Core Shorts: NOW Earnings Recap

Editor’s note: We’re so pleased to launch “Core Shorts” as a new feature on our blog this week. Every month, we will share our favorite recent ServiceNow, Sourcing and Procurement, and Core Operations articles from across the industry trades – plus share a quick executive summary with the who, what, where, why, and how the recent press matters to the daily lives of our ecosystem.

ServiceNow “Beats and Raises” Halfway Through the Year

Article source: Diginomica, July 25th, 2024

First up this week, is ServiceNow’s earnings report from Thursday, July 24, where NOW reported impressive Q2 2024 earnings, with revenues climbing 23% year-over-year – inspiring corporate leadership to raise its full-year guidance.

(It’s been a while since I’ve worn my analyst hat – and this is in no way a stock recommendation -- but that seems like a safe bet given the strong midyear performance and the fact that Q3 is historically buoyed by Fed spending.)

Unsurprisingly, NOW stock went up $100 (at the time of writing) off continued strong performance, as summarized by Diginomica:

• Subscription revenues of $2.542 billion in Q2 2024, representing 23% year‑over‑year growth, 23% in constant currency
• Total revenues of $2.627 billion in Q2 2024, representing 22% year‑over‑year growth, 22.5% in constant currency
• Current remaining performance obligations of $8.78 billion as of Q2 2024, representing 22% year‑over‑year growth, 22.5% in constant currency
• Remaining performance obligations of $18.6 billion as of Q2 2024, representing 31% year‑over‑year growth, 31.5% in constant currency
• 88 transactions over $1 million in net new ACV in Q2 2024, up 26% year‑over‑year 

I also checked in with CoreX CEO, and former ServiceNow EVP, Rick Wright on his take on this week’s numbers and analyst recap.

To Wright, we’re seeing a lot of growth and energy at NOW based on the strength that AI within the workflows, and significant expansion into new functional momentum.

We spent the week in NOW HQ this week, and there, you can feel the strengthening momentum in the core operations space, as the promise of Workflow efficiency and just plain logic begins to elevate non-IT teams, helping them drive efficiency, better experiences, and more operational controls.

Of course, the elephant in the room was the surprise announcement that Chris Bedi will be stepping into the new role of Chief Product Officer, replacing C.J. Desai who has overseen the product since 2016.

We’ll let people much more familiar with the situation weigh in on the long-term impact of that role change. Weighing in on the situation during the earnings call, ServiceNow CEO Bill McDermott emphasized that the NOW product team is maniacally focused on the Xanadu release in a few weeks right now, so even they will have more time to process the personnel changes when they’re done finalizing beta testing and release notes.

All in on AI for Core Ops

As a part of that expansion, it was interesting to see how ServiceNow’s market-leading AI capabilities continue to drive strong economic performance, as well as driving efficiency and higher quality data throughout operational processes.

We’re also seeing huge early wins for our procurement clients, especially when leveraged to drive a guided buying process. Using AI to improve the user experience and guide your end users through an automated flow to help them find and order critical resources and requests provides a much simpler, more thoughtful experience for employees, for the company to effectively control or manage.

While many ERP and indirect spend management companies are developing this guided purchasing technology, the ServiceNow version, called NowAssist, has the advantage of also then orchestrating that process across the enterprise (versus one category or range of categories.)

NowAssist can further extend across multiple systems and business processes like sourcing, legal, vendor assessments, onboarding, security evaluations, etc. In contrast, some of the more common point solutions will improve only a sliver of the whole need.

Ultimately, that connectivity, visibility and workflow process gives your the digital knowledge workers (and leadership) the tools to run business at speed.