NOW Q3 2023 Earnings

Call Details

• Call Title: ServiceNow, Inc. Q3 2023 Earnings Call
• Date: October 25, 2023 at 9:00 PM UTC
• Management Team:
  • Bill McDermott (Chairman and Chief Executive Officer)
  • Gina Mastantuono (Chief Financial Officer)
  • Darren Yip (President and Chief Operating Officer)

Call Summary

Financial Performance

• Subscription revenues were $2.216B, representing 24.5% year-over-year growth in constant currency.
• Remaining performance obligations (RPO) ended at approximately $14.4B, representing 23.5% year-over-year constant currency growth.
• Current RPO was approximately $7.43B, representing 24% year-over-year constant currency growth.
• Non-GAAP operating margin was 30%, which was over 250 basis points above the company's guidance.
• Free cash flow margin was 9%, which improved 300 basis points year-over-year.
• Cash and investments totaled $7.0B at quarter end and the company repurchased 0.5M shares during the quarter.

Guidance

• Full-year subscription revenue guidance was raised by $48M at the midpoint to a range of $8.635B to $8.640B, representing 25% year-over-year growth.
• Full-year operating margin target was increased from 26.5% to 27%.
• Full-year expectations include a subscription gross margin of 84% and a free cash flow margin target of 30%.
• Q4 subscription revenue guidance was set at $2.320B to $2.325B, representing 24.5% to 25% year-over-year growth, or 23% to 23.5% in constant currency.
• Q4 current RPO growth was guided to 20.5% (or 21% in constant currency) and the company cited a one-point headwind to Q4 CRPO growth from a higher mix of 12-month federal contracts.
• Q4 operating margin was guided to 27.5% and diluted weighted average shares were expected to be 206M.