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Mar 31, 2022
ServiceNow Q1 2022 Earnings Report
ServiceNow's Q1 2022 earnings exceeded expectations across all metrics, with subscription revenues growing 26% year-over-year and the company raising its 2022 subscription revenues guidance.
Key Takeaways
ServiceNow reported strong Q1 2022 results, exceeding guidance across all metrics. Subscription revenues grew 26% year-over-year to $1,631 million, and total revenues increased 27% to $1,722 million. The company raised its mid-point of 2022 subscription revenues guidance and expects growth to accelerate year-over-year on a constant currency basis.
Subscription revenues reached $1,631 million, a 26% year-over-year increase (29% adjusted for constant currency).
Total revenues amounted to $1,722 million, reflecting a 27% year-over-year growth (29% adjusted for constant currency).
Current remaining performance obligations (cRPO) stood at $5.69 billion, representing a 29% year-over-year increase (30.5% adjusted for constant currency).
ServiceNow closed 52 transactions with over $1 million in net new annual contract value (NNACV), a 41% year-over-year growth.
ServiceNow
ServiceNow
ServiceNow Revenue by Segment
Revenue by Segment
Subscription Revenue
CapyFin.comProfessional services Revenue
CapyFin.com Forward Guidance
ServiceNow anticipates subscription revenues between $1,670 million and $1,675 million for Q2 2022, representing a 26% year-over-year growth (29% on a constant currency basis). The company projects a 22% operating margin for Q2 2022. For the full year 2022, ServiceNow expects subscription revenues between $7,025 million and $7,040 million, a 26% year-over-year increase (28.5% on a constant currency basis).
Positive Outlook
- Subscription revenues are projected to grow 26% year-over-year in Q2 2022 (29% on a constant currency basis).
- Full-year 2022 subscription revenue growth is expected to be 26% (28.5% on a constant currency basis).
- The company forecasts a 22% operating margin for Q2 2022.
- ServiceNow anticipates continued strong demand.
- Company expects cRPO growth to reaccelerate quarter-over-quarter.
Challenges Ahead
- An incremental strengthening of the U.S. dollar is expected to result in a $130 million currency headwind for 2022 subscription revenues.
- Q2 2022 will experience between 1 and 2 points of increasing headwinds to cRPO growth due to a larger-than-average customer cohort renewing in Q4 2022.
- Macro environment is complex.
- There is a $135 million currency headwind for Q2 2022 cRPO.
- Q3 2022 will experience between 1 and 2 points of increasing headwinds to cRPO growth as the contractual obligations wind down.
Revenue & Expenses
Visualization of income flow from segment revenue to net income