ServiceNow has revealed its Q2 results for 2023 alongside a bolstering of its AI credentials through AI Lighthouse, in a partnership with chip powerhouse NVIDIA. The company also laid out its vision for AI to lift people out of “soul-crushing work”, whilst admitting to prudence with regards to all things GenAI.
NOW announced total revenues of $2.150m in Q2 2023, representing 23 percent year‑over‑year (YoY) growth. The period ended June 30, 2023 also saw subscription revenues of $2,075m, representing 25 percent YoY growth. In the words of ServiceNow CFO Gina Mastantuono, the results “exceeded the high end of our guidance range for all of our key performance metrics.”
Alongside the results news came an expansion of GenAI capabilities with case summarization and text-to-code. The company also built on its existing relations with KPMG, building on its recently announced AI-powered Finance and Supply Chain Workflows.
The biggest announcement was an expansion of ServiceNow’s NVIDIA partnership. The result, AI Lighthouse, is billed (pardon the pun) as “a first‑of‑its‑kind program designed to fast‑track the development and adoption of enterprise generative AI capabilities”. Powering the service is the ServiceNow enterprise automation platform and engine, NVIDIA AI supercomputing and software plus Accenture AI transformation services. The vision is to let customers collaborate as design partners in architecting custom GenAI large language models (LLMs) and applications to advance their businesses.
In the ServiceNow earnings call, Chairman and CEO Bill McDermott commented: “We have become the intelligent enterprise for digital transformation, and we’re lifting people out of soul-crushing work and modernizing these companies with a 21st century platform that’s resonating.
“You combine that with LLMs, the combination of NVIDIA and others, I really think this is a once-in-a-generation moment.”
ServiceNow: an AI lighthouse shining bright with caution
AI Lighthouse builds on the ServiceNow/NVDIA love-in announced at the former’s Knowledge 23 event in May, with McDermott’s earnings speech calling Jensen Huang, the latter’s co-founder and CEO, a “good friend”. It also sees NVIDIA embedded deeper into enterprise tech through already existing relationships with Oracle, Snowflake and more.
“In the last 12 months NVIDIA has been able to put its chips into any public cloud of any relevance,” says Holger Mueller, VP and principal analyst for Constellation Research. “All large clouds are using NVIDIA chips, making the vendor a stock market darling… The core value proposition for NVIDIA and its attraction is that its AI models are portable.”
While AI has been a driver for NVIDIA, ServiceNow and its peers in recent months, the Q2 earnings call also saw Mastantuono admit AI wasn’t a huge steer for her financial forecast.
“We continue to be prudent with our guidance,” said the CFO. “At the end of the day, we absolutely believe that generative AI could potentially bring renewals forward, but I’m not baking that into a guide right now. We just don’t know what that’s going to look like.
“Our CRPO guide now for Q3 is strong. We are reflecting a lower level of early renewals as we continue to see. But… the generative AI potential and opportunity could absolutely have some upside that we’ve not reflected into our guide right now.”
The prudence is understandable considering the wildfire-like speed of AI development in 2023, which likely took many tech brands by surprise.
For the rest of its 2023 forecast, ServiceNow is also sticking to its line of no mass layoffs within its own workforce, with Q2 seeing McDermott’s promise holding fast.
“We took a very strong position with our employees that we would remain loyal to them no matter the weather conditions in the marketplace; that we would do it together,” said the CEO and chair. “And we now have the best retention rates in the history of the company.”
On similar note, McDermott also commented: “As AI goes to work, humans will be the real machines because in most cases, AI augments people, it doesn’t replace them.”
