SANTA CLARA, Calif. ‑ January 25, 2023 ‑ ServiceNow (NYSE: NOW), the leading digital workflow company making the world work better for everyone, today announced financial results for its fourth quarter ended December 31, 2022, with subscription revenues of $1,860 million in Q4 2022, representing 22% year‑over‑year growth, 27.5% adjusted for constant currency.
“ServiceNow continues to perform as a beyond expectations company,” said ServiceNow Chairman and CEO Bill McDermott. “Our Q4 surge in new business shows that the secular tailwinds of digitization aren’t going anywhere. We are driving net‑new innovation, fast growth, and operating leverage. The world works with ServiceNow as the end‑to‑end platform for digital transformation.”
As of December 31, 2022, current remaining performance obligations (“cRPO”), contract revenue that will be recognized as revenue in the next 12 months, was $6.94 billion, representing 22% year‑over‑year growth and 25.5% adjusted for constant currency. The company now has 1,637 total customers with more than $1 million in annual contract value, representing 22% year‑over‑year growth in customers.
“Q4 was another great quarter of execution as we exceeded our subscription revenue and profitability guidance,” said ServiceNow CFO Gina Mastantuono. “We outperformed our NNACV expectations, driven by robust net expansion and over 30% NNACV growth year‑over‑year from new logos. What’s more, our results were generated with a lower mix of early renewals from 2023, providing us more opportunities to drive further expansion throughout the year. With our strong results it's clear that ServiceNow remains a strategic priority, generating durable demand that is positioning us well for 2023 and beyond.”
Following McDermott’s elevation to Chairman and CEO late in 2022, ServiceNow has appointed Chirantan CJ Desai President and COO of ServiceNow. Desai joined ServiceNow in December 2016 as the Chief Product Officer and was promoted to the role of Chief Operating Officer in January 2022. Prior to joining ServiceNow, Desai held product leadership roles at EMC, Symantec, and Oracle.
“CJ has established himself as a leader of consequence in this industry,” said McDermott. “His track record – from strengthening our platform to driving our customer experience – has helped establish ServiceNow as the enterprise juggernaut it is today. I’d like to personally congratulate CJ for this latest, well‑deserved endorsement of his leadership.”
Recent Business Highlights
Fourth Quarter 2022 GAAP and Non‑GAAP Results:
The following table summarizes our financial results for the fourth quarter 2022:
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Fourth Quarter 2022 GAAP Results |
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Fourth Quarter 2022 Non‑GAAP Results(1) |
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Amount |
Year/Year |
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Amount |
Year/Year |
Subscription revenues |
$1,860 |
22% |
|
$1,941 |
27.5% |
Professional services and other revenues |
$80 |
(12%) |
|
$85 |
(6.5%) |
Total revenues |
$1,940 |
20% |
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$2,026 |
25.5% |
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Amount |
Year/Year |
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Amount |
Year/Year |
cRPO |
$6.94 |
22% |
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$7.12 |
25.5% |
RPO |
$14.0 |
22% |
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$14.4 |
25% |
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Amount |
Margin (%) |
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Amount |
Margin (%) |
Subscription gross profit |
$1,536 |
83% |
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$1,595 |
86% |
Professional services and other gross profit (loss) |
($11) |
(14%) |
|
$5 |
6% |
Total gross profit |
$1,525 |
79% |
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$1,600 |
83% |
Income from operations |
$155 |
8% |
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$544 |
28% |
Net cash provided by operating activities |
$1,162 |
60% |
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Free cash flow |
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$1,020 |
53% |
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Amount |
Earnings per |
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Amount |
Earnings per |
Net income |
$150 |
$0.74 / $0.74 |
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$464 |
$2.29 / $2.28 |
Note: Numbers rounded for presentation purposes.
Full‑Year 2022 GAAP and Non‑GAAP Results:
The following table summarizes our financial results for the full‑year 2022:
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Full‑Year 2022 GAAP Results |
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Full‑Year 2022 Non‑GAAP Results(1) |
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Amount |
Year/Year |
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Amount |
Year/Year |
Subscription revenues |
$6,891 |
24% |
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$7,165 |
28.5% |
Professional services and other revenues |
$354 |
10% |
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$373 |
15.5% |
Total revenues |
$7,245 |
23% |
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$7,538 |
28% |
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Amount |
Year/Year |
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Amount |
Year/Year |
cRPO |
$6.94 |
22% |
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$7.12 |
25.5% |
RPO |
$14.0 |
22% |
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$14.4 |
25% |
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Amount |
Margin (%) |
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Amount |
Margin (%) |
Subscription gross profit |
$5,704 |
83% |
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$5,935 |
86% |
Professional services and other gross profit (loss) |
($32) |
(9%) |
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$35 |
10% |
Total gross profit |
$5,672 |
78% |
|
$5,970 |
82% |
Income from operations |
$355 |
5% |
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$1,860 |
26% |
Net cash provided by operating activities |
$2,723 |
38% |
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Free cash flow |
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$2,180 |
30% |
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Amount |
Earnings per |
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Amount |
Earnings per |
Net income |
325 |
$1.61 / $1.60 |
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$1,543 |
$7.66 / $7.59 |
Note: Numbers rounded for presentation purposes.
Financial Outlook
Our guidance includes GAAP and non‑GAAP financial measures. The non‑GAAP growth rates for subscription revenues and cRPO are only adjusted for constant currency to provide better visibility into the underlying business trends.
The following table summarizes our guidance for the first quarter 2023:
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First Quarter 2023 |
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First Quarter 2023 |
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Amount |
Year/Year |
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Constant Currency |
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Subscription revenues |
$1,990 ‑ $2,000 |
22% ‑ 22.5% |
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25% ‑ 25.5% |
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cRPO |
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21% |
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24% |
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Margin (%) |
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Income from operations |
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24% |
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Amount |
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Weighted‑average shares used to compute diluted net income per share |
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204 |
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The following table summarizes our guidance for the full‑year 2023:
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Full‑Year 2023 |
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Full‑Year 2023 |
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Amount |
Year/Year |
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Constant Currency |
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Subscription revenues |
$8,440 ‑ $8,500 |
22.5% ‑ 23.5% |
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22.5% ‑ 23.5% |
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Margin (%) |
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Subscription gross profit |
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84% |
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Income from operations |
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26% |
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Free cash flow |
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30% |
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Amount |
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Weighted‑average shares used to compute diluted net income per share |
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206 |
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Note: Numbers are rounded for presentation purposes and may not foot.
Conference Call Details
The conference call will begin at 2 p.m. Pacific Time (22:00 GMT) on January 25, 2023. Interested parties may listen to the call by dialing (888) 330‑2455 (Passcode: 8135305), or if outside North America, by dialing (240) 789‑2717 (Passcode: 8135305). Individuals may access the live teleconference from this webcast.
https://events.q4inc.com/attendee/623018365
An audio replay of the conference call and webcast will be available two hours after its completion and will be accessible for 30 days. To hear the replay, interested parties may go to the investor relations section of the ServiceNow website or dial (800) 770‑2030 (Passcode: 8135305), or if outside North America, by dialing (647) 362‑9199 (Passcode: 8135305).
Investor Presentation Details
An investor presentation providing additional information, including forward‑looking guidance, and analysis can be found at https://www.servicenow.com/company/investor‑relations.html
Statement Regarding Use of Non‑GAAP Financial Measures
We use the following non‑GAAP financial measures in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP.
Our presentation of non‑GAAP financial measures may not be comparable to similar measures used by other companies. We encourage investors to carefully consider our results under GAAP, as well as our supplemental non‑GAAP information and the reconciliation between these presentations, to more fully understand our business. Please see the tables included at the end of this release for the reconciliation of GAAP and non‑GAAP results.
Use of Forward‑Looking Statements
This release contains “forward‑looking statements” regarding our performance, including but not limited to statements in the section entitled “Financial Outlook.” Forward‑looking statements are subject to known and unknown risks and uncertainties and are based on potentially inaccurate assumptions that could cause actual results to differ materially from those expected or implied by the forward‑looking statements. If any such risks or uncertainties materialize or if any of the assumptions prove incorrect, our results could differ materially from the results expressed or implied by the forward‑looking statements we make.
Factors that may cause actual results to differ materially from those in any forward‑looking statements include, among others, experiencing an actual or perceived cyber‑security event; our ability to comply with evolving privacy laws, data transfer restrictions, and other foreign and domestic standards related to data and the Internet; errors, interruptions, delays, or security breaches in or of our service or data centers; our ability to maintain and attract key employees and manage workplace culture; alleged violations of laws and regulations, including those relating to anti‑bribery and anti‑corruption and those relating to public sector contracting requirements; our ability to compete successfully against existing and new competitors; our ability to predict, prepare for and respond promptly to rapidly evolving technological, market and customer developments; our ability to grow our business, including converting remaining performance obligations into revenue, adding and retaining customers, selling additional subscriptions to existing customers, selling to larger enterprises, government and regulated organizations with complex sales cycles and certification processes, and entering new geographies and markets; our ability to develop and gain customer demand for and acceptance of new and improved products and services; global economic conditions; fluctuations in the value of foreign currencies relative to the U.S. Dollar; fluctuations in interest rates; our ability to consummate and realize the benefits of any strategic transactions or acquisitions; the impact of the Russian invasion of Ukraine on macroeconomic conditions; inflation; and fluctuations and volatility in our stock price.
Further information on these and other factors that could affect our financial results are included in our Form 10‑Q for the quarter ended September 30, 2022 and in other filings we make with the Securities and Exchange Commission from time to time, including our Form 10‑K that will be filed for the year ended December 31, 2022.
We undertake no obligation, and do not intend, to update these forward‑looking statements, to review or confirm analysts’ expectations, or to provide interim reports or updates on the progress of the current financial quarter.
About ServiceNow
ServiceNow (NYSE: NOW) makes the world work better for everyone. Our cloud‑based platform and solutions help digitize and unify organizations so that they can find smarter, faster, better ways to make work flow. So employees and customers can be more connected, more innovative, and more agile. And we can all create the future we imagine. The world works with ServiceNowTM. For more information, visit: www.servicenow.com.
© 2023 ServiceNow, Inc. All rights reserved. ServiceNow, the ServiceNow logo, Now, and other ServiceNow marks are trademarks and/or registered trademarks of ServiceNow, Inc. in the United States and/or other countries. その他 company names, product names, and logos may be trademarks of the respective companies with which they are associated.
ServiceNow Q4 and Full‑Year 2022 complete financial tables (download PDF)
Media お問合せ:
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Investor お問合せ:
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ir@servicenow.com