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ServiceNow, Inc. is a cloud-based platform company that enhances workflow efficiency across various industries, including government, financial services, healthcare, telecommunications, manufacturing, IT services, technology, oil and gas, education, and consumer products . The company offers digital workflow products that automate and connect work across systems, organized into four main workflow areas: Technology, Customer and Industry, Employee, and Creator . ServiceNow's platform is highly adaptable, addressing workflow challenges across any enterprise department, and is recognized for its innovation, particularly in integrating generative AI .
- Digital Workflow Products - Automates and connects work across systems, contributing significantly to subscription revenues and enhancing business outcomes .
- IT Operations Management (ITOM) Products - Provides solutions for managing IT operations, priced on a subscription unit basis, and supports enterprise IT infrastructure .
- Technology Workflows - Focuses on IT service management, operations management, and business management to streamline technology processes .
- Customer and Industry Workflows - Enhances customer service and industry-specific operations, improving customer engagement and satisfaction .
- Employee Workflows - Facilitates HR service delivery, workplace services, and employee experience, optimizing workforce management .
- Creator Workflows - Empowers users to build custom applications and automate processes, fostering innovation and efficiency .
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With the significant uptick in headcount additions and operating expense growth in the back half of the year, particularly in sales and marketing and R&D, how are you balancing these investments with the need for prudent cost management, and can you provide more detail on the expected pace of investment beyond Q4?
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The strong growth in RPO is driven by longer contract terms and larger deal sizes, but as contract durations increase, how are you ensuring that you are not taking on additional risk, and what strategies are in place to manage potential future changes in customer commitment levels?
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With the introduction of the workflow data fabric and Raptor DB, how does this new data platform enable revenue generation opportunities that were not possible before, and what are your plans for monetizing these new capabilities given the competitive landscape?
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You mentioned the hiring of Amit, who has expertise in packaging and pricing. Does this indicate a potential shift in your pricing strategy, particularly regarding your AI offerings like Now Assist and Agentic AI, and how do you anticipate this affecting customer adoption and revenue growth?
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As you continue to expand your AI capabilities with products like Now Assist and Agentic AI, are you seeing any changes in the sales cycle or customer hesitancy due to the integration of these advanced technologies, and how are you addressing any potential challenges in customer adoption?
Competitors mentioned in the company's latest 10K filing.
- Oracle: Enterprise application software vendor that the Now Platform integrates with and complements .
- SAP: Enterprise application software vendor that the Now Platform integrates with and complements .
- Salesforce: Enterprise application software vendor that the Now Platform integrates with and complements .
- Workday: Enterprise application software vendor that the Now Platform integrates with and complements .
| Customer | Relationship | Segment | Details |
|---|---|---|---|
U.S. federal channel partner and systems integrator | Channel partner and systems integrator for the U.S. government | All | 12% of total accounts receivable as of Dec 31, 2024 (≈$268.8 million of $2,240 million), 11% of total revenue for 2024 (≈$1,208 million of $10,984 million). |
Recent developments and announcements about NOW.
Financial Reporting
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Revenue and Profit Performance: ServiceNow reported Q4 subscription revenues of $2.866 billion, marking a 21% year-over-year growth in constant currency, surpassing the high end of their guidance range. The remaining performance obligation (RPO) was approximately $22.3 billion, a 26% year-over-year growth. The company achieved a 98% renewal rate, indicating strong customer retention.
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Management’s Forward Guidance: For 2025, ServiceNow expects subscription revenues between $12.635 billion and $12.675 billion, representing a 20% year-over-year growth at the midpoint. The company plans to incorporate more elements of consumption-based monetization across its AI and data solutions, aiming for sustainable growth.
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Market Conditions and Strategic Initiatives: ServiceNow is focusing on expanding its AI capabilities, particularly in generative AI, which has seen rapid adoption. The company is also enhancing its go-to-market strategy to optimize its business model and capitalize on AI and data opportunities.
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Analyst Questions and Management Responses: Analysts inquired about the hybrid consumption and subscription model, with management expressing confidence in balancing both approaches to drive growth. The company highlighted its strategy to combine subscription pricing with consumption-based monetization to enhance customer value and drive adoption of AI capabilities.
Earnings Call
ServiceNow has released its Fourth Quarter 2024 Earnings Call transcript, providing insights into its financial performance and strategic initiatives. Key highlights include:
Overall, ServiceNow is positioning itself as a leader in AI-driven business transformation, with a strong focus on innovation and customer success.
Earnings Report
ServiceNow, Inc. has released its financial results for the fourth quarter and full-year 2024, showcasing significant growth and strategic initiatives. Subscription revenues for Q4 2024 were $2,866 million, marking a 21% year-over-year growth. Total revenues for the same period were $2,957 million, also reflecting a 21% increase year-over-year. For the full year, subscription revenues reached $10,646 million, a 23% increase from the previous year, while total revenues were $10,984 million, up by 22%.
The company reported a GAAP net income of $384 million for Q4 2024, with earnings per share of $1.86 (basic) and $1.83 (diluted). The non-GAAP net income was $769 million, with earnings per share of $3.72 (basic) and $3.67 (diluted).
ServiceNow's Board of Directors has authorized an additional $3 billion for its share repurchase program, aiming to manage the impact of dilution. The company continues to expand its AI capabilities, positioning itself as a leader in enterprise AI transformation. This includes the introduction of new AI Agent Orchestrator and AI Agent Studio, which will be available in March 2025.
ServiceNow's strategic partnerships with companies like Google Cloud, Oracle, and Visa are set to enhance its AI and data solutions, further driving growth and innovation.
Overall, ServiceNow's financial performance and strategic initiatives highlight its strong position in the market and its commitment to leveraging AI for business transformation.
Corporate Leadership
CFO Change
As of December 24, 2024, there is no indication that Gina Mastantuono, the Chief Financial Officer of ServiceNow, Inc., has left the company. The document only mentions amendments to her employment agreement, effective January 1, 2025, as part of the new Executive Severance Policy.