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ServiceNow NOW reported fourth-quarter 2021 adjusted earnings of $1.46 per share, which beat the Zacks Consensus Estimate by 2.1% and improved 24.8% year over year.
Revenues of $1.61 billion surpassed the consensus mark by 0.8% and increased 29.1% year over year. After adjusting for forex, revenues of $1.63 billion surged 30% year over year.
Subscription revenues improved 29% year over year to $1.52 billion. After adjusting for forex, subscription revenues increased 30% year over year to $1.54 billion.
Professional services and other revenues increased 38% year over year to $91 million. After adjusting for forex, professional services and other revenues climbed at the same rate on a year-over-year basis.
ServiceNow, Inc. Price, Consensus and EPS Surprise
ServiceNow, Inc. price-consensus-eps-surprise-chart | ServiceNow, Inc. Quote
ServiceNow has been benefiting from the rising adoption of its workflows by enterprises undergoing digital transformation. The company now has 1,359 total customers with more than $1 million in annual contract value, representing 25.3% year-over-year growth in customers.
During the reported quarter, ServiceNow closed 135 transactions with more than $1 million in net new annual contract value, representing 52% year-over-year growth.
Billing Details
Total billings, on a non-GAAP basis, rose 33% year over year to $2.53 billion. After adjusting for forex, total billings increased 33% year over year to $2.55 billion.
Subscription billings of $2.42 billion advanced 32% year over year. After adjusting for forex, subscription billings were $2.43 billion, up 33%.
Professional services and other billings increased 43% to $113 million. After adjusting for forex, professional services and other billings climbed at the same rate on a year-over-year basis.
Operating Details
In the fourth quarter, non-GAAP gross margin was 81.1%, which contracted 40 basis points (bps) on a year-over-year basis.
Subscription gross margin of 85% contracted 10 bps year over year. Professional services and other gross margin were 15.4% compared with year-ago quarter’s figure of 16.7%.
Total operating expenses, on a non-GAAP basis, were $942 million in the reported quarter, up 26.8% year over year. As a percentage of revenues, operating expenses declined 110 bps on a year-over-year basis.
ServiceNow’s non-GAAP operating margin expanded 70 bps on a year-over-year basis to 22.7%.
Balance Sheet & Cash Flow
As of Dec 31, 2021, ServiceNow had cash and cash equivalents, and short-term investments of $3.30 billion compared with $3.03 billion as of Sep 30, 2021.
During the reported quarter, cash from operations was $844 million compared with $320 million in the previous quarter.
ServiceNow generated free cash flow of $744 million in the quarter, up from $228 million reported in the prior quarter.
At the end of the fourth quarter, remaining performance obligations or RPO were $9.7 billion, surging 34% year over year.