10-QPeriod: Q1 FY2024

ServiceNow, Inc. Quarterly Report for Q1 Ended Mar 31, 2024

Filed May 6, 2024For Securities:NOW

Summary

ServiceNow, Inc. (NOW) reported strong financial results for the first quarter of 2024, demonstrating continued growth and operational efficiency. Total revenues reached $2.6 billion, a 24% increase year-over-year, primarily driven by a robust 25% growth in subscription revenues to $2.52 billion. This indicates persistent demand for ServiceNow's core workflow automation solutions. The company also showcased healthy profitability, with operating income rising significantly and net income more than doubling to $347 million from $150 million in the prior year period. This profitability was supported by a stable subscription gross profit margin of 83% and an improved professional services gross profit margin. Free cash flow saw a substantial 66% increase to $1.225 billion, highlighting the company's strong cash generation capabilities. Key operational metrics like Remaining Performance Obligations (RPO) and customers with Annual Contract Value (ACV) over $1 million also showed positive trends, with RPO growing 26% and the number of large customers increasing by 15%. The company also actively returned capital to shareholders through its share repurchase program, demonstrating a balanced approach to growth and shareholder value.

Financial Highlights

52 data points
Beta

Revenue

$2.60B

80.0% Gross Margin

Net Income

$347.00M

13.3% Net Margin

EPS (Diluted)

$0.33

Total Assets

$17.54B

Cash & Equivalents

$2.06B

Free Cash Flow

$1.21B

Financial Statements
Beta
Revenue$2.60B
Cost of Revenue$520.00M
Gross Profit$2.08B
R&D Expenses$606.00M
Operating Expenses$1.75B
Operating Income$332.00M
Net Income$347.00M
EPS (Basic)$0.34
EPS (Diluted)$0.33
Shares Outstanding (Basic)1.03B
Shares Outstanding (Diluted)1.04B

Key Highlights

  • 1Total revenues grew 24% year-over-year to $2.6 billion.
  • 2Subscription revenues increased by 25% to $2.52 billion, forming 97% of total revenues.
  • 3Net income more than doubled to $347 million, up from $150 million in Q1 2023.
  • 4Free cash flow surged by 66% to $1.225 billion.
  • 5Number of customers with Annual Contract Value (ACV) over $1 million increased by 15% to 1,933.
  • 6Remaining Performance Obligations (RPO) grew 26% to $17.7 billion.
  • 7The company repurchased $175 million of common stock during the quarter under its existing share repurchase program.

Frequently Asked Questions

ServiceNow reported a 24% increase in total revenues for the first quarter of 2024, reaching $2.6 billion compared to $2.1 billion in the same period of 2023. The subscription revenue, which is the primary driver of growth, increased by 25% to $2.52 billion.

ServiceNow demonstrated significant improvement in profitability. Net income more than doubled year-over-year to $347 million. This was supported by strong revenue growth, stable subscription gross margins at 83%, and an improvement in the professional services gross margin. Operating expenses also grew at a slower pace than revenue, contributing to the improved net income.

The company generated a strong free cash flow of $1.225 billion in the first quarter of 2024, a 66% increase year-over-year. This highlights efficient operations and strong cash generation. ServiceNow also continued its share repurchase program, buying back $175 million of its common stock, indicating a commitment to returning value to shareholders.

ServiceNow is expanding its customer base, with the number of customers having an Annual Contract Value (ACV) over $1 million growing by 15% to 1,933. Additionally, Remaining Performance Obligations (RPO), which represent contracted revenue yet to be recognized, increased by 26% to $17.7 billion. This indicates a healthy sales pipeline and strong future revenue visibility.