ServiceNow, Inc.
CEO : Mr. William R. McDermott
Quarterly earnings growth(YoY,%)
| Period | Revenue | Operating Income | EPS | Release Date |
|---|---|---|---|---|
| 2023 Q2 | 22.7% YoY | 234.3% | 5020.0% | 2023-07-26 |
Bill McDermott says,
Q2 Financial Performance
- Subscription revenue grew 25% in constant currency, beating expectations and exceeding high-end guidance
- CRPO grew 24% in constant currency, 1.5% above guidance
- Operating margin was 25%, 2 points above guidance
Strong Growth and Market Position
- 70 deals greater than $1 million in net new ACV, a 30% increase compared to the previous year
- ServiceNow is the intelligent platform for end-to-end digital transformation
- Over 1 trillion workflows running through ServiceNow annually, growing at 40% annually
- Strong demand and pipeline across all product businesses, geographic regions, and industry verticals
Solution Portfolio
- ITSM, ITOM, security and risk, customer workflows, employee workflows, and creator workflows all had strong performance in top deals
- Customers include Barclays, BT, Honda, HP, Petrobras, CSB Bank, and Yokohama City
Generative AI and AI Strategy
- Generative AI is supercharging ServiceNow’s long-term trajectory and is the core of the AI strategy
- Generative AI capabilities include virtual agent, AI controller, case summarization, text-to-code, text-to-flow, and text-to-new-application-development
- ServiceNow is infusing Generative AI into workflow offerings for improved accuracy and customer outcomes
- New premium plus SKU offerings introduced for Generative AI capabilities
- ServiceNow AI Lighthouse customer program established for design partnerships with industry leaders
Partnership and Market Position
- Expanded partnership with NVIDIA as the partnership of choice for enterprise IT
- ServiceNow is positioned in a growing market environment for enterprise software
- Recognized as a leading platform for automation technologies, AI, and process mining
CJ Desai says,
ITSM Pro and CSM Pro Growth
- ITSM Pro and CSM Pro experienced significant growth in the second quarter.
- The Pro trajectory has been on a positive trend due to automation and other features.
Seat Expansion
- T times Q times R formula is used to calculate seat expansion.
- ITSM Pro saw a 10% seat expansion in addition to the 25% uplift previously mentioned.
- The increase in seat expansion is due to the growing digitization of corporations.
Generative AI and Pro Plus
- Generative AI is being applied to the Pro base to create Pro Plus.
- Pro Plus offers additional value to employees, customers’ customers, and agents.
- The monetization strategy for Pro Plus is focused on increasing productivity and gaining a small percentage of the value delivered.
Q & A sessions,
Transformation in Various Industries
- Telco, media, and technology CEOs are looking to reinvent customer service, offers, network management, and service operations.
- The public sector is focused on self-service citizen experience, rethinking citizen-facing services, and improving employee productivity.
- Manufacturing CEOs are concerned about productivity loss on the shop floor and are looking to improve sourcing, supply chain, sales, and service.
- Healthcare CEOs aim to rethink patient care and move services from in-house establishments to patients’ homes.
ServiceNow as the Intelligent Enterprise for Digital Transformation
- ServiceNow is becoming the intelligent enterprise for digital transformation across various industries.
- ServiceNow’s platform is modernizing companies and uplifting people from soul-crushing work with a 21st Century platform.
- LLMs and the collaboration with NVIDIA and others are creating a once-in-a-generation moment.
Growth Opportunities in Different Geographies
- Americas is extremely strong, Europe is strong in spite of geopolitical complexities, and Asia, especially Japan, is growing fast.
Partnerships and Channel Expansion
- ServiceNow has strong partnerships with companies like Cognizant, KPMG, and Accenture, expanding its reach and offering business solutions instead of product SKUs.
- Technology channel partners are early in their adoption, while system integrators have billion-dollar practices with ServiceNow.
The Future of Gen AI and Digital Transformation
- Interest in Gen AI is high among C-suite executives who are focused on innovation and using AI in everyday business activities.
- ServiceNow’s cloud business model allows different personas within an enterprise to fund their own initiatives, expanding the impact beyond just the IT budget.
- The future looks bright, with opportunities to revolutionize customer and employee service, automate processes, and provide seamless onboarding and visibility into all business operations.
Pricing Strategy for Pro Plus
- Pro Plus pricing is based on the value customers receive from specific use cases and the productivity improvement brought by large language models.
- Pro Plus starts at a minimum of 60% above Pro pricing, and as more value is delivered, higher prices can be requested.
No bad stock 