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ServiceNow NOW reported fourth-quarter 2024 adjusted earnings of $3.67 per share, which beat the Zacks Consensus Estimate by 2.51% and increased 18% year over year.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Revenues of $2.957 billion beat the consensus mark by 0.13% and increased 21.3% year over year. At constant currency (cc), revenues increased 21% year over year to $2.95 billion.
However, shares fell more than 9% as NOW’s 2025 subscription revenue growth is now expected between 19.5% and 20% over 2024. ServiceNow reported 2024 subscription revenues of $10.639 billion, up 22.5% over 2023.
ServiceNow, Inc. Price, Consensus and EPS Surprise
ServiceNow, Inc. price-consensus-eps-surprise-chart | ServiceNow, Inc. Quote
NOW’s Subscription Revenues Up Y/Y, Margin Expands
Subscription revenues improved 21.2% year over year, on a reported basis, to $2.866 billion. On a cc basis, revenues increased 21% to $2.859 billion.
Professional services and other revenues increased 26% year over year on a reported and 26.5% on a cc basis to $91 million.
At the end of the fourth quarter, the current remaining performance obligations (cRPO) were $10.49 billion, up 22% year over year on a cc basis. Remaining performance obligations, on a cc basis, rose 26% year over year to $22.7 billion.
In terms of margins, the third-quarter non-GAAP gross margin was 82.6%, up 60 bps on a year-over-year basis. Subscription gross margin was 84.9%, up 60 bps year over year. Professional services and other gross margins were 6.1% compared with 9.7% reported in the year-ago quarter.
As a percentage of revenues, operating expenses decreased 170 bps on a year-over-year basis to 66%.
ServiceNow’s non-GAAP operating margin expanded 10 bps on a year-over-year basis to 29.5%.
Expanding Clientele Aids NOW’s Prospects
ServiceNow had 2,109 total customers with more than $1 million in annual contract value (ACV) at the end of the reported quarter, which represents 14% year-over-year growth in customers.
In the reported quarter, NOW had 19 deals greater than $5 million in net new ACV. It closed 170 deals greater than $1 million net new ACV. The number of customers contributing more than $20 million or more grew nearly 35% year over year.
ServiceNow’s Pro Plus AI grew 150% sequentially. The number of customers who bought two or more of NOW’s GenAI capabilities doubled quarter-over-quarter.
In terms of products, 76 of NOW’s tech workflow deals were more than $1 million, including one over 15 million. ITSM, ITOM and ITAM and Security and Risk were all in at least 15 of the top 20 deals. IT asset management was in all of the company’s top 20. Employee and creative workflows won at least 17 deals, each more than $1 million.
Industry-wise, manufacturing and public sector grew 50% and 40% year over year, respectively. ServiceNow’s renewal rate was a strong 98%.