NOW Q2 2024 Earnings

Call Details

• Call Title: ServiceNow, Inc. Q2 2024 Earnings Call
• Date: July 24, 2024 at 9:00 PM UTC
• Management Team:
  • Bill McDermott (Chairman and Chief Executive Officer)
  • Gina Mastantuono (Chief Financial Officer)
  • Darren Yip (Group Vice President of Investor Relations)
  • Chris Betty (Interim Chief Product Officer)
  • CJ Desai (President and Chief Operating Officer)

Call Summary

Financial Performance

• Subscription revenues were $2.542 billion in Q2 and grew 23% year-over-year on a constant currency basis.
• Remaining performance obligations ended the quarter at approximately $18.6 billion, representing 31.5% year-over-year constant currency growth.
• Current RPO was $8.78 billion, representing 22.5% year-over-year constant currency growth and a 200 basis point beat versus guidance.
• Non-GAAP operating margin for the quarter was over 27%, roughly 250 basis points above guidance, driven by operating expense efficiencies and top-line outperformance.
• Free cash flow margin for the quarter was 14%, and cash and investments ended the quarter at $8.9 billion.
• The company closed 88 deals greater than $1 million in net new ACV in the quarter, which was up 26% year-over-year.

Guidance

• Full-year 2024 subscription revenue guidance was raised to a narrowed range of $10.575 billion to $10.585 billion, representing 22% year-over-year growth.
• The company increased its full-year operating margin target from 29% to 29.5%.
• Full-year subscription gross margin expectation remains 84.5% and free cash flow margin expectation remains 31%.
• Q3 2024 subscription revenue guidance was provided at $2.660 billion to $2.665 billion, representing 20% to 20.5% year-over-year growth, or 20.5% on a constant currency basis.
• Q3 2024 CRPO growth was guided to 22.5% on a reported basis or 22% on a constant currency basis.
• GAAP diluted weighted average outstanding shares were guided to 209 million for Q3 and approximately 208 million for the full year.