Loading...
•
Sep 30, 2023
ServiceNow Q3 2023 Earnings Report
ServiceNow exceeded guidance across all Q3 2023 topline growth and profitability metrics, raised 2023 subscription revenues and operating margin guidance.
Key Takeaways
ServiceNow reported strong Q3 2023 results, exceeding guidance for topline growth and profitability. Subscription revenues grew 27% year-over-year to $2,216 million, and total revenues increased by 25% to $2,288 million. The company raised its 2023 subscription revenues and operating margin guidance, highlighting the strength of its digital transformation solutions and the potential unlocked by generative AI.
Subscription revenues reached $2,216 million in Q3 2023, a 27% year-over-year increase (24.5% in constant currency).
Total revenues for Q3 2023 were $2,288 million, representing 25% year-over-year growth (22.5% in constant currency).
Current remaining performance obligations (cRPO) stood at $7.43 billion as of Q3 2023, a 27% year-over-year increase (24% in constant currency).
ServiceNow had 83 transactions over $1 million in net new ACV in Q3 2023, up 20% year-over-year.
Revenue by Segment
Forward Guidance
ServiceNow provided guidance for the fourth quarter of 2023, including subscription revenues between $2,320 million and $2,325 million, representing a year-over-year growth of 24.5% - 25% (23% - 23.5% in constant currency). The company also expects an operating margin of 27.5%.
Positive Outlook
- Subscription revenues are expected to grow between 24.5% and 25% year-over-year.
- Constant currency subscription revenue growth is projected to be between 23% and 23.5%.
- Operating margin is anticipated to be 27.5%.
- Weighted-average shares used to compute diluted net income per share are expected to be 206 million.
- Full-year 2023 subscription gross profit margin is expected to be 84%
Challenges Ahead
- The total FX impact is estimated to be an approximately $30 million (~0.5%) year-over-year headwind for Q4 2023 cRPO.
- Q3 2023 strength of US Federal business has resulted in a higher mix of contracts containing 12-month renewal terms which will create a 1-point headwind to Q4 2023 cRPO growth and remain a headwind into 2024.
Historical Earnings Impact
Analyze how earnings announcements historically affect stock price performance
Avg. Return Before/After Earnings
Loading earnings performance data...
Loading earnings reaction data...