPP whose Offering Periods will commence from June 28, 2012, only for employees ofthe Company, and so long as the provisions of the law are not changed, and only if the Company and the employees will actin accordance with the provisions of this tax arrangement.3.2Each term in this tax arrangement shall have the meaning ascribed to it in Part E-1 of the Ordinance, unless otherwiseexpressly provided.3.3The provisions of section 102(c)(2) of the Ordinance and the Income Tax Rules (Tax Benefits for Employee ShareAllotments), 2003 (hereinafter: the “Rules”) will apply to the grant of the ESPP to the employees of the Company.3.4The Company will not take any tax deductions related to the ESPP, regardless of whether the employees of the Companyparticipate in the tax agreement or not.3.5Notwithstanding section 3.2 above, the end of each Offering Period will be deemed an “exercise” for the purpose of section102(c)(2) of the Ordinance (hereinafter: the “Exercise Date”), and the following provisions will apply:3.5.1All Shares that an employee received on the Exercise Date will be deemed sold according to the closing price ofthe Shares on the Exercise Date (hereinafter: the “Share Price”).3.5.2The employee will be liable for employment income according to section 2(2) of the Ordinance for the differencebetween the Share Price and the Exercise Price that the employee paid on the Exercise Date, multiplied by the totalShares purchased by the broker in his name (hereinafter: the “Value of the Benefit”).3.5.3On the Exercise Date, the Company will withhold tax for the Value of the Benefit and will transfer therelevant withholding to the Assessing Officer, as required by section 9(e) of the Rules.3.5.4Employees will be deemed residents of Israel until the date on which the Shares are actually sold, in respect of theincome from the ESPP that is the subject of this tax agreement. The aforesaid will not apply to Offering Periodsafter an employee is no longer a resident of Israel if the employee has secured approval from the ITA on thetermination of his Israeli residency or if the Company secures a tax agreement with respect to severing Israeliresidency of its employees.3.5.5On the actual date of sale the Shares, Part E of the Ordinance will apply to the employee, and the price of theShares and the end of the Offering Period (as stated in section 3.4.1 above) will be deemed the original price of theShares on the Purchase Date.3.5.6For the avoidance of doubt, it is clarified that the reporting and tax payment obligations for the income describedin section 3.5.5 above, on the actual date of sale, are the sole obligations of the employees.3.6This tax agreement is condition on the full satisfaction of the conditions of the law and this agreement. This agreement isgiven on reliance on the representations that you provided above. If it is later discovered that the details you provided in thecontext of the request are not accurate, or substantively incomplete, and/or one of the conditions is not complied with, thefollowing consequences will result: the employees that purchase Shares on the Purchase Date will be liable for income tax asemployment income under section 2(2) of the Ordinance on the actual date of sale of the Shares, at the highest price of theShares from the beginning of the Offering Period until the sale of the Shares to an unrelated third party, as defined by section88 of the Ordinance, including interest and linkage differentials from the grant date.3.7This tax agreement does not amount to an assessment or approval of the facts as presented by you. The facts as presented byyou shall be examined by the Assessing Officer via his examination of the Company and/or the employees participating in theESPP, as applicable.3.8This tax agreement is valid from the Offering Periods that will begin through December 31, 2017. Following that period, youmay request an extension from the ITA (if any).3.9Within 60 days of the date hereof, and within 60 days from a new employee’s enrolment in the ESPP, as applicable, theCompany and the employees participating in the ESPP will submit a declaration in the form provided in Exhibit B to this taxagreement. Section 3.6 above will apply to an employee who does not sign the declaration. The Company and the employees’declarations will be valid with respect to the ESPP for all Offering Periods that are the subject of this tax agreement, andaccordingly for the period stated in section 3.1 above. The Company will submit a list of the employees that did notparticipate in this tax agreement to the Assessing Officer within 60 days of the receipt of this tax agreement or within 60 daysof the beginning of each Offering Period, as applicable.Yours truly, Eran Dvir, CPA (jurist)Superior (Professional Division)Copies: Mr. Aaron Elijahu, CPA – Senior VP for Professional Issues.Mr. Gilad Takoa, CPA – Jerusalem 3 Assessing OfficerMr. Raz Itzkovitch, CPA (Jurist) – Department Manager – Employee OptionsMr. Rafi Tawina, Adv. – Senior Department Manager (Employee Options), Legal DepartmentEXHIBIT AJAPANExchange Control Information.If I pay more than ¥30,000,000 for the purchase of shares of Common Stock in any one transaction, I must file an ex post factoPayment Report with the Ministry of Finance (through the Bank of Japan or the bank carrying out the transaction). The precisereporting requirements vary depending on whether the relevant payment is made through a bank in Japan. If I acquire shares ofCommon Stock whose value exceeds ¥100,000,000 in a single transaction, I must also file an ex post facto Report ConcerningAcquisition of Shares with the Ministry of Finance through the Bank of Japan within 20 days of acquiring the shares of Common Stock.The forms to make these reports can be acquired at the Bank of Japan.A Payment Report is required independently of a Report Concerning Acquisition of Securities. Consequently, if the total amount that Ipay on a one-time basis to purchase shares exceeds ¥100,000,000, I must file both a Payment Report and a Report ConcerningAcquisition of Securities.Foreign Asset/Account Reporting Information.I am required to report details of any assets held outside Japan as of December 31 (including shares of Common Stock acquired underthe ESPP), to the extent such assets have a total net fair market value exceeding ¥50,000,000. Such report will be due by March 15 eachyear. I am advised to consult with my personal tax advisor to determine if the reporting obligation applies to my personal situation.MEXICONo Entitlement or Claims for CompensationThe following provisions supplement section 7 of the Enrollment/Change Form:Modification.By participating in the ESPP, I understand and agree that any modification of the Plan or the Agreement or its termination shall notconstitute a change or impairment of the terms and conditions of my employment.Policy Statement.I acknowledge that the option to purchase shares of Common Stock is making under the ESPP is unilateral and discretionary and,therefore, the Company reserves the absolute right to amend it and discontinue it at any time without any liability.I acknowledge that the Company, with registered offices at 2225 Lawson Lane, Santa Clara, CA 95054, U.S.A., is solely responsible forthe administration of the ESPP and participation in the ESPP and the acquisition of shares does not, in any way, establish anemployment relationship between myself and the Company since I am participating in the ESPP on a wholly commercial basis, nor doesit establish any rights between myself and the Employer.Plan Document Acknowledgment.By participating in the Plan, I acknowledge that I have received copies of the ESPP, have reviewed the ESPP and the Agreement in theirentirety and fully understand and accept all provisions of the ESPP and the Agreement.In addition, by accepting the Agreement, I further acknowledge that I have read and specifically and expressly approved the terms andconditions in section 7 of the Agreement, in which the following is clearly described and established: (i) participation in the ESPP doesnot constitute an acquired right; (ii) the ESPP and participation in the ESPP is offered by the Company on a wholly discretionary basis;(iii) participation in the ESPP is voluntary; and (iv) the Company and any Subsidiary are not responsible for any decrease in the value ofthe shares.Finally, I hereby declare that I do not reserve any action or right to bring any claim against the Company for any compensation ordamages as a result of my participation in the ESPP and therefore grant a full and broad release to the Employer, the Company and anySubsidiary with respect to any claim that may arise under the ESPP.Spanish TranslationSin derecho a compensación o reclamaciones por compensaciónLas siguientes disposiciones complementan la sección 7 del Contrato:Modificación.Al participar en el Plan, entiendo y acuerdo que cualquier modificación al Plan o al Contrato o su terminación no constituirá uncambio o perjuicio a los términos y condiciones de empleo.Declaración de Política.El Reconozco que el otorgamiento de la opción que la Compañía está haciendo de conformidad con el ESPP es unilateral ydiscrecional y, por lo tanto, la Compañía se reserva el derecho absoluto de modificar y discontinuar el mismo en cualquier momento,sin responsabilidad alguna.Reconozco que la Compañía, con oficinas registradas ubicadas en 2225 Lawson Lane, Santa Clara, CA 95054, EE.UU. es únicamenteresponsable de la administración del ESPP y la participación en el ESPP y la adquisición de acciones no establece, de forma alguna,una relación de trabajo entre la Compañía y yo, ya que estoy participando en el ESPP de una forma totalmente comercial, y tampocoestablece ningún derecho entre el Patrón y yo.Reconocimiento del Documento del ESPP. Al participar en el ESPP, reconozco que he recibido copias del ESPP, he revisado el ESPP yel Contrato en su totalidad y entiendo y acepto completamente todas las disposiciones contenidas en el ESPP y en el Contrato.Adicionalmente, al aceptar el Contrato, reconozco que he leído y específica y expresamente he aprobado los términos y condiciones dela sección 7 del Contrato, en la que lo siguiente está claramente descrito y establecido: (i) la participación en el ESPP no constituye underecho adquirido; (ii) el ESPP y la participación en el ESPP es ofrecida por la Compañía de forma enteramente discrecional; (iii) laparticipación en el ESPP es voluntaria; y (iv) la Compañía y cualquier empresa Subsidiaria no son responsables por cualquierdisminución en el valor de las acciones. Finalmente, declaro que no me reservo ninguna acción o derecho para interponer cualquier demanda o reclamación en contra de laCompañía por compensación, daño o perjuicio alguno como resultado de mi participación en el ESPP y, por lo tanto, otorgo el másamplio finiquito al Patrón, la Compañía y cualquier empresa Subsidiaria con respecto a cualquier demanda o reclamación quepudiera surgir en virtud del ESPP.NETHERLANDSLabor Law Acknowledgment.By enrolling in the ESPP, I acknowledge that the purchase rights and shares of Common Stock purchased under the ESPP are intendedas an incentive for me to remain employed with the Company or Employer and are not intended as remuneration for labor performed.Securities Law NotificationSINGAPORESecurities Law Notification.To the extent you sell, offer to sell or otherwise dispose of shares of Common Stock purchased under the ESPP within six months of thedate of offering, you are permitted to dispose of such shares of Common Stock through the designated broker under the ESPP, if any,provided the resale of shares of Common Stock acquired under the Plan takes place outside of Singapore through the facilities of astock exchange on which the shares of Common Stock are listed. The shares are currently listed on New York Stock Exchange.I understand that the option is being granted to me pursuant to the “Qualifying Person” exemption under section 273(1)(f) of theSingapore Securities and Futures Act (Chapter 289, 2006 Ed.) (“SFA”). I further understand that the ESPP has not been lodged orregistered as a prospectus with the Monetary Authority of Singapore. I understand and acknowledge that my option to purchase sharesof Common Stock is subject to section 257 of the SFA and I am not permitted to sell, or offer to sell any shares of Common Stock inSingapore unless such sale or offer is made (i) within six months from the date of offering or (ii) pursuant to exemptions under Part XIIIDivision (1) Subdivision (4) (other than section 280) of the SFA.Chief Executive Officer and Director Notification Obligation.I acknowledge that if I am the Chief Executive Officer (“CEO”) a director, associate director or shadow director of a SingaporeSubsidiary, I am subject to certain notification requirements under the Singapore Companies Act. Among these requirements is anobligation to notify the Singapore Subsidiary in writing when I receive an interest (e.g., an option or shares of Common Stock) in theCompany or any Subsidiary within two business days of (i) its acquisition or disposal, (ii) any change in previously disclosed interest(e.g., when the shares of Common Stock are sold), or (iii) becoming a CEO, director, associate director or shadow director.SOUTH AFRICATax Consequences.The following provision supplements section 6 of the Enrollment/Change Form:By participating in the ESPP, I agree that, immediately upon purchase of shares of Common Stock, I will notify the Employer of theamount of any gain realized. If I fail to advise the Employer of the gain realized at purchase, I may be liable for a fine. I will be solelyresponsible for paying any difference between the actual tax liability and the amount withheld by the Employer.Tax Clearance Certificate Requirement.If I use cash to exercise the option to purchase shares, rather than a cashless exercise method, I must first obtain and provide to theEmployer, or any third party designated by the Employer or the Company, a Tax Clearance Certificate (with respect to ForeignInvestments) bearing the official stamp and signature of the Exchange Control Department of the South African Revenue Service(“SARS”). I must renew this Tax Clearance Certificate every 12 months, or such other period as may be required by the SARS. I mustalso complete a transfer of funds application form to transfer the funds. If I exercise the option and purchase shares of Common Stockby a cashless exercise whereby no funds are remitted offshore for the purchase, no Tax Clearance Certificate is required.Exchange Control Information.Under current South African exchange control regulations, I understand that if I am a South African resident, I may invest a maximumof ZAR11,000,000 per annum in offshore investments, including shares of Common Stock. This limit does not apply to non-residentemployees. It is my responsibility to ensure that I do not exceed this limit. This limit is a cumulative allowance; therefore, my ability toremit funds for the purchase of shares of Common Stock will be reduced if my foreign investment limit is utilized to make a transfer offunds offshore that is unrelated to the ESPP. I acknowledge that if the ZAR 11,000,000 limit will be exceeded as a result of a purchaseunder the ESPP, I may still participate in the ESPP; however, I will be required to immediately sell the shares of Common Stockpurchased on my behalf under the ESPP and repatriate the proceeds to South Africa in order to ensure that I do not hold assets outsideSouth Africa with a value in excess of the permitted offshore investment allowance amount.As the investment limit and other exchange control requirements are subject to change without notice, I understand that I should consultmy personal legal advisor prior to the purchase or sale of shares of Common Stock under the ESPP and to ensure compliance withcurrent regulations. I acknowledge that I am solely responsible for ensuring compliance with all exchange control laws in South Africa.Securities Law Information. In compliance with South African Securities Law, I acknowledge that I have been notified that thedocuments listed below are available for my review at the ServiceNow intranet site at the web addresses listed below:1.ServiceNow Inc.'s most recent Annual Report (Form 10-K), Quarterly Report (Form 10-Q) and financial statements are availableon the Company's website (www.servicenow.com) (Company ˆ About ServiceNow ˆ Investor Relations ˆ SEC Filings).2.ServiceNow Inc.'s ESPP, plan Prospectus and the Agreement are available on the Company's designated broker website(www.fidelity.com). Participant must log into his or her brokerage account to access these materials.A copy of the above materials will be provided to Participant free of charge, upon request to ServiceNow, Inc., Stock Administration,2225 Lawson Lane, Santa Clara, CA 95054, U.S.A. SWITZERLANDSecurities Law Notification.I acknowledge and agree that the ESPP is not intended to be publicly offered in Switzerland. Neither this document nor any othermaterials relating to the offer constitutes a prospectus as such term is understood pursuant to article 652a of the Swiss Code ofObligations, and neither this document nor any materials relating to the offer may be publicly distributed nor otherwise made publiclyavailable in Switzerland.UNITED KINGDOMResponsibility for Taxes.The following provisions supplement section 6 of the Enrollment/Change Form:I agree that, if I do not pay or the Employer or the Company does not withhold from me the full amount of income tax that I owe atexercise of the option/purchase of shares, or the release or assignment of the option for consideration, or the receipt of any other benefitin connection with the option within ninety days of the end of the tax year in which event giving rise to the liability occurred or suchother period specified in Section 222(1)(c) of the U.K. Income Tax (Earnings and Pensions) Act 2003 (the “Due Date”), the amount thatshould have been withheld shall constitute a loan owed by me to the Employer, effective as of the Due Date. I agree that the loan willbear interest at Her Majesty’s Revenue and Customs (“HMRC”) official rate and will be immediately due and repayable by me, and theCompany and/or the Employer may recover it at any time thereafter by withholding the funds from salary, bonus or any other fundsdue to me by the Employer, by withholding from the cash proceeds from the sale of shares of Common Stock or by demanding cash ora cheque from me. I also authorize the Company to delay the issuance of any shares of Common Stock unless and until the loan isrepaid in full.Notwithstanding the foregoing, if I am an executive officer or director (as within the meaning of Section 13(k) of the Exchange Act),the terms of the immediately foregoing provision will not apply. In the event that I am an executive officer or director and income tax isnot collected from or paid by me within 90 days of the Due Date, the amount of any uncollected income tax may constitute a benefit tome on which additional income tax and National Insurance contributions (“NICs”) (including Employer NICs, as defined below) maybe payable. I acknowledge that the Company or the Employer may recover any such additional income tax and NICs (includingEmployer NICs, as defined below) at any time thereafter by any of the means referred to in section 6 of the Enrollment/Change Form,although I acknowledge that I ultimately will be responsible for reporting any income tax or NICs (including Employer NICs, asdefined below) due on this additional benefit directly to the HMRC under the self-assessment regime.National Insurance Contributions Acknowledgment.As a condition of participation in the ESPP and the purchase of shares of Common Stock, I agree to accept any liability for secondaryClass 1 NICs which may be payable by the Company and/or the Employer in connection with the option/purchase of shares and anyevent giving rise to Tax-Related Items (the “Employer NICs”). Without limitation to the foregoing, I agree to execute a joint electionwith the Company, the form of such joint election being formally approved by HMRC (the “Joint Election”), and any other requiredconsent or election. I further agree to execute such other joint elections as may be required between me and any successor to theCompany and/or the Employer. I further agree that the Company and/or the Employer may collect the Employer NICs from me by anyof the means set forth in section 6 of the Enrollment/Change Form.If I do not enter into a Joint Election prior to purchasing shares or if approval of the Joint Election has been withdrawn by HMRC, theoption shall become null and void without any liability to the Company and/or the Employer and I may not purchase shares under theESPP.SPECIAL NOTICE FOR EMPLOYEES IN DENMARKEMPLOYER STATEMENTPursuant to Section 3(1) of the Act on Stock Options in employment relations (the "Stock Option Act"), you are entitled to receive the following informationregarding participation in the ServiceNow, Inc. 2012 Employee Stock Purchase Plan (the “ESPP”) in a separate written statement.This statement contains only the information mentioned in the Stock Option Act, while the other terms and conditions of your grant of stock options topurchase shares of the common stock of ServiceNow, Inc. (the “Company”) are described in detail in the ESPP, the Enrollment/Change Form and theapplicable country-specific supplement, which have been made available to you.1.Time of grant of right to purchase stockProvided always that at the relevant time you are eligible to participate in the ESPP, at the beginning of successive six (6)-month offering periods,the Company will grant you a right to purchase shares of stock in the Company that may be exercised on the last day of each offering period.2.Terms or conditions for grant of a right to future purchase of stockThe Plan is offered at the discretion of the Company's Board of Directors.3.Purchase DateIf you are employed by the Company or one of its participating subsidiaries or affiliates on the last day of an offering period, shares of commonstock will automatically be purchased for you with your accumulated payroll deductions. If you are not employed by the Company or one of itsparticipating subsidiaries or affiliates on the last day of an offering period, Sections 4 and 5 of the Stock Option Act will determine your rights (if theStock Option Act applies and the terms of the Stock Option Act are more favorable than the terms of the Plan and the enrollment materials). If sharesare purchased for you at the end of an offering period, the number of shares purchased will depend on the purchase price, the amount of youraccumulated payroll deductions and the share purchase limits in the Plan. You will be the immediate owner of the common stock purchased withyour accumulated payroll deductions and, subject to the limitations in the Plan, you may sell your shares of common stock purchased under the Planat any time, subject to any Company insider trading restrictions.294.Purchase PriceThe purchase price per share is the lower of 85% of the fair market value of the Company’s common stock on the first market day of the offeringperiod or on the date the stock purchase right is exercised, i.e., the last market day of the offering period.5.Your rights upon termination of employmentThe treatment of your stock option upon termination of employment will be determined under Sections 4 and 5 of the Stock Option Act unless theterms contained in the ESPP, the Agreement and the applicable country-specific supplement are more favorable to you than Sections 4 and 5 of theStock Option Act. If the terms contained in the ESPP, the Agreement and the applicable country-specific supplement are more favorable to you, thensuch terms will govern the treatment of your stock option upon termination of employment.6.Financial aspects of participating in the ESPPAside from the payroll deductions which will start after you enroll in the ESPP, the ESPP offering has no immediate financial consequences for you.The value of the purchase rights and the value of the shares purchased for you under the ESPP are not taken into account when calculating holidayallowances, pension contributions or other statutory consideration calculated on the basis of salary.Shares of stock are financial instruments and investing in stocks will always have financial risk. The possibility of profit at the time you sell yourshares will not only be dependent on the Company’s financial development, but inter alia also on the general development on the stock market. Inaddition, after you purchase shares, the shares could decrease in value even below the purchase price.SERVICENOW, INC.2225 Lawson LaneSanta Clara, CA 95054U.S.A.30SÆRLIG MEDDELELSE TIL MEDARBEJDERE I DANMARKARBEJDSGIVERERKLÆRINGI henhold til § 3, stk. 1, i lov om brug af køberet eller tegningsret m.v. i ansættelsesforhold ("Aktieoptionsloven") er du berettiget til i en særskilt skriftligerklæring at modtage følgende oplysninger om deltagelse i ServiceNow, Inc.'s medarbejderaktieordning - 2012 Employee Stock Purchase Plan ("ESPP-planen").Denne erklæring indeholder kun de oplysninger, der er nævnt i Aktieoptionsloven, mens de øvrige vilkår og betingelser for din tildeling af aktieoptioner tilkøb af ordinære aktier i ServiceNow, Inc. ("Selskabet") er nærmere beskrevet i ESPP-planen, Tilmeldings-/Ændringsblanketten (Enrollment/Change Form) ogdet gældende landespecifikke tillæg, som du har modtaget.1.Tidspunkt for tildeling af retten til at købe aktierForudsat at du er berettiget til at deltage i ESPP-planen på det pågældende tidspunkt vil Selskabet ved påbegyndelsen af successive tilbudsperioderpå seks (6) måneder tildele dig retten til at købe aktier i Selskabet, som kan udøves på den sidste dag i hver tilbudsperiode.2.Kriterier og betingelser for tildeling af retten til senere at købe aktierESPP-planen tilbydes efter Selskabets bestyrelses eget skøn.3.KøbsdatoHvis du er ansat i Selskabet eller i et af de deltagende datterselskaber eller en af de deltagende tilknyttede virksomheder på den sidste dag i entilbudsperiode, vil der automatisk blive købt ordinære aktier til dig for det akkumulerede beløb, der er fratrukket dine nettolønudbetalinger. Hvis duikke er ansat i Selskabet eller i et af de deltagende datterselskaber eller en af de deltagende tilknyttede virksomheder på den sidste dag i entilbudsperiode, vil Aktieoptionslovens §§ 4 og 5 være gældende for dine rettigheder (hvis Aktieoptionsloven finder anvendelse og lovensbestemmelser er mere fordelagtige for dig end vilkårene i ESPP-planen og materialet vedrørende din deltagelse i planen). Hvis der købes aktier tildig ved udløbet af en tilbudsperiode, vil antallet af købte aktier afhænge af købskursen, størrelsen på det akkumulerede beløb, der er fratrukket dinenettolønudbetalinger, samt af de begrænsninger for aktiekøb, der er fastsat i ESPP-planen. Du vil blive indehaver af de ordinære aktier, der er købtfor det akkumulerede beløb, der er fratrukket dine nettolønudbetalinger, og du kan, med de begrænsninger, der følger af ESPP-planen, til enhver tidsælge de ordinære aktier, som du har købt i henhold til ESPP-planen, med forbehold for eventuelle begrænsninger i Selskabets regler ominsiderhandel.4.KøbskursKøbskursen pr. aktie er den værdi, der er lavest af 85 % af kursværdien af Selskabets ordinære aktier på enten den første handelsdag itilbudsperioden eller på den dato, hvor retten til at købe aktier udøves, dvs. den sidste handelsdag i tilbudsperioden.315.Din retsstilling i forbindelse med fratrædenDine aktieoptioner vil i tilfælde af din fratræden blive behandlet i overensstemmelse med Aktieoptionslovens §§ 4 og 5, medmindre bestemmelsernei ESPP-planen, Aftalen og det gældende landespecifikke tillæg er mere fordelagtige for dig end Aktieoptionslovens §§ 4 og 5. Hvis bestemmelsernei ESPP-planen, Aftalen og det gældende landespecifikke tillæg er mere fordelagtige for dig, vil disse bestemmelser være gældende for, hvordan dineaktieoptioner behandles i forbindelse med din fratræden.6.Økonomiske aspekter ved at deltage i ESPP-planenBortset fra de fradrag i dine nettolønudbetalinger, som påbegynder, når du er blevet tilmeldt ESPP-planen, har deltagelsen i ESPP-planen ingenumiddelbare økonomiske konsekvenser for dig. Værdien af købsretten og af de aktier, der købes til dig i henhold til ESPP-planen, indgår ikke iberegningen af feriepenge, pensionsbidrag eller øvrige lovpligtige, vederlagsafhængige ydelser.Aktier er finansielle instrumenter, og investering i aktier vil altid være forbundet med en økonomisk risiko. Muligheden for at opnå en gevinst, nårdu sælger dine aktier, afhænger ikke alene af Selskabets økonomiske udvikling, men også af den generelle udvikling på aktiemarkedet. Derudoverkan aktierne efter købet falde til en værdi, der måske endda ligger under købskursen.SERVICENOW, INC.2225 Lawson LaneSanta Clara, CA 95054U.S.A.32SERVICENOW, INC. 2012 EMPLOYEE STOCK PURCHASE PLANElection To Transfer the Employer’s National Insurance Liability to the EmployeeThis Election is between:A.The individual who has obtained authorised access to this Election (the “Employee”), who is employed by one of theemploying companies listed in the attached schedule (the “Employer”) and who is eligible to participate in the Employee StockPurchase Plan pursuant to the 2012 Employee Stock Purchase Plan (the “ESPP”), andB.ServiceNow, Inc., 2225 Lawson Lane, Santa Clara, CA 95054, U.S.A. (the “Company”), which may grant options under theESPP and is entering into this Election on behalf of the Employer.1.Introduction1.1This Election relates to the options granted to the Employee under the ESPP on or after June 19, 2012, up to the terminationdate of the ESPP.1.2In this Election the following words and phrases have the following meanings:(a)“Chargeable Event” means, in relation to the ESPP:(i)the acquisition of securities pursuant to the options (within section 477(3)(a) of ITEPA);(ii)the assignment (if applicable) or release of the options in return for consideration (within section 477(3)(b) ofITEPA);(iii)the receipt of a benefit in connection with the options, other than a benefit within (i) or (ii) above (within section477(3)(c) of ITEPA);(iv)post-acquisition charges relating to the shares acquired pursuant to the ESPP (within section 427 of ITEPA); and/or(v)post-acquisition charges relating to the shares acquired pursuant to the ESPP (within section 439 of ITEPA).(b) “ITEPA” means the Income Tax (Earnings and Pensions) Act 2003.(c) “SSCBA” means the Social Security Contributions and Benefits Act 1992.1.3This Election relates to the employer’s secondary Class 1 National Insurance Contributions (the “Employer’s Liability”) whichmay arise on the occurrence of a Chargeable Event in respect of the ESPP pursuant to section 4(4)(a) and/or paragraph 3B(1A)of Schedule 1 of the SSCBA.1.4This Election does not apply in relation to any liability, or any part of any liability, arising as a result of regulations being givenretrospective effect by virtue of section 4B(2) of either the SSCBA, or the Social Security Contributions and Benefits (NorthernIreland) Act 1992.1.5This Election does not apply to the extent that it relates to relevant employment income which is employment income of theearner by virtue of Chapter 3A of Part VII of ITEPA (employment income: securities with artificially depressed market value).332. The ElectionThe Employee and the Company jointly elect that the entire liability of the Employer to pay the Employer’s Liability onthe Chargeable Event is hereby transferred to the Employee. The Employee understands that, by signing or electronicallyaccepting this Election, he or she will become personally liable for the Employer’s Liability covered by this Election. ThisElection is made in accordance with paragraph 3B(1) of Schedule 1 of the SSCBA.3. Payment of the Employer’s Liability3.1The Employee hereby authorises the Company and/or the Employer to collect the Employer’s Liability from the Employee atany time after the Chargeable Event:(i)by deduction from salary or any other payment payable to the Employee at any time on or after the date of theChargeable Event; and/or(ii)directly from the Employee by payment in cash or cleared funds; and/or(iii)by arranging, on behalf of the Employee, for the sale of some of the securities which the Employee is entitled to receivepursuant to the options, the proceeds of which must be delivered to the Employer in sufficient time for payment to bemade to HMRC by the due date; and/or(iv)where the proceeds of the gain are to be made through a third party, the Employee will authorize that party to withholdan amount from the payment or to sell some of the securities which the Employee is entitled to receive pursuant to theoptions, such amount to be paid in sufficient time to enable the Company to make payment to HMRC by the due date;and/or(v)through any other method as set forth in the applicable Enrollment/Change Form entered into between the Employee andthe Company.3.2The Company hereby reserves for itself and the Employer the right to withhold the transfer of any securities to the Employee inrespect of the ESPP until full payment of the Employer’s Liability is received.3.3The Company agrees to remit the Employer’s Liability to HM Revenue & Customs on behalf of the Employee within 14 daysafter the end of the UK tax month during which the Chargeable Event occurs (or within 17 days if payments are madeelectronically).4. Duration of Election4.1The Employee and the Company agree to be bound by the terms of this Election regardless of whether the Employee istransferred abroad or is not employed by the Employer on the date on which the Employer’s Liability becomes due.4.2This Election will continue in effect until the earliest of the following:(i)the Employee and the Company agree in writing that it should cease to have effect;(ii)on the date the Company serves written notice on the Employee terminating its effect;(iii)on the date HMRC withdraws approval of this Election; or34(iv)after due payment of the Employer’s Liability in respect of the ESPP to which this Election relates or could relate, suchthat the Election ceases to have effect in accordance with its terms.Acceptance by the EmployeeThe Employee acknowledges that by clicking on the “ACCEPT” box where indicated on the grant acceptance screen, theEmployee agrees to be bound by the terms of this Election as stated above.Acceptance by the CompanyThe Company acknowledges that, by signing this Election or arranging for the scanned signature of an authorised representativeto appear on this Election, the Company agrees to be bound by the terms of this Election.Signature for and onbehalf of the Company Name [Insert name] Position [Insert position] Date 35SCHEDULE OF EMPLOYER COMPANIESThe following are employer companies to which this Election may apply:Service-now.com UK LimitedRegistered Office:Standard House, Weyside Park, Catteshall Lane, Godalming,Surrey, Gu7 1XECompany Registration Number:6299383Corporation Tax District:201 South LondonCorporation Tax Reference:6359720602PAYE Reference:581/LA0819436EXHIBIT BRe: Agreed Tax Ruling– ServiceNow A.B. Israel 2012 Ltd.Pursuant to section 3.9 of the Tax Ruling dated February 4, 2013, “Tax Ruling by Agreement – Calculation of Tax re the Benefit toEmployees under the ServiceNow, Inc. 2012 Employee Stock Purchase Plan (the “ESPP”) – ServiceNow A.B. Israel 2012 Ltd.” (the“Tax Ruling”), I, the undersigned employee, declare that I understand the Tax Ruling, will act in accordance with it, and will notrequest to change it and/or annul it, and/or replace it, and/or will not request additional tax benefits other than those provided in this TaxRuling.In addition, I understand that should I sell the shares of Common Stock (as defined under the ESPP) purchased under the ESPPmore than three (3) days after I purchase such shares, I will be required, by Israeli law, to report on all profits and/or losses fromsuch sales on my Annual Return, to report to the Tax Authorities according to section 91(d), and to make advanced tax paymentsas required by law.Additionally, I understand that I will be required to file an Annual Return to the Assessing Officer even if I do not currently file anAnnual Return.I also declare that I understand that a failure to file an Annual Return or a failure to pay tax, as required by Israeli law, on anyincome from sale of shares of Common Stock that I purchased under the ESPP is a criminal offense.Executed by:SignatureDateIDEmployee name 37EXHIBIT Bמ”בע 2012 ישראל א.ב. נאו סרוויס – בהסכם מיסוי החלטת:הנדון2012 מיום המיסוי להחלטת 3.9 לסעיף בהתאםx.11., “לעובדים מניות לרכישת בתוכנית לעובד שנוצרה ההנאה טובת בגין המס חישוב (ESPP) נאו סרוויס בחברתאו/ו לבטלה או/ו לשנותה יבקש ולא, לפיה ינהג וכי המיסוי החלטת את הבין כי בזאת מצהיר, מטה החתום העובד”(, המיסוי החלטת: “להלן) מ”בע 2012 ישראל א.ב.זו מיסוי בהחלטת לקבוע מעבר נוספת מס הפחתת ידרוש או/ו, באחרת להחליפה.ה תוכנית במסגרת לי שיוקצו המניות את למכור ואבחר שבמידה מבין הריני, בנוסף- ESPP מחוייב אהיה, רכישתם מיום ימים משלושה יותר שחלפו לאחרכדין מס מקדמת ובתשלום המס לרשויות( ד)91 סעיף לפי בדיווח וכן השנתי ח”בדו אלה ממכירות הפסד או/ו רווח כל על לדווח דין פי על.שנתיים חות”דו מגיש אינני כיום אם גם השומה לפקיד שנתי ח”דו להגיש עלי יהיה כי מבין הנני כן.ה תוכנית במסגרת שנרכשו מניות ממכירת הכנסותי על כדין מס תשלום אי או שנתי ח”דו הגשת אי כי ומבין מצהיר בנוסף אני- ESPP עבירות הןפליליות. החתום על:העובד שםת.ז מספרתאריךחתימה 38EXHIBIT 21.1SUBSIDIARIES Name of Subsidiary Jurisdiction of Incorporation or Organization ServiceNow Australia Pty Ltd AustraliaServiceNow Austria GmbH AustriaServiceNow Belgium BVBA BelgiumSN Europe C.V. BermudaServiceNow Brasil Gerenciamento De Servicos Ltda BrazilServiceNow Canada Inc. CanadaServiceNow Delaware LLC DelawareServiceNow Denmark ApS DenmarkServiceNow Finland OY FinlandServiceNow France SAS FranceService-now.com GmbH GermanyServiceNow Hong Kong Limited Hong KongServiceNow Software Development India Private Limited IndiaServiceNow Service Management Limited IrelandServiceNow Israel A.B. 2012 Ltd IsraelNeebula Systems Ltd IsraelServiceNow Italy S.r.l. ItalyServiceNow Japan KK JapanServiceNow Operations Mexico S DE RL DE CV MexicoServiceNow Nederland B.V. NetherlandsServiceNow Norway AS NorwayServiceNow Poland Sp. Z.O.O. PolandServiceNow Pte. Ltd. SingaporeServiceNow South Africa (Pty) Ltd. South AfricaServiceNow Spain Sociedad Limitada SpainServiceNow Sweden AB SwedenServiceNow Switzerland GmbH SwitzerlandServiceNow Turkey Limited Sirketi TurkeyService-now.com UK Ltd United KingdomEXHIBIT 23.1CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMWe hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 333-182445, 333-188462, 333-194210 and 333-202331) of ServiceNow, Inc. of our report dated February 25, 2016 relating to the financial statements and the effectiveness of internal control over financialreporting, which appears in this Form 10-K./s/ PricewaterhouseCoopers LLPSan Jose, CaliforniaFebruary 25, 2016EXHIBIT 31.1CERTIFICATION OF PERIODIC REPORT UNDER SECTION 302 OFTHE SARBANES-OXLEY ACT OF 2002I, Frank Slootman, certify that: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 thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial 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 inExchange 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, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, 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 oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal 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 theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; andd.Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recentfiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely tomaterially affect, the registrant's internal control over financial reporting; and5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant'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 reasonablylikely to adversely affect the registrant's ability to record, process, summarize and report financial information; andb.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controlover financial reporting.Date: February 25, 2016 /s/ Frank Slootman Frank SlootmanChief Executive Officer(Principal Executive Officer)EXHIBIT 31.2CERTIFICATION OF PERIODIC REPORT UNDER SECTION 302 OFTHE SARBANES-OXLEY ACT OF 2002I, Michael P. Scarpelli, certify that: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 thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial 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 inExchange 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, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, 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 oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal 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 theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; andd.Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recentfiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely tomaterially affect, the registrant's internal control over financial reporting; and5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant'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 reasonablylikely to adversely affect the registrant's ability to record, process, summarize and report financial information; andb.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controlover financial reporting.Date: February 25, 2016 /s/ Michael P. Scarpelli Michael P. ScarpelliChief Financial Officer(Principal Financial and Accounting Officer)EXHIBIT 32.1CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350AS ADOPTED PURSUANT TO SECTION 906OF THE SARBANES-OXLEY ACT OF 2002I, Frank Slootman, Chief Executive Officer of ServiceNow, Inc. (the “Company”), do hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuantto Section 906 of the Sarbanes-Oxley Act of 2002, that:•the Annual Report on Form 10-K of the Company for the period ended December 31, 2015 (the "Report") fully complies with the requirements ofSection 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 atthe dates and for the periods presented therein.Date: February 25, 2016 /s/ Frank Slootman Frank SlootmanChief Executive Officer(Principal Executive Officer)A signed original of this written statement required by Section 906 has been provided to ServiceNow, Inc. and will be retained by it and furnished to theSecurities and Exchange Commission or its staff upon request.EXHIBIT 32.2CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350AS ADOPTED PURSUANT TO SECTION 906OF THE SARBANES-OXLEY ACT OF 2002I, Michael P. Scarpelli, Chief Financial Officer of ServiceNow, Inc. (the “Company”), do hereby certify, pursuant to 18 U.S.C. Section 1350, as adoptedpursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:•the Annual Report on Form 10-K of the Company for the period ended December 31, 2015 (the "Report") fully complies with the requirements ofSection 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 atthe dates and for the periods presented therein.Date: February 25, 2016 /s/ Michael P. Scarpelli Michael P. ScarpelliChief Financial Officer(Principal Financial and Accounting Officer)A signed original of this written statement required by Section 906 has been provided to ServiceNow, Inc. and will be retained by it and furnished to theSecurities and Exchange Commission or its staff upon request.

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