ServiceNow Q4 2024 Earnings Report
Key Takeaways
ServiceNow reported strong Q4 2024 results, with subscription revenues up 21% year-over-year to $2.866 billion and total revenues reaching $2.957 billion, also a 21% increase. The company is focusing on AI-driven growth, with significant advancements in its platform and strategic partnerships.
Subscription revenues grew by 21% year-over-year, reaching $2.866 billion.
Total revenues increased by 21% year-over-year to $2.957 billion.
Current remaining performance obligations (cRPO) grew by 19% year-over-year to $10.27 billion.
The company has nearly 500 customers with ACV greater than $5 million, a 21% year-over-year increase.
ServiceNow
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ServiceNow Revenue by Segment
Forward Guidance
ServiceNow anticipates continued growth in subscription revenues and cRPO, with a focus on AI and data solutions. The company expects a foreign exchange headwind and is shifting its business model to include consumption-based monetization.
Positive Outlook
- Subscription revenues are projected to be between $2.995 billion and $3.000 billion in Q1 2025, representing 18.5% to 19% year-over-year growth.
- cRPO is expected to grow by 19.5% to 20.5% year-over-year in Q1 2025.
- The company is expanding its AI and data solutions, incorporating consumption-based monetization.
- ServiceNow is optimizing its go-to-market approach and creating more integrated solutions.
- Free cash flow margin is expected to expand incrementally.
Challenges Ahead
- An incremental strengthening of the U.S. dollar is expected to result in a foreign exchange headwind of approximately $175 million for 2025 subscription revenues.
- Q1 2025 will see $40 million in subscription revenues and $205 million for Q1 2025 cRPO impact from the FX headwind.
- Guidance assumes a more pronounced second-half weighted linearity in the U.S. Federal business due to seasonality.
- The shift to consumption-based monetization may forgo upfront incremental new subscriptions.
- The company faces risks related to evolving privacy laws, data transfer restrictions, and other foreign and domestic standards.