ServiceNow Inc. has delivered another strong quarterly performance today, beating expectations on earnings and revenue with its third-quarter financial results.
The company reported a profit before certain costs such as stock compensation of $1.21 per share on revenue of $1.15 billion, up 30% from the same quarter one year ago. Wall Street had expected a profit of $1.03 per share on revenue of $1.11 billion.
ServiceNow, which sells a cloud automation platform designed to help enterprises automate parts of their business that involve service delivery and other functions, also reported subscription billings of $1.08 billion, up 25% from a year ago. Subscription revenue rose 29%, to $1.07 billion, and the company ended the quarter with 1,012 customers with an annual contract value of more than $1 million, up 25% from last year.
ServiceNow Chief Executive Bill McDermott (pictured) said the company had done so well that it has decided to raise its full-year guidance. “Our outstanding Q3 performance beat expectations across the board,” he said.
One reason for ServiceNow’s success is that it has become an essential platform for many enterprises trying to adapt to the COVID-19 pandemic economy. The “new normal” has forced companies to accelerate their digital transformation efforts and unify various systems, data silos and processes into their business workflows, and ServiceNow offers numerous tools to support that.
“ServiceNow is the platform for digital business,” McDermott said. “Customers are leveraging the Now Platform to create the workflows that deliver great experiences for heroic veterans, students, knowledge workers, consumers and so many others worldwide.”
ServiceNow has moved quickly to adapt its offerings in light of COVID-19. The Paris release of its flagship Now Platform, released last month, added several new features designed to help customers evolve in the new digital economy.
They include a new a Business Continuity Management service that enables them to automate their business impact analysis and business continuity plan development. And on a more practical level, the company has integrated its new Safe Workplace Suite with Cisco Systems Inc.’s indoor location services platform, called DNA Spaces, to enable better contact tracing for employees returning to work.
Analyst Charles King of Pund-IT Inc. told SiliconANGLE that when disaster strikes and things hit breaking point, most organizations don’t look to startups with scant experience. Instead, they turn to more established vendors with leadership that understand what tough times are all about and provide solutions to weather such extraordinary circumstances.
“ServiceNow’s results suggest that it is just that kind of company, and that its CEO Bill McDermott and and his team are well-positioned to provide the kind of guidance that businesses are looking for,” King said.
ServiceNow’s management seems to think so too. For the fourth quarter, it’s forecasting subscription revenue of $1.14 billion to $1.15 billion, ahead of Wall Street’s estimate of $1.127 billion. Officials also expect adjusted subscription billings of $1.61 billion to $1.63 billion, versus estimates of $1.61 billion.
“In a challenging pandemic environment, Q3 was a fantastic quarter for ServiceNow,” ServiceNow Chief Financial Officer Gina Mastantuono said. “We see strong momentum heading into the last quarter of the year and our robust pipeline gives me confidence in our ability to continue executing well into 2021.”
ServiceNow’s stock rose more than 2% in after-hours trading.
Photo: World Economic Forum/Flickr
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