ServiceNow Reports Fourth Quarter and Full-Year 2023 Financial Results
-- ServiceNow exceeds guidance across all Q4 2023 topline growth and
profitability metrics; raises 2024 subscription revenues and operating
margin outlook
-- Subscription revenues of $2,365 million in Q4 2023, representing 27%
year-over-year growth, 25.5% in constant currency
-- Total revenues of $2,437 million in Q4 2023, representing 26%
year-over-year growth, 24% in constant currency
-- Current remaining performance obligations of $8.60 billion as of Q4
2023, representing 24% year-over-year growth, 23% in constant currency
-- 168 transactions over $1 million in net new ACV in Q4 2023, up 33%
year-over-year
SANTA CLARA, Calif.SANTA CLARA, Calif.--(BUSINESS WIRE)--January 24, 2024--
ServiceNow (NYSE: NOW), the leading digital workflow company making the world work better for everyone, today announced financial results for its fourth quarter ended December 31, 2023, with subscription revenues of $2,365 million in Q4 2023, representing 27% year-over-year growth and 25.5% in constant currency.
“ServiceNow closed out the year with another outstanding quarter,” said ServiceNow Chairman and CEO Bill McDermott. “Generative AI is injecting new fuel into our already high-performing engine. ServiceNow’s intelligent platform for end-to-end digital transformation is driving massive leaps in productivity and explosive growth. This is a breakthrough moment.”
As of December 31, 2023, current remaining performance obligations (“cRPO”), contract revenue that will be recognized as revenue in the next 12 months, was $8.60 billion, representing 24% year-over-year growth and 23% in constant currency. The company now has 1,897 total customers with more than $1 million in annual contract value (“ACV”), representing 15% year-over-year growth in customers.
“Once again we exceeded our topline growth and operating margin guidance metrics, showcasing ServiceNow’s consistent and relentless focus on execution,” said ServiceNow CFO Gina Mastantuono. “We ended Q4 with a 99% renewal rate, accelerating large new logo growth, and the strongest NNACV contribution for any new product family with the introduction of our Plus SKUs. The accelerating pace of investment in workflow automation and generative AI positions us well for another strong year and we are raising our outlook for 2024.”
Recent Business Highlights
-- In its first full quarter since the launch of Now Assist, ServiceNow
saw the largest net-new ACV contribution for a first quarter of any new
product family release. The company also continued to execute on its
ambitious generative AI roadmap, launching a major expansion to its Now
Assist generative AI portfolio with Now Assist in Virtual Agent, flow
generation, and Now Assist for Field Service Management.
-- The company continued to grow its AI-related partnerships--including a
strategic partnership with DXC--to integrate ServiceNow advanced
analytics and enhanced AI capabilities into DXC Platform XTM. ServiceNow
also announced a five-year Strategic Collaboration Agreement with Amazon
Web Services (AWS) to offer the ServiceNow Platform and full suite of
solutions in the AWS Marketplace. The two companies will also co-develop
and launch industry-specific, AI powered applications.
-- Today, ServiceNow announced a broader strategic alliance with EY to
empower responsible AI use for enterprise customers, deliver unified
solutions for AI compliance and governance, and bring AI-enhanced
experiences to EY employees and clients with ServiceNow Now Assist.
-- Additionally, ServiceNow and Visa today announced a five-year strategic
alliance to transform payment services experiences. The initial phase
includes the launch of ServiceNow Disputes Management, Built with
Visa---- a single, connected solution for disputes resolution.
-- In Q4, ServiceNow joined the AI Alliance launched by IBM and Meta, to
advance open, safe, and responsible AI. The AI Alliance consists of a
broad range of organizations that are working across aspects of AI
education, research, development and deployment, and governance to
support open innovation and open science in AI.
-- The company announced its acquisition of task mining company
UltimateSuite to bolster automation and AI capabilities, helping
customers identify process bottlenecks and drive stronger operational
efficiencies.
-- Aston Martin Aramco Cognizant Formula One(R) Team announced ServiceNow
as the intelligent platform partner to streamline the team's AMR
Technology Campus.
-- During the quarter, ServiceNow repurchased 400,000 shares of its common
stock for $256 million as part of its share repurchase program, with the
primary objective of managing the impact of dilution from future employee
equity grants and employee stock purchase programs. $962 million of the
original authorized amount remains available for future share repurchases
under the existing program.
-- The company received significant recognition during the quarter,
ranking #1 in the software category and #5 overall in the American
Opportunity Index, as well as #3 on Glassdoor's Best Places to Work 2023.
ServiceNow was further recognized by placing on Fortune World's 25 Best
Workplaces(TM) and Fortune 100 Best Large Workplaces for Women(TM)
lists(1). The company was also named a Leader in both the Forrester
Wave(TM): Governance, Risk, and Compliance and The Forrester Wave(TM):
Digital Process Automation Software.
(1) (c)2023 FORTUNE Media IP Limited All rights reserved. Used under
license. FORTUNE and FORTUNE Media IP Limited are not affiliated with,
and do not endorse products or services of, ServiceNow.
Fourth Quarter 2023 GAAP and Non-GAAP Results:
The following table summarizes our financial results for the fourth quarter 2023:
Fourth Quarter 2023 GAAP Fourth Quarter 2023 Non-GAAP
Results Results(1)
---------------------------- ------------------------------
Amount Year/Year Amount ($ Year/Year
($ millions) Growth (%) millions)(3) Growth (%)
-------------- ------------- ------------- --------------- -------------
Subscription
revenues $2,365 27% $2,332 25.5%
Professional
services and
other
revenues $72 (10%) $71 (11%)
Total revenues $2,437 26% $2,403 24%
Amount Year/Year Amount ($ Year/Year
($ billions) Growth (%) billions)(3) Growth (%)
------------- ------------- --------------- -------------
cRPO $8.60 24% $8.52 23%
RPO $18.0 29% $17.9 27.5%
Amount Amount ($
($ millions) Margin (%) millions)(2) Margin (%)(2)
-------------- ------------- ------------- --------------- -------------
Subscription
gross profit $1,922 81% $1,996 84%
Professional
services and
other gross
profit
(loss) ($1) (1%) $11 15%
Total gross
profit $1,921 79% $2,007 82%
Income from
operations $270 11% $717 29%
Net cash
provided by
operating
activities $1,605 66%
Free cash flow $1,344 55%
Earnings per Earnings per
Amount Basic/Diluted Amount ($ Basic/Diluted
($ millions) Share ($) millions)(2) Share ($)(2)
-------------- ------------- ------------- --------------- -------------
Net income $295 $1.44 / 1.43 $643 $3.14 / 3.11
(1) We report non-GAAP financial measures in addition to, and not as a
substitute for, or superior to, financial measures calculated in
accordance with GAAP. See the section entitled "Statement Regarding Use
of Non-GAAP Financial Measures" for an explanation of non-GAAP
measures.
(2) Refer to the table entitled "GAAP to Non-GAAP Reconciliation" for a
reconciliation of GAAP to non-GAAP measures.
(3) Non-GAAP subscription revenues, professional services and other
revenues, total revenues, cRPO and RPO are adjusted only for constant
currency. See the section entitled "Statement Regarding Use of Non-GAAP
Financial Measures" for an explanation of non-GAAP measures.
Note: Numbers rounded for presentation purposes and may not foot.
Full-Year 2023 GAAP and Non-GAAP Results: