Summary
ServiceNow, Inc. reported strong revenue growth in the first quarter of 2018, with total revenues reaching $589.2 million, a 37% increase year-over-year. Subscription revenue, the primary driver, grew by 40% to $543.3 million. This growth was fueled by an expanding customer base and increased purchases by existing clients. The company also achieved net income of $10.6 million, a significant improvement from a net loss of $21.5 million in the prior year's quarter, largely attributed to the adoption of new accounting standards (Topic 606 and ASU 2016-01) which provided a one-time tax benefit and recognized unrealized gains on marketable equity securities. Operating expenses also increased, reflecting continued investment in sales and marketing, research and development, and general and administrative functions, with headcount growing substantially. Financially, ServiceNow ended the quarter with $682.9 million in cash and cash equivalents and $1.2 billion in short-term investments, demonstrating a healthy liquidity position. The company's deferred revenue also increased, indicating future revenue potential. Management anticipates continued revenue growth for the full year, though non-recurring gains from accounting standard adoptions are not expected to persist. The company's strategic investments in growth initiatives, coupled with solid revenue performance, position it favorably, although investors should remain aware of the non-recurring nature of certain positive impacts on net income for this quarter.
Financial Highlights
51 data points| Revenue | $589.22M |
| Cost of Revenue | $143.47M |
| Gross Profit | $445.75M |
| R&D Expenses | $117.27M |
| Operating Expenses | $466.03M |
| Operating Income | -$20.28M |
| Interest Expense | $17.06M |
| Net Income | $10.62M |
| EPS (Basic) | $0.01 |
| EPS (Diluted) | $0.01 |
| Shares Outstanding (Basic) | 877.41M |
| Shares Outstanding (Diluted) | 951.25M |
Key Highlights
- 1Total revenues increased by 37% to $589.2 million compared to the prior year's quarter.
- 2Subscription revenues, the core business segment, grew by 40% to $543.3 million.
- 3The company achieved net income of $10.6 million, a substantial turnaround from a net loss of $21.5 million in Q1 2017.
- 4Cash and cash equivalents and short-term investments totaled $1.89 billion, indicating strong liquidity.
- 5Significant investments in headcount across sales & marketing, R&D, and G&A reflect growth strategies.
- 6The adoption of new accounting standards (Topic 606 and ASU 2016-01) significantly impacted the net income for the quarter.
- 7Billings grew by 33% to $689.4 million, acting as a leading indicator for future revenue.