ServiceNow has announced its financial results for Q4 and the full year, revealing yet another positive quarter, with results exceeding the high end of guidance across GAAP topline growth and profitability. Revenues were $1.9bn, representing another 20 percent increase in year-over-year growth. In addition, subscription revenues brought in $1.8bn, representing a 22 percent year-over-year growth, 27.5 percent at constant currency.
The earnings confirmed the optimistic tone of ServiceNow CEO and chairman Bill McDermott. Pointing to their strategy of organic innovation rather than prospecting on an assumption of never-ending growth, McDermott gave an upbeat spin on the year ahead. “Not a chance of recession for IT spending this year. We’re hiring”, he said in an interview with CNBC last week, where he predicted an upbeat year for the company.
Responding to the earnings announcement, McDermott said, “ServiceNow continues to perform as a beyond-expectations company, “Our Q4 surge in new business shows that the secular tailwinds of digitization aren’t going anywhere. We are driving net‑new innovation, fast growth, and operating leverage. The world works with ServiceNow as the end-to-end platform for digital transformation.”
Customer numbers continued to grow with ServiceNow now having a total of 1,637 equalling over $1m in annual contract value, and current remaining performance obligations (cRPO) of $6.9bn billion as of Q4 2022, representing a 22 percent year-over-year growth, 25.5 percent at constant currency. Net new annual contract value (NNACV) contribution to cRPO also outperformed company expectations in Q4, driven by over 30 percent NNACV growth year‑over‑year from new logos.
Commenting on the sustained demand for ServiceNow solutions, ServiceNow CFO Gina Mastantuono said: “Q4 was another great quarter of execution as we exceeded our subscription revenue and profitability guidance. “We outperformed our NNACV expectations, driven by robust net expansion. What’s more, our results were generated with a lower mix of early renewals from 2023, providing us with more opportunities to drive further expansion throughout the year. With our strong results, it’s clear that ServiceNow remains a strategic priority, generating durable demand that is positioning us well for 2023 and beyond.”
Quarter four saw a series of developments in the ServiceNow partnership arena and, last week, the company announced a program aimed at tapping into the estimated $500bn market opportunity for the Now Platform and associated partnerships. The new program will be available for all partners on 6 March this year.
In an ERP today article on the announcement, Erica Volini, senior vice president of alliances and channel ecosystem at ServiceNow, gave the nod to the latent talent waiting to be unleased in the partner pool. “Our reimagined Partner Program creates unbounded opportunity for partners to expand and collaborate with ServiceNow well beyond where we can go alone. We are investing in partner success, championing their expertise, and giving them flexibility to drive exponential value with our platform,” she said.
The partnership foray also included a new extended offering from ServiceNow and Zoom, to help joint customers elevate the employee experience and help them benefit from more significant productivity gains.
New innovations launched in the previous quarter, including automated service suggestions, Service Request Playbook, and Workplace Scenario Planning, helped the company drive significant performance improvements by addressing productivity issues for customer, employee, and constituent experience.
Following McDermott’s elevation to Chairman and CEO late in 2022, ServiceNow also saw the promotion of Chirantan “CJ” Desai from chief product officer to COO in recognition of his leadership qualities in times of headwinds.
“CJ has established himself as a leader of consequence in this industry,” said McDermott. “His track record – from strengthening our platform to driving our customer experience – has helped establish ServiceNow as the enterprise juggernaut it is today. I’d like to personally congratulate CJ for this latest, well‑deserved endorsement of his leadership.”
For 2023, subscription revenues are projected to see another 23 percent growth, to $8.5bn.
With the only certainty on the road ahead being uncertainty, the optimistic announcement represents a welcome tune in an industry beset by headwinds.