ServiceNow’s Q4 signals “rock solid and growing core business” in new era

CEO Bill McDermott | ServiceNow sees “tailwind of growth” with GenAI in Q3 23 success

ServiceNow has released its fourth quarter and full-year 2023 financial results, demonstrating a successful end of the fiscal year while exceeding guidance across all Q4 2023 topline growth and profitability metrics.

The company scored a total revenue of $2,437m and a current remaining performance obligations (cRPO) of $8.6bn – a sign of its robust market position and the value of its offerings. A 24 percent year-on-year (YoY) growth in cRPO also signifies ServiceNow’s future revenue potential and its ability to secure long-term contracts.

ServiceNow chairman and CEO, Bill McDermott, emphasized during the financials earnings call that the Q4 performance is packed with milestones spanning the full breadth of the portfolio. With technology, customer and creator, the company now boasts three workflow businesses with over $1bn in ACV, as well as 11 individual product lines with more than $250m in ACV.

“Our core business is rock solid and growing. Our perimeter is growing. Our platform adoption is growing. We are, in fact, in a new era of business transformation powered by AI. This is unlocking massive opportunities in the enterprise software industry. And ServiceNow is extremely well-positioned, not only to lead this movement, but to define it.

“2023 was the latest successful milestone in this journey and we intend to make 2024 an even greater success. To say we’re fired up would be an understatement,” McDermott said.

ServiceNow’s subscription revenues of $2,365m in Q4 2023, marking 27 percent YoY growth, also show its ability to leverage the increasing demand for workflow automation and generative AI, demonstrating increasing user adoption that is pivotal for recurring revenue in the software industry. 

Keeping an ear on the ground with end-user experience while delivering its AI promises, McDermott said the company draws inspiration from users’ evolving needs: “CEOs don’t want to wait another decade for technology to finally deliver on its promise. One told me, ‘I’m tired of excuses coming into my boardroom. We need innovation and new experiences, and we need them now’. That’s obviously music to our ears and nicely on brand for ServiceNow.”

Moving to its future guidance, ServiceNow’s CFO Gina Mastantuono announced during the call that the company is raising its 2024 outlook to reflect the strong momentum with which it exited 2023, taking subscription revenue outlook and full-year operating margin up.

“This partially reflects the early success we’ve seen with our GenAI products as those investments are accelerating the build of our already robust pipeline with customers lining up to be first movers in this next wave of business transformation,” Mastantuono said.

In a highlight of new customer wins secured over the quarter, ServiceNow continued to grow its AI‑related partnerships with a new collaboration with DXC integrating ServiceNow advanced analytics and enhanced AI capabilities into DXC Platform XTM.

The company also announced a five‑year strategic collaboration agreement with Amazon Web Services (AWS) offering the ServiceNow Platform and a full suite of solutions in the AWS Marketplace, as well as co‑developing industry‑specific, AI-powered applications.

Marking another milestone, ServiceNow and Visa announced a five‑year strategic alliance to transform payment service experiences, featuring the launch of a single, connected solution for disputes resolution ServiceNow Disputes Management, built with Visa.