ServiceNow’s stock falls despite solid Q1 performance

image of Bill McDermott / CEO of ServiceNow

ServiceNow has announced strong financial results for the first quarter of 2021, with the company reporting subscription revenues of $1.29m, representing 30 percent year-on-year growth. Current remaining performance obligations also grew by 33 percent year-on-year, standing at $4.4bn.

Despite its first quarter results exceeding expectations, ServiceNow’s stock fell after the company revealed it had added fewer big contracts in Q1 than in previous quarters, adding just 53 new customers with an annual contract value of more than $1m in Q1 compared with 89 contracts in the previous quarter.

The company now has 1,146 total customers with more than $1m in annual contract value, representing 23 percent year-on-year growth in customers overall.

Bill McDermott, ServiceNow president and CEO, said: “Our outstanding start to 2021 is rooted in our relentless focus to make the world of work, work better for people. As the leading platform for digital transformation, our empathy for customers inspires our continuous innovation.”

Gina Mastantuono, CFO at ServiceNow, added: “On the heels of a tremendous 2020, the team delivered another strong quarter of out‑performance. We are focused, disciplined, and committed to helping our customers succeed. Every C‑suite leader wants to create great experiences for their employees and their customers, and ServiceNow is delivering. The Now Platform offers the speed, flexibility, and innovation companies need. We have strong momentum on our way to becoming a $10bn revenue company.”