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ServiceNow Revenue Up in Q1 2023 to $2.1B, Beating Estimates

The News: ServiceNow revenue climbed to $2.1 billion in the first fiscal quarter of 2023, up 22 percent from $1.7 billion one year ago, as the cloud workflow automation software vendor announced its latest earnings on April 26 for the quarter ending March 31, 2023. ServiceNow also posted non-GAAP net income of $483 million, up 37 percent from $352 million one year ago. See the full Press Release on the ServiceNow website.

ServiceNow Revenue Up in Q1 2023 to $2.1B, Beating Estimates

Analyst Take: ServiceNow’s revenue boost of 22 percent to $2.1 billion in the first quarter continues the company’s string of earnings successes in recent years from its expanding Now workflow automation platform and other enterprise software products. These results are even more impressive today because they arrive amid the still challenging macroeconomic forces affecting many tech and consumer companies around the world.

Here are the ServiceNow Q1 2023 fiscal year earnings by the numbers:

  • Q1 2023 revenue of $2.1 billion, up 22 percent from $1.7 billion one year ago. The revenue figure beat the $2.04 billion consensus estimate expected by analysts at Zack’s Investment Research.
  • Q1 2023 non-GAAP net income of $483 million, up 37 percent from $352 million one year ago.
  • Q1 2023 non-GAAP diluted earnings per share (EPS) of $2.37, up from $1.73 per share one year ago. The EPS price beat analyst consensus estimates of $2.04 per share from analysts with Zack’s Investment Research.
  • Q1 2023 non-GAAP gross profit of $1.7 billion, up 22 percent from $1.4 billion one year ago.
  • Q1 2023 non-GAAP gross margin of 83 percent, unchanged from one year ago.
  • Q1 2023 non-GAAP income from operations of $552 million, up 26 percent from $437 million one year ago.
  • Q1 2023 non-GAAP operating margin of 26 percent, up from 25 percent one year ago.

ServiceNow also reported current remaining performance obligations (cRPO) contract revenue of $7.01 billion as of March 31, 2023, which is up 23 percent from one year ago. In addition, ServiceNow has grown its list of customers with more than $1 million in annual sales contract value to 1,682 customers, which is up 20 percent from a year ago.

ServiceNow Revenue by Business Segment

Here are ServiceNow’s Q1 2023 revenue numbers by segment:

For Q1, subscription revenue reached $2.02 billion, up 24 percent from $1.63 billion one year ago. Professional services and other revenue came in at $72 million, down 21 percent from $91 million one year ago.

ServiceNow Revenue Guidance for Q2 2023

ServiceNow also provided financial guidance for subscription revenue in Q2 2023 and for the full year of FY2023.

For Q2, the company expects subscription revenue between $2.04 billion to $2.045 billion, for YoY growth of 23 percent to 23.5 percent.

For the full FY2023, ServiceNow expects subscription revenue of $8.47 billion to $8.52 billion, for YOY growth of 23 percent to 23.5 percent.

ServiceNow Revenue Overview

It was another positive quarter for ServiceNow, again proving the value of its product offerings and expertise in the enterprise workflow automation software marketplace.

It is clear after another top and bottom beat that ServiceNow Chairman and CEO Bill McDermott’s confidence in the company’s continued growth trajectory is a reasonable argument that it is one of the best-positioned software companies in the market. As we have said over the last few quarters, we continue to remain bullish on this growing, progressive company and its strong revenue performance and smart executive team.

The AI space has not talked much about the Now platform but ServiceNow is seeing large wins with customers among five or more of the company’s offerings. These investments in Now are indicative of companies looking to layer innovation on top of existing and even legacy software stacks to eventually replace and disrupt how companies engage with software.

And that is just the start, we believe. Just imagine as ServiceNow adds Generative AI on top of its products – that will really be something interesting to watch in this space.

The value and importance of the cloud-based workflow automation offerings from ServiceNow is that they are built to revamp enterprise business processes by removing unneeded steps from workflows and letting enterprises get more work done in less time on a SaaS subscription pay-as-you-use-it basis. We believe that ServiceNow’s workflow automation tools will see continuing adoption and investment in the future as more companies realize how these tools can help them as they battle macroeconomic conditions and tight labor markets around the world.

We think that ServiceNow is incredibly well positioned to excel and lead continuing transformations in the continuing uncertain market.

Disclosure: The Futurum Group is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.

Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of The Futurum Group as a whole.

Other insights from The Futurum Group:

ServiceNow Announces Major Platform Expansion with its ServiceNow Now Platform Utah Release

ServiceNow Revenue Hits $1.94B in Q4 2022, Up 20% YoY

We are LIVE! Talking Best of 2022 and a Look into 2023 – The Six Five Webcast

Author Information

Daniel is the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise.

From the leading edge of AI to global technology policy, Daniel makes the connections between business, people and tech that are required for companies to benefit most from their technology investments. Daniel is a top 5 globally ranked industry analyst and his ideas are regularly cited or shared in television appearances by CNBC, Bloomberg, Wall Street Journal and hundreds of other sites around the world.

A 7x Best-Selling Author including his most recent book “Human/Machine.” Daniel is also a Forbes and MarketWatch (Dow Jones) contributor.

An MBA and Former Graduate Adjunct Faculty, Daniel is an Austin Texas transplant after 40 years in Chicago. His speaking takes him around the world each year as he shares his vision of the role technology will play in our future.

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