Summary
ServiceNow, Inc. (NOW) reported strong financial performance for the third quarter and first nine months of 2020. Total revenues grew by 30% year-over-year for both periods, reaching $1.15 billion and $3.27 billion, respectively. This growth was primarily driven by its subscription services, which saw a 31% increase in the third quarter and a 32% increase in the nine-month period. The company also demonstrated improved profitability, with total gross profit increasing significantly and gross profit margin remaining robust at 78% for both periods. Operationally, ServiceNow continued to expand its customer base, notably increasing the number of customers with Annual Contract Value (ACV) greater than $1 million by 25% year-over-year. The company also maintained a high renewal rate of 98% for the third quarter. Despite increased operating expenses, particularly in sales & marketing and R&D, which are key investments for future growth, ServiceNow generated substantial free cash flow of $815.7 million for the nine-month period, a 30% increase from the prior year. The company ended the quarter with a strong liquidity position, including $3.0 billion in cash, cash equivalents, and short-term investments.
Financial Highlights
52 data points| Revenue | $1.15B |
| Cost of Revenue | $252.00M |
| Gross Profit | $900.00M |
| R&D Expenses | $268.00M |
| Operating Expenses | $831.00M |
| Operating Income | $69.00M |
| Interest Expense | $8.00M |
| Net Income | $12.86M |
| EPS (Basic) | $0.01 |
| EPS (Diluted) | $0.01 |
| Shares Outstanding (Basic) | 966.18M |
| Shares Outstanding (Diluted) | 1.01B |
Key Highlights
- 1Total revenues increased by 30% year-over-year to $1.15 billion for Q3 2020 and $3.27 billion for the first nine months of 2020.
- 2Subscription revenues, the primary revenue driver, grew by 31% and 32% for the respective periods.
- 3The number of customers with Annual Contract Value (ACV) greater than $1 million increased by 25% year-over-year to 1,012.
- 4Operating expenses increased, reflecting continued investment in sales, marketing, and research & development to support growth.
- 5Free cash flow generation was strong, reaching $815.7 million for the first nine months of 2020, up 30% year-over-year.
- 6The company maintained a high renewal rate of 98% for Q3 2020.
- 7ServiceNow ended the period with a robust liquidity position of $3.0 billion in cash and cash equivalents and short-term investments.