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Sep 30, 2022
ServiceNow Q3 2022 Earnings Report
ServiceNow's Q3 2022 financial results were announced, with the company beating both top and bottom-line goals, driven by the mission-critical nature of its platform and strong execution.
Key Takeaways
ServiceNow reported strong Q3 2022 results, exceeding expectations for both revenue and earnings. Subscription revenues grew 22% year-over-year, and the company saw a significant increase in customers paying over $10 million in annual contract value.
Subscription revenues reached $1,742 million, a 22% year-over-year increase (28.5% adjusted for constant currency).
Total revenues amounted to $1,831 million, reflecting a 21% year-over-year growth (27.5% adjusted for constant currency).
Current remaining performance obligations (cRPO) stood at $5.87 billion, up 18% year-over-year (25% adjusted for constant currency).
The number of customers paying over $10 million in annual contract value grew by 60% year-over-year.
ServiceNow
ServiceNow
ServiceNow Revenue by Segment
Revenue by Segment
Professional services Revenue
CapyFin.com Forward Guidance
ServiceNow provided guidance for Q4 2022, including subscription revenues between $1,834 and $1,839 million, representing a 20-21% year-over-year growth (26-27% adjusted for constant currency).
Positive Outlook
- Subscription revenues are expected to grow 20-21% year-over-year.
- Constant currency adjusted subscription revenue growth is projected at 26-27%.
- Operating margin is anticipated to be 26%.
- cRPO is expected to grow 20% year-over-year.
- Constant currency adjusted cRPO growth is projected at 26%.
Challenges Ahead
- Foreign exchange headwinds are expected to impact subscription revenues by approximately $290 million (~5.5%) for 2022.
- FX is also expected to be approximately a 1 point headwind to both FY 2022 operating margin
- The U.S. dollar has strengthened incrementally since December 31, 2021, resulting in foreign exchange headwinds.
- FX impact estimated to be approximately a $330 million (~6%) headwind for Q4 2022 cRPO.
- FX is also expected to be approximately a 1 point headwind to free cash flow margin.