NOW Q3 2020 Earnings

Call Details

• Call Title: ServiceNow, Inc. Q3 2020 Earnings Call
• Date: October 28, 2020 at 9:00 PM UTC
• Management Team:
  • Lisa Banks (Senior Vice President of Finance)
  • Bill McDermott (Chairman and Chief Executive Officer)
  • Gina Mastantuono (Chief Financial Officer)

Call Summary

Financial Performance

• Q3 subscription revenues were $1.091B representing 29% year-over-year constant currency growth.
• Q3 subscription billings were $1.081B representing 24% year-over-year adjusted growth.
• Remaining performance obligations (RPO) were approximately $7.3B representing 28% year-over-year constant currency growth.
• Current RPO was approximately $3.8B representing 30% year-over-year constant currency growth.
• The company reported a Q3 operating margin of 26% which beat guidance by 400 bps.
• Q3 free cash flow margin was 19% which was up 500 bps year-over-year driven by lower T&E and strong collections.
• The company closed 41 deals greater than $1M in ACB in the quarter and reported its largest-ever $13M ACB deal.

Guidance

• Full-year 2020 subscription revenue guidance was raised to $4.257B to $4.262B representing 31% year-over-year constant currency growth.
• Full-year 2020 subscription billings guidance was raised to $4.78B to $4.80B representing 26% to 27% year-over-year adjusted growth.
• Full-year 2020 operating margin was raised from 24% to 24.5%.
• Full-year 2020 free cash flow margin was raised from 29.5% to 31.5%, a 200 bps increase.
• Q4 2020 subscription revenue guidance is $1.155B to $1.160B representing 27% year-over-year constant currency growth.
• Q4 2020 subscription billings guidance is $1.625B to $1.645B representing 24% to 26% year-over-year adjusted growth.
• Q4 2020 operating margin is expected to be 21% and includes roughly 150 bps of marketing spend shifted from Q3 into Q4.