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Mar 31, 2023
ServiceNow Q1 2023 Earnings Report
ServiceNow exceeded guidance across all Q1 2023 topline growth and profitability metrics and raised 2023 subscription revenues guidance.
Key Takeaways
ServiceNow reported strong Q1 2023 results, exceeding guidance for topline growth and profitability. Subscription revenues grew 24% year-over-year to $2,024 million, and total revenues increased by 22% year-over-year to $2,096 million. The company is focused on balancing innovation with cost management and profitability.
ServiceNow delivered a powerful combination of growth and profitability.
C-level decision makers are actively making enterprise platform investments that deliver significant business impact.
ServiceNow launched a major platform expansion with the Utah release.
ServiceNow added Deborah Black, VP of engineering at Netflix, to the company’s Board of Directors.
ServiceNow
ServiceNow
ServiceNow Revenue by Segment
Revenue by Segment
Professional services Revenue
CapyFin.com Forward Guidance
ServiceNow provided guidance for the second quarter of 2023 and full-year 2023.
Positive Outlook
- Second Quarter 2023 subscription revenues are expected to be $2,040 - $2,045 million, representing 23% - 23.5% year-over-year growth, 23.5% - 24% adjusted for constant currency.
- Second Quarter 2023 income from operations margin is expected to be 23%.
- Weighted-average shares used to compute diluted net income per share are expected to be 205 million for the second quarter of 2023.
- Full-year 2023 subscription revenues are expected to be $8,470 - $8,520 million, representing 23% - 23.5% year-over-year growth, 23% - 23.5% adjusted for constant currency.
- Full-year 2023 subscription gross profit margin is expected to be 84%.
Challenges Ahead
- Full-year 2023 income from operations margin is expected to be 26%.
- Full-year 2023 free cash flow margin is expected to be 30%.
- Weighted-average shares used to compute diluted net income per share are expected to be 206 million for the full-year 2023.
- The non-GAAP growth rates for subscription revenues and cRPO are adjusted only for constant currency to provide better visibility into the underlying business trends.
- Guidance for GAAP subscription revenues and GAAP subscription revenue and cRPO growth rate is based on the 31-day average of foreign exchange rates for March 2023 for entities reporting in currencies other than U.S. Dollars.