ServiceNow Looks Robust

Photo Credit: Executive Networks Media/Flickr.com

ServiceNow (NYSE: NOW) recently reported results that surpassed all market expectations. The company attributes the growth to a successful platform strategy, and rightly so.

ServiceNow’s Financials

Revenues for the fourth quarter of the year grew 35% over the year to $391.7 million, ahead of the market’s expectations of $379 million. Adjusted EPS of $0.24 compared with the Street’s forecast of $0.23 for the quarter.

By segment, revenues from subscriptions grew 43% over the year to $350.3 million and professional services revenues increased 1% to $41.4 million. Subscription billings grew 52% to $483.9 million. The growth was driven by an addition of a record 31 Global 2000 logos in the quarter. Some of the big names added during the quarter included General Mills, DNB Bank, and Renault. The quarter was also impressive due to the number of large deals booked. It added a record 27 deals, with net new average contract value of more than $1 million.

It ended the year with revenues growing 38% to $1.39 billion. Losses came in at $451.8 million or $2.75 per diluted share.

For the current quarter, ServiceNow projected revenues of $416 million-$421 million, compared with the market’s projections of $402 million. It expects to end the current year with revenues of $1.86 billion-$1.89 billion, compared above the consensus for $1.79 billion. ServiceNow is confident of reaching its revenue goal of $4 billion by the year 2020.

ServiceNow’s Offering Growth

ServiceNow continued to enhance its portfolio of services. The company may have begun as an ITSM player, but now it has diversified into other cloud offerings including human resources, customer service, and security software. Last year, 72% of its customers bought licenses for products besides ITSM. 46% of its last quarter net new contract value was for non-ITSM work and 94 of its top 100 deals booked in the  fourth quarter included products beyond ITSM.