ServiceNow: Reports Third Quarter 2024 Financial Results

ServiceNow exceeds guidance across all Q3 2024 topline growth and profitability metrics; raises 2024 subscription revenue guidance

Subscription revenues of $2,715 million in Q3 2024, representing 23% year‑over‑year growth, 22.5% in constant currency

Total revenues of $2,797 million in Q3 2024, representing 22% year‑over‑year growth, 22% in constant currency

Current remaining performance obligations of $9.36 billion as of Q3 2024, representing 26% year‑over‑year growth, 23.5% in constant currency

Remaining performance obligations of $19.5 billion as of Q3 2024, representing 36% year‑over‑year growth, 33% in constant currency

15 transactions over $5 million in net new ACV in Q3 2024, up 50% year‑over‑year

ServiceNow (NYSE: NOW), the AI platform for business transformation, today announced financial results for its third quarter ended September 30, 2024, with subscription revenues of $2,715 million in Q3 2024, representing 23% year‑over‑year growth and 22.5% in constant currency.

“ServiceNow raised our full year topline guidance on the strength of our Q3 results, once again going beyond expectations,” said ServiceNow Chairman and CEO Bill McDermott. “This remarkable momentum stems from both existing and new customers doubling down on their investments in ServiceNow as the AI platform for business transformation. The mandate to put AI to work for people represents a generational technology shift. We have never been more confident in ServiceNow’s team, our platform, and our position as the ultimate growth company in enterprise software.”

As of September 30, 2024, the current remaining performance obligations (“RPO”), contract revenue that will be recognized as revenue in the next 12 months, was $9.36 billion, representing 26% year‑over‑year growth and 23.5% in constant currency. The company now has 2,020 total customers with more than $1 million in annual contract value (“ACV”), representing 14% year‑over‑year growth in customers.

“Q3 was another spectacular quarter driven by robust demand for the Now Platform and exceptional team execution,” said ServiceNow CFO Gina Mastantuono. “With Now Assist already delivering fantastic results, our latest Xanadu release marks our most comprehensive set of new AI innovations yet, further fueling our durable topline growth and margin expansion.”

ServiceNow also named enterprise software industry veteran Amit Zavery as president, chief product officer (CPO), and chief operating officer (COO) to lead product and engineering, effective October 28, 2024. With more than three decades in enterprise technology and previous leadership roles at Google Cloud and Oracle, Zavery is a visionary leader who brings extensive experience in enterprise innovation, transformation, and scale. Zavery’s responsibilities will include ServiceNow’s platform, products, engineering, cloud infrastructure, user experience, and enterprise‑wide operations, ensuring all solutions meet the real‑world business needs of ServiceNow customers.

Recent Business Highlights

Innovation

ServiceNow is putting AI to work for customers. In Q3, the Now Platform Xanadu release, ServiceNow’s largest AI release to date, introduced hundreds of additional, new AI capabilities including the Now Assist Skill Kit and purpose‑built GenAI industry solutions for telecom, media, and technology; financial services; the public sector; and more.

Alongside Xanadu, the company announced its plans to integrate Agentic AI into the ServiceNow platform and unlock 24/7 productivity at a massive scale. With advanced reasoning and grounded in cross‑enterprise data through the Now Platform, ServiceNow AI Agents evolve from the more familiar prompt‑based activity to deep contextual comprehension, keeping people in the loop for robust oversight and governance. The first use cases will be available in November for Customer Service Management (CSM) and IT Service Management (ITSM).

Today, the company announced ServiceNow Workflow Data Fabric, an integrated data layer that unifies business and technology data across the enterprise, powering all workflows and AI agents with real‑time, secure access to data from any source. Powered by Automation Engine and RaptorDB Pro high‑performance database, Workflow Data Fabric unlocks value with orchestration and automation at ultra‑speed and scale.

At the United Nations General Assembly last month, ServiceNow demonstrated its commitment to building a better world through greater access to technology, knowledge, and opportunity. Through efforts such as ServiceNow.org and others, ServiceNow has set a bold ambition to partner with nonprofits and customers to accelerate impact and reach 1 billion people. This includes the company’s ambition to positively reach 20 million people through its philanthropy efforts.

Partnerships

Today, the company made several partnership announcements designed to expand the ServiceNow ecosystem and accelerate business transformation. ServiceNow and NVIDIA will co‑develop native AI Agents using NVIDIA NIM Agent Blueprints within the ServiceNow platform, creating use cases fueled by business knowledge that customers can simply choose to turn on; ServiceNow and Siemens announced a collaboration designed to bolster industrial cybersecurity and integrate GenAI into shop floor operations; ServiceNow and Rimini Street announced a partnership to help enable organizations to unlock value in legacy ERP systems; and ServiceNow and Pearson announced plans to supercharge workforce development and employee experiences in the age of AI.

Earlier in October, ServiceNow and Zoom announced an expanded strategic alliance to integrate the companies’ GenAI technologies – ServiceNow Now Assist and Zoom AI Companion – to offer organizations advanced workflow automation for tasks and activities.

Global Expansion

Continuing efforts to expand AI and technology skills, during the quarter, ServiceNow announced a new National Academic Partnership with Singapore’s Republic Polytechnic to provide hundreds of early‑in‑career and lifelong learners access to emerging AI and cloud computing roles in support of the government's Smart Nation agenda.

Later this month, the company plans to launch a new data centre pair located in Milan and Rome in response to the growing demand for data centre infrastructure in the region. The data centre pair will help enhance customer agility, boost productivity, and promote innovation.

In October, ServiceNow announced plans to invest $1.5 billion cumulatively in it s UK business over the next five years. This includes plans to increase headcount, office space, and AI skills programs.

Investment

ServiceNow repurchased approximately 272,000 shares of its common stock for $225 million as part of its share repurchase program, with the primary objective of managing the impact of dilution. Of the original authorized amount, approximately $562 million remains available for future share repurchases under the existing program.

Recognition

As a testament to ServiceNow’s workplace culture, ServiceNow was awarded 10^th place on the Fortune Best Workplaces in Technology list¹, in addition to placing on the TIME World's Best Companies, PEOPLE Companies that Care, Fast Company 100 Best Workplaces for Innovators, and more.

Third Quarter 2024 GAAP and Non‑GAAP Results:

The following table summarizes our financial results for the third quarter of 2024:


	Third Quarter 2024 GAAP Results		Third Quarter 2024 Non‑GAAP Results⁽¹⁾
	Amount ($ millions)	Year/Year Growth (%)	Amount ($ millions)⁽³⁾	Year/Year Growth (%)
Subscription revenues	$2,715	23%	$2,711	22.5%
Professional services and other revenues	$82	14%	$81	13.5%
Total revenues	$2,797	22%	$2,792	22%

	Amount ($ billions)	Year/Year Growth (%)	Amount ($ billions)⁽³⁾	Year/Year Growth (%)
RPO	$9.36	26%	$9.18	23.5%
RPO	$19.5	36%	$19.1	33%

	Amount ($ millions)	Margin (%)	Amount ($ millions)⁽²⁾	Margin (%)⁽²⁾
Subscription gross profit	$2,219	82%	$2,305	85%
Professional services and other gross (loss) profit	($6)	(7%)	$5	7%
Total gross profit	$2,213	79%	$2,310	83%
Income from operations	$418	15%	$872	31%
Net cash provided by operating activities	$671	24%
Free cash flow			$471	17%

	Amount ($ millions)	Earnings per Basic/Diluted Share ($)	Amount ($ millions)⁽²⁾	Earnings per Basic/Diluted Share ($)⁽²⁾
Net income	$432	$2.09 / $2.07	$775	$3.76 / $3.72

We report non‑GAAP financial measures in addition to, and not as a substitute for, or superior to, financial measures calculated by GAAP. See the section entitled “Statement Regarding Use of Non‑GAAP Financial Measures” for an explanation of non‑GAAP measures.

Refer to the table entitled “GAAP to Non‑GAAP Reconciliation” for a reconciliation of GAAP to non‑GAAP measures.

Non‑GAAP subscription revenues and total revenues are adjusted for constant currency by excluding the effects of foreign currency rate fluctuations and any gains or losses from foreign currency hedge contracts. Professional services and other revenues, cRPO, and RPO are adjusted only for constant currency. See the section entitled “Statement Regarding Use of Non‑GAAP Financial Measures” for an explanation of non‑GAAP measures.

Note: Numbers are rounded for presentation purposes and may not foot.

Financial Outlook

Our guidance includes GAAP and non‑GAAP financial measures. The non‑GAAP growth rates for subscription revenues are adjusted for constant currency by excluding the effects of foreign currency rate fluctuations and any gains or losses from foreign currency hedge contracts, and cRPO is adjusted only for constant currency to provide better visibility into the underlying business trends.

The following table summarizes our guidance for the fourth quarter 2024:

	Fourth Quarter 2024 GAAP Guidance		Fourth Quarter 2024 Non‑GAAP Guidance⁽¹⁾
	Amount ($ millions)⁽³⁾	Year/Year Growth (%)⁽³⁾	Constant Currency Year/Year Growth (%)
Subscription revenues	$2,875 ‑ $2,880	21.5% ‑ 22%	20.5%
cRPO		21.5%	21.5%
			Margin (%)⁽²⁾
Income from operations			29%
		Amount (millions)
Weighted‑average shares used to compute diluted net income per share		209

We report non‑GAAP financial measures in addition to, and not as a substitute for, or superior to, financial measures calculated by GAAP. See the section entitled “Statement Regarding Use of Non‑GAAP Financial Measures” for an explanation of non‑GAAP measures.

Refer to the table entitled “Reconciliation of Non‑GAAP Financial Guidance” for a reconciliation of GAAP to non‑GAAP measures.

Guidance for GAAP subscription revenues and GAAP subscription revenues and cRPO growth rates are based on the 30‑day average of foreign exchange rates for September 2024 for entities reporting in currencies other than U.S. Dollars.

The following table summarizes our guidance for the full year 2024:

	Full‑Year 2024 GAAP Guidance		Full‑Year 2024 Non‑GAAP Guidance⁽¹⁾
	Amount ($ millions)⁽³⁾	Year/Year Growth (%)⁽³⁾	Constant Currency Year/Year Growth (%)
Subscription revenues	$10,655 ‑ $10,660	23%	22.5%
			Margin (%)⁽²⁾
Subscription gross profit			84.5%
Income from operations			29.5%
Free cash flow			31%
		Amount (millions)
Weighted‑average shares used to compute diluted net income per share		208

We report non‑GAAP financial measures in addition to, and not as a substitute for, or superior to, financial measures calculated by GAAP. See the section entitled “Statement Regarding Use of Non‑GAAP Financial Measures” for an explanation of non‑GAAP measures.

Refer to the table entitled “Reconciliation of Non‑GAAP Financial Guidance” for a reconciliation of GAAP to non‑GAAP measures.

GAAP subscription revenues and related growth rates for the future quarter included in our full‑year 2024 guidance are based on the 30‑day average of foreign exchange rates for September 2024 for entities reporting in currencies other than U.S. Dollars.

Note: Numbers are rounded for presentation purposes and may not foot.

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ServiceNow: Reports Third Quarter 2024 Financial Results

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