ServiceNow (NOW) Q2 2021 Earnings


Results

  • EPS: $1.42 vs $1.22 expected, an earnings surprise of 16.4%

  • Revenue: $1.41 billion vs $1.36 billion expected, up 27% YoY

  • Subscription revenue $1.33 billion, up 31% YoY

  • Strong demand as companies retool their workflows as they go digital

  • Current remaining performance obligations of $4.7 billion, up 34% YoY

  • 1,201 customers with more than $1 million in contract value, up 25% YoY

  • 62 customers with more than $10 million in contract value

  • Operating margin of 25%, beating guidance of 22%

  • FCF margin of 19%

  • 97% renewal rate (strong level of stickiness)


Q3 Guidance

  • Revenue: $1.4-1.405 billion, up 28-29% YoY

  • FY21 revenue between $5.53-5.54 billion

  • Margin of 23%, with marketing spend saved is Q2 pushed to Q3


FY21 Guidance

  • Revenue: $6.315-6.325 billion, up 27% YoY, revised up $123 million

  • Subscription revenue: $5.53-5.54 billion, up 29% YoY, revised up $73 million

  • Margin of 24.5% margin, revised up from 23.5%

  • FCF margin of 31%, revised up from 30%

  • Commentary of being well on their way to being a $15 billion revenue company


Market Reaction

  • Dropped 2% on after-hours trading, which climbed back up into marginally positive territory