ServiceNow exceeds on Q2 earnings targets whilst revenues fall short

ServiceNow has reported financial results for Q2 ended June 30, 2022, showing subscription revenues of $1.65bn, representing 25 percent year‑on‑year growth.

However, the company’s total revenues for Q2 were up 24 percent to $1.75bn, just falling short of the $1.76bn estimated.

On the other hand, Q2 adjusted earnings per share exceeded targets, coming in at $1.62 versus the $1.54 estimated.

As of Q2 2022, current remaining performance obligations were $5.75bn, representing growth of 21 percent.

ServiceNow now has 1,463 total customers with more than $1m in annual contract value, representing 22 percent year‑over‑year growth in customers, and has surpassed 100 customers paying over $10m in annual contract value in the quarter – a year-on-year increase of more than 50 percent.

During the quarter, ServiceNow announced Procurement Service Management, a new solution to help transform procurement across the enterprise. The company also furthered its investment in employee experience with the acquisition of Hitch Works, a skills mapping and intelligence company that will tie employee learning and development to workforce planning to address talent gaps. In addition, through its partnership with Microsoft, ServiceNow is accelerating Azure adoption for mutual customers.

ServiceNow president and CEO Bill McDermott said: “ServiceNow once again beat expectations on the top and bottom line. ServiceNow is the enduring platform for a fast‑changing world. Our pace of innovation, customer‑centricity, and consistent execution are proven. While no industry is immune to the current macro environment, no company is in a better position than ServiceNow to help customers innovate through this moment.”

ServiceNow CFO Gina Mastantuono added: “Our Q2 results demonstrate the durability of our business, as strong net expansion and a best‑in‑class renewal rate of 99 percent drove a solid balance of growth and profitability. In the current macro environment, ServiceNow remains a core component of our customers’ digital transformation strategy and we continue to see a very strong pipeline.  We are leaning into our massive opportunity with operational rigor as we remain ever confident in achieving $16bn+ in subscription revenue in 2026.”

For the full year 2022, ServiceNow anticipates subscription revenues of between $6.91bn to $6.92bn, representing year-on-year growth of 24 percent.