The News: ServiceNow revenue jumped 24 percent to $1.75 billion in the second quarter of 2022, up from $1.4 billion in 2021, as the cloud workflow automation software vendor reported its Q2 2022 earnings July 27 after the markets closed. ServiceNow also posted non-GAAP net income of $329 million, which is up 15 percent from $287 million one year ago. Read the full Press Release on the ServiceNow website.
ServiceNow Revenue Hits $1.75B in Q2 2022, Up 24% YoY
Analyst Take: ServiceNow’s revenue of $1.75 billion for Q2 2022, which increased by 24 percent from a year ago, shows that the company is still making good progress, despite the continuing macroeconomic conditions that are adversely affecting the tech and other markets around the world.
We remain bullish on ServiceNow due to its broad and beneficial workflow automation software products as well as its rapidly expanding Now Platform for its enterprise customers. We are also continually impressed with the company’s talented executive team, which continues to carefully watch the company’s helm and lead with vision and smart execution.
Here are the ServiceNow Q2 2022 earnings by the numbers:
- Q2 2022 revenue of $1.75 billion, up 24 percent from $1.4 billion one year ago. The revenue figure was just below analyst consensus estimates of $1.76 billion for the quarter from Yahoo Finance.
- Q2 2022 non-GAAP net income of $329 million, up 14.6 percent from $287 million one year ago.
- Q2 2022 non-GAAP earnings per basic share (EPS) of $1.63, up from $1.45 per share one year ago. The EPS price beat analyst consensus estimates of $1.54 per share from Yahoo Finance.
Overall, this was a good quarter for ServiceNow during a an increasingly difficult period for markets that has led to a greater number of companies missing analyst estimates and displaying more mixed results. The growth for ServiceNow was quite robust and the company was largely on pace with its targets which also included CEO Bill McDermott reiterating long term growth targets that were shared in the company’s recent Investor Day.
Like other companies, ServiceNow’s revenue and other earnings results are being affected by macroeconomic issues including inflation, as well as by lingering effects from the Covid-19 pandemic, Russia’s war in Ukraine, on-going supply chain issues, and other complications around the world. ServiceNow, like other tech companies, continues to cope with these issues that are broadly affecting markets, sales, expectations, and the rest.
But at the same time, we do observe promise in ServiceNow’s latest financial results.
The company brought in subscription revenue of $1.66 billion in Q2 2022, up 24.6 percent from $1.3 billion one year ago, and professional services and other revenue of $94 million, up 19 percent from $79 million one year ago.
ServiceNow also listed current remaining performance obligations of $5.75 billion as of Q2 2022, representing 21 percent year over year growth, and announced that it has now surpassed 100 customers which are each spending more than $10 million on annual contracts as of Q2 2022. That represents more than 50 percent year over year growth with those customers, the company stated.
ServiceNow reported it now has 1,463 total customers, each spending more than $1 million in annual contract value with the company, which is 22 percent year over year growth for the business.
The company said it expects its growth to continue, with a target of more than $16 billion in annual subscription revenue in 2026.
ServiceNow’s Financial Outlook
For the third quarter of 2022, ServiceNow said it expects to bring in subscription revenue of $1.75 billion to $1.76 billion, with expected year-over-year growth of 23 percent.
For the full year of 2022, ServiceNow guidance calls for subscription revenue of $6.92 billion to $6.93 billion, for an increase of 24 percent year-over-year.
Overall, ServiceNow continues to be in a steady place today. With its workflow automation platform, the company is serving an important and growing technology need for enterprises, especially as work-from-home situations continue around the world even as some workers are returning to their offices.
Workflow automation gives enterprises helpful systems that allow them to take a process, remove unneeded steps from its workflows, and get more work done in less time on a SaaS subscription basis. It continues to be an easy decision for over-stressed enterprises across the marketplace. And as we continue to stress, workflow automation is likely to see additional jumps in adoption and investment in coming quarters as macroeconomic conditions and tight labor markets add further pressures on many companies.
It will be interesting to watch ServiceNow’s performance and market results throughout the rest of 2022 and into 2023 as it maneuvers its way through today’s economic and global storms. We fully expect ServiceNow to continue to perform well and to deliver its products and services to an expanding number of customers in the future.
We continue to be bullish on ServiceNow’s innovative Now platform, which is built to help customers with their own digital transformations today. For enterprises, ServiceNow is a deflationary winner as companies seek to streamline processes and workflows and better manage margins even during what looks to be a slower growth period for the overall economy.
Disclosure: Futurum Research 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 Futurum Research as a whole.