10-QPeriod: Q2 FY2024

ServiceNow, Inc. Quarterly Report for Q2 Ended Jun 30, 2024

Filed July 25, 2024For Securities:NOW

Summary

ServiceNow, Inc. (NOW) reported a solid second quarter for 2024, demonstrating continued revenue growth and robust operational performance. Total revenues increased by 22% year-over-year to $2.63 billion, driven primarily by a strong 23% increase in subscription revenues, which now constitute 97% of total revenue. The company also reported significant growth in its customer base, with the number of customers with an Annual Contract Value (ACV) greater than $1 million increasing by 15% to 1,988. Profitability remained strong, with gross profit increasing by 24% and income from operations more than doubling, indicating effective cost management and operational leverage. Financially, ServiceNow maintains a strong liquidity position with $2.16 billion in cash and cash equivalents and $8.9 billion in total cash, cash equivalents, and investments. The company generated $1.96 billion in cash from operating activities during the first six months of the year, a 32% increase year-over-year, leading to a healthy free cash flow of $1.58 billion, up 33%. The company continues to invest in growth, with Research & Development expenses up 23%, reflecting ongoing innovation. The balance sheet shows stable debt levels and a healthy increase in stockholders' equity, underscoring financial stability.

Financial Highlights

52 data points
Beta

Revenue

$2.63B

79.0% Gross Margin

Net Income

$262.00M

10.0% Net Margin

EPS (Diluted)

$0.25

Total Assets

$18.21B

Cash & Equivalents

$2.16B

Free Cash Flow

$358.00M

Financial Statements
Beta
Revenue$2.63B
Cost of Revenue$552.00M
Gross Profit$2.08B
R&D Expenses$643.00M
Operating Expenses$1.83B
Operating Income$240.00M
Net Income$262.00M
EPS (Basic)$0.25
EPS (Diluted)$0.25
Shares Outstanding (Basic)1.03B
Shares Outstanding (Diluted)1.04B

Key Highlights

  • 1Total revenues grew 22% year-over-year to $2.63 billion for the three months ended June 30, 2024.
  • 2Subscription revenues, the primary revenue driver, increased by 23% year-over-year to $2.54 billion.
  • 3The number of customers with an Annual Contract Value (ACV) greater than $1 million increased by 15% to 1,988.
  • 4Income from operations more than doubled, increasing by 105% to $240 million.
  • 5Net income attributable to common stockholders was $262 million for the quarter, though this was a decrease from the prior year's quarter which included a significant tax benefit.
  • 6Cash flow from operations showed strong growth, increasing by 32% to $1.96 billion for the six months ended June 30, 2024.
  • 7Free cash flow increased by 33% to $1.58 billion for the six months ended June 30, 2024, indicating strong operational efficiency.

Frequently Asked Questions

ServiceNow reported a 22% increase in total revenues for the three months ended June 30, 2024, reaching $2.63 billion. This growth was primarily driven by a 23% increase in subscription revenues, which accounted for 97% of total revenues.

The company demonstrated strong profitability improvements. Income from operations more than doubled, increasing by 105% to $240 million for the quarter. Gross profit also saw a significant increase of 24% year-over-year.

ServiceNow exhibits robust cash flow generation. Net cash provided by operating activities increased by 32% to $1.96 billion for the first six months of 2024. Free cash flow also saw substantial growth, up 33% to $1.58 billion for the same period, indicating strong financial health and operational efficiency.

Yes, ServiceNow reported a 15% increase in customers with an Annual Contract Value (ACV) greater than $1 million, reaching 1,988. Additionally, the renewal rate remained high at 98% for the quarter.

While revenues and operating income have grown, Net Income for the quarter ended June 30, 2024, was $262 million, a decrease from $1.04 billion in the prior year. This significant year-over-year difference in Net Income is primarily due to a substantial income tax benefit recorded in the second quarter of 2023 related to the release of a valuation allowance on certain deferred tax assets, which was not present in the current year's quarter.