Summary
ServiceNow, Inc. (NOW) reported a net loss of $40.7 million for the first quarter of 2017, a significant improvement from the $333.3 million net loss in the same period of 2016. This improvement was largely driven by the absence of a significant legal settlement charge that impacted the prior year's results. Total revenues grew by 36% year-over-year to $416.8 million, with subscription revenues, the primary driver of the business, increasing by 41% to $376.1 million. The company continues to invest heavily in sales and marketing and research and development, leading to an increase in operating expenses, but as a percentage of revenue, these expenses showed some improvement or remained stable year-over-year, excluding the one-time legal settlement. Key financial highlights include a substantial increase in operating cash flow to $187.4 million, up from $78.7 million in Q1 2016, and a significant rise in billings, which grew 40% to $529.2 million. The company added 125 customers with Annual Contract Value (ACV) greater than $1 million, bringing the total to 370. Despite the ongoing net loss on a GAAP basis, the company's strong revenue growth, improving cash flow generation, and expanding customer base for its enterprise cloud computing solutions indicate positive operational momentum.
Financial Highlights
51 data points| Revenue | $428.77M |
| Cost of Revenue | $116.08M |
| Gross Profit | $312.69M |
| R&D Expenses | $84.49M |
| Operating Expenses | $334.48M |
| Operating Income | -$21.79M |
| Interest Expense | $8.68M |
| Net Income | -$21.51M |
| EPS (Basic) | $-0.03 |
| EPS (Diluted) | $-0.03 |
| Shares Outstanding (Basic) | 843.71M |
| Shares Outstanding (Diluted) | 843.71M |
Key Highlights
- 1Total revenues increased by 36% year-over-year to $416.8 million, driven by strong subscription revenue growth of 41% to $376.1 million.
- 2Net loss significantly narrowed to $40.7 million from $333.3 million in the prior year's quarter, primarily due to the absence of a large legal settlement ($270 million) in Q1 2016.
- 3Operating cash flow more than doubled, reaching $187.4 million, compared to $78.7 million in the prior year's quarter.
- 4Billings, a key performance indicator for future revenue, grew by 40% to $529.2 million, signaling strong demand and contract signings.
- 5The company continues to expand its enterprise customer base, adding 125 customers with an Annual Contract Value (ACV) greater than $1 million, bringing the total to 370.
- 6Investment in growth continues with sales & marketing expenses up 34% and R&D expenses up 28% year-over-year, though both remained relatively stable as a percentage of revenue.
- 7The company announced a new CEO, John J. Donahoe, effective April 3, 2017, signaling a leadership transition.