ServiceNow beats Q4 estimates with solid growth in large deals

ServiceNow on Wednesday published fourth quarter financial results that beat market expectations, in part thanks a significant number of large transactions. The company also announced a series of executive leadership promotions, including the promotion of Chief Product and Engineering Officer Chirantan “CJ” Desai to chief operating officer (COO). 

ServiceNow’s Q4 non-GAAP basic earnings per share came to $1.49, while diluted EPS was $1.46. Revenue for the quarter was $1.629 billion, up 30% year-over-year.

Analysts were expecting earnings of $1.43 per share on revenue of $1.6 billion. 

During the quarter, ServiceNow closed 135 transactions over $1 million in net new annual contract value, representing 52% year-over-year growth. The company now has 1,359 total customers with more than $1 million in annual contract value, representing 25% year-over-year growth in customers. 

“We once again reported results that significantly beat the high end of expectations,” CEO and President Bill McDermott said in a statement. “Customer demand for ServiceNow’s innovative platform is stronger than ever. Our unique culture has made us one of the best places to work. We are growing like a fast-moving startup with the profitability of a global market leader.”

Subscription revenues in Q4 totaled $1.523 billion, representing 29% year-over-year growth.  Fourth Quarter non-GAAP subscription billings were $2.42 billion, up 33% year-over-year. 

The company reported current remaining performance obligations in Q4 of $5.7 billion, an increase of 29%.

ServiceNow CFO Gina Mastantuono said in a statement the company is “well on our way to becoming a $15 billion plus revenue company.”

For the full 2021 fiscal year, ServiceNow reported basic non-GAAP earnings per share of $6.07 and a diluted EPS of $5.92. Revenue for the full year was $5.813 billion, up 29%.  

For the full year, non-GAAP subscription billings were $6.494 billion, up 28% year-over-year. 

The company’s 2021 operating margin was 25%, and its free cash flow margin was 32%.

In addition to announcing Desai’s promotion to COO, ServiceNow said that Chief Revenue Officer Kevin Haverty has been promoted to a new strategic role as senior advisor to the CEO. President of EMEA Paul Smith has been promoted to chief commercial officer. Additionally, on Feb. 1, ServiceNow will bring on former Salesforce and Coca-Cola executive Ulrik Nehammer as its new president of EMEA (Europe, Middle East, Africa).

“As our business continues to accelerate, we are strengthening our leadership team for scale,” McDermott said in a statement.