ServiceNow reported Q2 revenue of $1.41 billion, above the analysts’ estimate of $1.36 billion and up 32% year over year. The company reported that it had profits of $1.42 per share, also going above the estimates by analysts, who predicted $1.21.
Most of the growth came from subscription revenues, which grew by 27%, to $1.33 billion adjusted for constant currency. The current remaining performance obligations (contract revenue to be recognized as revenue over the next 12 months), went up 31% to hit $4.7 billion.
The company said that it now has about 1,201 total customers, paying more than $1 million every year, a 25% increase year over year, with 62 paying sums above $10 million annually. As CEO Bill McDermott puts it, “the pipeline is incredibly robust.”
ServiceNow also released guidance for the year, raising expectations, with an expected $5.53 billion in subscription revenue, up 29%. McDermott reported that the margins will rise from 23.5% to 24.5%. He continued to say that the team delivered an outstanding quarter, exceeding the high end of previous guidance. The Chief Financial Officer, Gina Mastantuono reported the company saw strong demand across regions and workflows, adding that it is on track to earn $15-billion-plus in revenue.
The accelerated growth put investors at ease, given that in the last quarter’s earnings announcement, ServiceNow caught them off-guard with a decline in growth of high-spending clients, sending the stock sharply down. After the announcement that things were looking up, the stock rose a little under 1% in after-hours trading.
The pandemic did interrupt things but Mastantuono said that recent capabilities acquired (from Lightstep) give the company the ability to support distributed network environments as businesses return to normal. If the world returns to a face-to-face sales mode, ServiceNow could be in a better position to sell more.