ServiceNow Earnings
ServiceNow (NYSE:NOW), a trailblazer in AI-driven business transformation platforms, has unveiled its financial results for the fourth quarter, concluding on December 31, 2024. The company showcased solid financial growth amidst increasing demand for AI and automation solutions.
| Metric | Q4 2024 (in $ millions) | Year-over-Year Growth | Constant Currency Growth |
|---|---|---|---|
| Subscription Revenue | $2,866 | 21% | 21% |
| Total Revenue | $2,957 | 21% | 21% |
| Current Remaining Performance Obligations (cRPO) | $10.27 billion | 19% | 22% |
| Remaining Performance Obligations (RPO) | $22.3 billion | 23% | 26% |
These results underscore ServiceNow's consistent and resilient performance, attributed to their effective market strategies and insulated operations against forex fluctuations through sturdy subscription revenue streams and performance obligations.
ServiceNow Results
The latest quarter saw ServiceNow achieving a commendable 21% YoY growth in total revenue, aligning with their strategic focus on expanding subscription services. Subscription revenue alone accounted for $2,866 million, reflecting the company’s strong foothold in the enterprise solutions space. Furthermore, current and remaining performance obligations reported at $10.27 billion and $22.3 billion, respectively, indicate promising future revenue generation with notable growth.
Revenue Breakdown
The financial success in Q4 2024 was bolstered by impressive gains across key customer segments:
| Segment | Q4 2024 Growth | Notes |
|---|---|---|
| Customers > $5 million ACV | 21% | Nearly 500 customers reached this level. |
| Customers > $1 million ACV | 12% | Total of 2,109 customers surpassed this threshold. |
ServiceNow saw significant growth among customers generating over $5 million in annual contract value (ACV), with nearly 500 customers achieving this milestone. The 21% growth in this segment indicates ServiceNow's strong penetration and increasing reliance on its platform by high-value clients. Additionally, with over 2,100 customers contributing more than $1 million in ACV, ServiceNow continues to capture a broad and loyal client base.
Key Developments
ServiceNow's quarter was marked by pivotal developments aimed at consolidating its leadership in AI and automation:
- AI and Automation Innovations: Launching an AI Agent Orchestrator and introducing thousands of pre-built AI agents significantly accelerated enterprise AI adoption.
- Strategic Partnerships: Enhanced collaborations with tech giants like Google Cloud, Oracle, AWS, Microsoft, and others, amplifying customer transformation capabilities and addressing complex challenges.
- Strategic Acquisitions: ServiceNow acquired the AI-native conversation platform, Cuein, and operational technology service provider, Mission Secure, fortifying its AI-driven offerings.
This slew of innovations and strategic expansions fortifies ServiceNow’s positioning as an essential partner for organizations pursuing digital transformation with AI at its core.
Comments from Company Officers
In commentary accompanying the financial results, Bill McDermott, ServiceNow's Chairman and CEO, echoed his optimism for the company's path forward, emphasizing that AI is a transformative force in enterprise technology, positioning ServiceNow as a leader in the AI business transition. Additionally, President and CFO, Gina Mastantuono, underscored the strategic innovations proposed for 2025, calling them game-changers that are set to redefine automation and further consolidate the company's leadership stance.
Dividends and Share Repurchases
Although there is no dividend to report, ServiceNow is proactively addressing stock dilution issues with a substantial $3 billion share repurchase program. This strategic financial maneuver, with $266 million remaining from the previously authorized amount, illustrates ServiceNow's commitment to optimizing shareholder value while managing equity metrics prudently.
ServiceNow Stock Forecast
Post-earnings announcement, ServiceNow's stock witnessed a slight decline of approximately 2.2%, a typical short-term market reaction to earnings disclosures. Given the robust financial fundamentals and strategic business outlook, ServiceNow's stock price could see optimistic projections between $1,150 to $1,200 in the near term. However, should market conditions or adoption rates fluctuate significantly, conservative estimates might place the stock between $1,100 and $1,130. These projections take into account the current last price of $1,144.60 and the market capitalization standing at $158,992,367,660, with the transition towards a consumption-based business model and expanding AI solutions providing potential for considerable growth and valuation upside.
ServiceNow's journey towards sustained strategic growth, bolstered by a clear focus on innovation and customer-centric solutions, indicates a promising future just as the company enters another fiscal year.
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