Summary
ServiceNow, Inc. (NOW) reported its second-quarter 2017 financial results, showcasing robust revenue growth driven by its subscription services. The company demonstrated strong operational execution with significant increases in both total revenues and subscription revenues compared to the prior year's period. Key business metrics, such as the number of large enterprise customers (ACV > $1 million) and Global 2000 customers, also saw substantial year-over-year growth, indicating successful market penetration and expansion. Despite continued investment in sales and marketing and research and development to fuel future growth, the company managed its expenses effectively, leading to an improvement in operating loss compared to the prior year's period. The balance sheet reflects a strong liquidity position with substantial cash and cash equivalents. Financially, ServiceNow reported total revenues of $471.7 million for the three months ended June 30, 2017, a 38% increase year-over-year, with subscription revenues accounting for 87% of total revenue. The company's gross profit margin improved to 74% from 71% in the prior year's comparable period. While the company incurred a net loss of $56.5 million for the quarter, this represents an improvement from a net loss of $49.6 million in the prior year's quarter, largely influenced by significant legal settlements in the prior year. The company's cash flow from operations was positive, indicating healthy cash generation from its core business activities.
Financial Highlights
50 data points| Revenue | $448.26M |
| Cost of Revenue | $122.13M |
| Gross Profit | $326.13M |
| R&D Expenses | $90.00M |
| Operating Expenses | $363.92M |
| Operating Income | -$37.79M |
| Interest Expense | $11.34M |
| Net Income | -$55.80M |
| EPS (Basic) | $-0.07 |
| Shares Outstanding (Basic) | 852.10M |
Key Highlights
- 1Revenue grew by 38% year-over-year to $471.7 million, driven by a 41% increase in subscription revenues ($411.0 million).
- 2Gross profit margin improved to 74% from 71% in the prior year's comparable period, indicating improving operational efficiency.
- 3The number of customers with Annual Contract Value (ACV) greater than $1 million increased by 46% to 403, and Global 2000 customers grew by 15% to 790.
- 4Sales and Marketing expenses increased by 33% but decreased as a percentage of revenue to 52% from 55%, demonstrating leverage.
- 5The company generated $316.1 million in cash from operating activities for the first six months of 2017, a significant turnaround from a negative $69.5 million in the prior year.
- 6Cash and cash equivalents increased substantially to $1.17 billion as of June 30, 2017, up from $401.2 million at the end of 2016.
- 7The company successfully issued $782.5 million in 0% convertible senior notes due 2022, strengthening its liquidity position.