NOW Q1 2020 Earnings

Call Details

• Call Title: ServiceNow, Inc. Q1 2020 Earnings Call
• Date: April 29, 2020 at 9:00 PM UTC
• Management Team:
  • Lisa Banks (Senior Vice President of Finance)
  • Bill McDermott (Chairman and Chief Executive Officer)
  • Gina Mastituno (Chief Financial Officer)

Call Summary

Financial Performance

• Q1 subscription revenues were $995 million, representing 36% year-over-year constant currency growth.
• Q1 subscription billing were $1.055 million, representing 32% year-over-year adjusted growth as stated on the call.
• Remaining performance obligations ended the quarter at approximately $6.6 billion, representing 32% year-over-year constant currency growth.
• Current RPO was approximately $3.3 billion, representing 33% year-over-year constant currency growth.
• Q1 operating margin was 24% and Q1 free cash flow margin was 39% as reported on a non-GAAP basis.
• Company reported beating the high end of guidance for subscription revenues and subscription billing and beating consensus for the quarter.
• The quarter included 37 deals greater than $1 million, which the company stated was up 48% year-over-year.

Guidance

• Q2 subscription revenues were guided between $995 million and $1.0 billion, representing 29% to 30% year-over-year constant currency growth.
• Q2 subscription billings were guided between $960 million and $980 million, representing 20% to 22% year-over-year adjusted growth.
• Full-year 2020 subscription revenues were guided between $4.125 billion and $4.145 billion, representing 28% to 29% year-over-year constant currency growth.
• Full-year 2020 subscription billings were guided between $4.60 billion and $4.66 billion, representing 23% to 25% year-over-year adjusted growth.
• Guidance reflects a $52 million foreign-exchange headwind and stated reductions to new ACV of $43 million on revenue and $123 million on billings compared to midpoint of the previous guidance range.
• Company expects full-year 2020 subscription gross margin of 86% and raised full-year operating margin guidance to 23%.
• Guidance is explicitly based on assumptions as of April 29, 2020, including COVID-19 timing and severity and FX moves, and the company increased the range for subscription billings to reflect uncertainty.