• Subscription Revenue: $2.715 billion, 22.5% year-over-year growth in constant currency.

• Operating Margin: Over 31%, exceeding guidance by more than 150 basis points.

• Current RPO: $9.36 billion, 23.5% year-over-year growth in constant currency.

• Free Cash Flow Margin: 17%, up over 800 basis points year-over-year.

• Cash and Investments: $9.1 billion at the end of the quarter.

• Share Repurchase: Approximately 272,000 shares bought back, with $562 million remaining on the authorization.

• Guidance for 2024 Subscription Revenue: Raised to $10.655 billion to $10.66 billion, representing 23% year-over-year growth.

• Q4 Subscription Revenue Guidance: Between $2.8 billion and $2.85 billion, representing 21.5% to 22% year-over-year growth.

• Warning! GuruFocus has detected 5 Warning Sign with NOW.

Release Date: October 23, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• ServiceNow Inc (NYSE:NOW) reported strong Q3 2024 results, outperforming all top-line and profitability metrics, with subscription revenue growth of 22.5% at constant currency.

• The company achieved an operating margin of over 31%, exceeding guidance by more than 150 basis points, and closed 96 deals greater than $1 million in net new ACV.

• ServiceNow Inc (NYSE:NOW) continues to expand its strategic relevance, with its platform being adopted as a governance control tower for AI, integrating with other systems to modernize workflows.

• The company has launched significant AI innovations, including the Xanadu release with over 350 new innovations, enhancing its platform's capabilities in analytics, custom skills development, and industry-specific solutions.

• ServiceNow Inc (NYSE:NOW) is experiencing growing brand awareness and market opportunities, with partnerships and collaborations with major companies like Siemens, Zoom, and Nvidia, expanding its addressable market to nearly half a trillion dollars.

Negative Points

• Despite strong performance, the macroeconomic environment remains complex, with a value-based market that requires continuous innovation and execution.

• There is a potential risk of over-reliance on AI and new technologies, which could face challenges in adoption and integration across diverse customer environments.

• The company's rapid expansion and headcount growth, particularly in sales and marketing, may lead to increased operational costs and require careful management to maintain profitability.

• ServiceNow Inc (NYSE:NOW) faces competition in the AI and enterprise software space, necessitating continuous innovation to maintain its leadership position.

• The integration of new technologies and partnerships, while beneficial, could pose challenges in terms of execution and alignment with existing systems and customer expectations.