ServiceNow Q4 2021 Earnings Report
Key Takeaways
ServiceNow reported strong Q4 2021 results, exceeding the high end of guidance across all metrics. Subscription revenues reached $1,523 million, representing 29% year-over-year growth. The company closed 135 transactions with over $1 million in net new annual contract value, and now has 1,359 total customers with more than $1 million in annual contract value. ServiceNow expects strong 2022 subscription revenues growth with constant currency subscription revenues growth acceleration year-over-year in Q1 2022.
Subscription revenues reached $1,523 million, a 29% increase year-over-year (30% adjusted for constant currency).
Current remaining performance obligations (cRPO) totaled $5.7 billion, up 29% year-over-year (32% adjusted for constant currency).
ServiceNow closed 135 transactions with over $1 million in net new annual contract value, a 52% increase year-over-year.
The company now has 1,359 customers with over $1 million in annual contract value, representing 25% year-over-year growth in customers.
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ServiceNow Revenue by Segment
Forward Guidance
ServiceNow provided guidance for Q1 2022 and full-year 2022, including subscription revenues and cRPO growth, and operating margin.
Positive Outlook
- Expects constant currency subscription revenue growth to accelerate year-over-year in Q1 2022.
- GAAP Subscription revenues for Q1 2022 are expected to be $1,610 - $1,615 million, representing 25% year-over-year growth.
- Non-GAAP Subscription revenues for Q1 2022 are expected to be $1,645 - $1,650 million, representing 27.5% year-over-year growth.
- For the full year 2022, GAAP subscription revenues are projected to be $7,020 - $7,040 million, a 26% increase year-over-year.
- Non-GAAP subscription revenues for the full year 2022 are projected to be $7,130 - $7,150 million, a 28% increase year-over-year.
Challenges Ahead
- Incremental strengthening of the U.S. dollar resulting in a foreign exchange (“FX”) headwind in 2022 (estimated to be approximately a $110 million currency headwind for 2022 subscription revenue).
- A $75 million currency headwind for Q1 2022 cRPO.
- First Quarter 2022 GAAP operating margin is expected to be 4%.
- First Quarter 2022 Non-GAAP operating margin is expected to be 25%.
- Full-Year 2022 GAAP operating margin is expected to be 5%.