ServiceNow Q1 2024 Earnings Report
Key Takeaways
ServiceNow reported strong first quarter results, exceeding guidance across topline growth and profitability metrics. Subscription revenues grew 25% year-over-year to $2,523 million, and total revenues increased 24% year-over-year to $2,603 million. The company is experiencing strong demand for its GenAI offerings and has raised its full-year subscription revenues guidance.
ServiceNow exceeded guidance across all Q1 2024 topline growth and profitability metrics.
Subscription revenues reached $2,523 million, representing 25% year-over-year growth.
Total revenues amounted to $2,603 million, a 24% increase year-over-year.
Current remaining performance obligations totaled $8.45 billion, reflecting 21% year-over-year growth.
ServiceNow
ServiceNow
ServiceNow Revenue by Segment
Forward Guidance
ServiceNow provided guidance for the second quarter and full year 2024.
Positive Outlook
- Second quarter subscription revenues are expected to be between $2,525 million and $2,530 million, representing 21.5% - 22% year-over-year growth.
- Second quarter cRPO growth is expected to be 20.5%.
- Second quarter income from operations margin is expected to be 25%.
- Full year subscription revenues are projected to be between $10,560 million and $10,575 million, indicating 21.5% - 22% year-over-year growth.
- Full year subscription gross profit margin is expected to be 84.5%.
Challenges Ahead
- The strengthening of the U.S. Dollar since December 31, 2023 has resulted in an adverse impact to the 2024 guidance.
- Q3 2023 strength of U.S. Federal business has resulted in a higher mix of contracts containing 12-month renewal terms, creating a negative 2-point impact to Q2 2024 cRPO growth.
- Weighted-average shares used to compute diluted net income per share for Q2 and full year 2024 is expected to be 208 million.
- Full year income from operations margin is expected to be 29%.
- Full year free cash flow margin is expected to be 31%.