NOW Q1 2024 Earnings

Call Details

• Call Title: ServiceNow, Inc. Q1 2024 Earnings Call
• Date: April 24, 2024 at 9:00 PM UTC
• Management Team:
  • Darren Yip (Vice President, Investor Relations)
  • Bill McDermott (Chairman and Chief Executive Officer)
  • Gina Mastantuono (Chief Financial Officer)
  • CJ Desai (President and Chief Operating Officer)

Call Summary

Financial Performance

• Subscription revenues were $2.523B in Q1, growing 24.5% year-over-year in constant currency.
• RPO ended the quarter at $17.7B, representing 27% year-over-year constant currency growth.
• Current RPO was $8.45B, representing 21% year-over-year constant currency growth.
• Non-GAAP operating margin was over 30%, approximately 150 basis points above the company's guidance.
• Free cash flow margin was 47%, which is up 12 percentage points year-over-year.
• Cash and investments totaled $8.8B at quarter end.
• The company closed 59 deals greater than $1M net new ACV in the quarter, including four deals greater than $10M representing 300% year-over-year growth in that cohort.
• The quarter included eight deals over $5M in net new ACV, which is a 100% increase year-over-year.

Guidance

• 2024 subscription revenue midpoint was raised by $20M to a range of $10.560B to $10.575B, implying 21.5% to 22% year-over-year growth and 21.5% on a constant currency basis.
• The company expects subscription gross margin of 84.5% for 2024 on the stated basis.
• Full-year operating margin guidance was reiterated at 29% for 2024.
• Full-year free cash flow margin guidance was reiterated at 31% for 2024.
• GAAP diluted weighted average shares outstanding guidance for 2024 and Q2 is 208 million shares.
• For Q2, the company expects subscription revenues of $2.525B to $2.530B, representing 21.5% to 22% year-over-year growth or 22% on a constant currency basis, and expects CRPO growth of 20.5% on both reported and constant currency bases.