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Jun 30, 2022
ServiceNow Q2 2022 Earnings Report
ServiceNow's Q2 2022 earnings surpassed expectations, driven by strong subscription revenue growth and customer expansion.
Key Takeaways
ServiceNow reported strong Q2 2022 financial results, exceeding expectations with significant growth in subscription revenues, total revenues, and current remaining performance obligations. The company also saw a substantial increase in customers with over $1 million in annual contract value and surpassed 100 customers paying over $10 million in annual contract value.
Subscription revenues reached $1,658 million, a 25% year-over-year increase (29.5% adjusted for constant currency).
Total revenues amounted to $1,752 million, reflecting a 24% year-over-year growth (29.5% adjusted for constant currency).
Current remaining performance obligations (cRPO) totaled $5.75 billion, a 21% year-over-year increase (27% adjusted for constant currency).
The company exceeded 100 customers paying over $10 million in annual contract value, representing over 50% year-over-year growth.
ServiceNow
ServiceNow
ServiceNow Revenue by Segment
Revenue by Segment
Subscription Revenue
CapyFin.comProf. services & other Revenue
CapyFin.com Forward Guidance
ServiceNow provided guidance for Q3 2022 and full-year 2022, including subscription revenue targets and cRPO growth expectations, while also noting headwinds from foreign exchange and renewal timing.
Positive Outlook
- Q3 2022 subscription revenues are projected to be $1,750 - $1,755 million, representing 23% year-over-year growth (27.5% adjusted for constant currency).
- Q3 2022 cRPO growth is expected to be 20% (23.5% adjusted for constant currency).
- Full-year 2022 subscription revenues are projected to be $6,915 - $6,925 million, representing 24% year-over-year growth (28% adjusted for constant currency).
- Full-year 2022 subscription gross profit margin is expected to be 86%.
- Full-year 2022 free cash flow margin is projected to be 30%.
Challenges Ahead
- The company faces an approximate $220 million (~400bps) foreign exchange headwind for 2022 subscription revenues.
- There is an expected $180 million (~350bps) foreign exchange headwind for Q3 2022 cRPO.
- FX is expected to be approximately a 1 point headwind to FY 2022 operating margin.
- Q3 2022 will experience approximately 2 points of headwinds to cRPO growth due to a larger-than-average renewal cohort.
- Weighted-average shares used to compute diluted net income per share are expected to be 203 million.
Revenue & Expenses
Visualization of income flow from segment revenue to net income