Investor Alert

Earnings Results

July 28, 2021, 5:32 p.m. EDT

ServiceNow beats earnings estimates on strength of subscriptions

By Levi Sumagaysay

Citing “strong demand across all regions and workflows,” ServiceNow Inc. on Wednesday reported quarterly results that beat expectations.

The Silicon Valley-based maker of workflow software reported second-quarter net income of $59 million, or 29 cents a share, compared with $41 million, or 20 cents a share, in the year-ago period. Adjusted for stock-based compensation, depreciation and amortization and other costs, earnings were $1.42 a share. Revenue rose to $1.4 billion from $1.1 billion in the year-ago quarter, with subscription revenue increasing 31% year over year to $1.33 billion.

Analysts surveyed by FactSet had forecast earnings of $1.21 a share on revenue of $1.36 billion.

The company also reported a 25% increase year over year in the number of customers with more than $1 million in annual contract value.

“We are the platform for digital business, and we are well on our way to becoming a $15+ billion revenue company,” said ServiceNow (NYS:NOW) Chief Financial Officer Gina Mastantuono in a news release.

“ServiceNow is the control tower for digital transformation for every business in every industry,” said Chief Executive Bill McDermott on the company’s earnings call.

ServiceNow expects third-quarter subscription revenue of $1.4 billion to $1.405 billion. Analysts had forecast subscription revenue of $1.39 billion and overall revenue of $1.45 billion.

The company also raised its full-year guidance for subscription revenue to between $5.53 billion and $5.54 billion, above analysts’ forecast of $5.47 billion for subscription sales.

ServiceNow shares fell about 0.6% after hours, after rising nearly 0.2% in the regular session to close at $583.35. 

ServiceNow shares are up almost 6% year to date, and have risen about 34% in the past 52 weeks. By comparison, the S&P 500 Index (S&P:SPX) has climbed more than 17% so far this year, and 35% in the past year.

Link to MarketWatch's Slice.