ServiceNow raised its outlook for 2023 as its third quarter subscription revenue grew 27% and the company ended the quarter with 49 customers with more than $20 million in annual contract value.
The company reported third quarter earnings of $242 million, or $1.17 a share, on revenue of $2.29 billion, up 25% from a year ago. Non-GAAP earnings in the quarter were $2.92 a share. Analysts were expecting non-GAAP third quarter earnings of $2.55 a share.
As for guidance, ServiceNow projected fourth-quarter subscription revenue of $2.32 billion to $2.325 billion. For 2023, ServiceNow projected subscription revenue of $8.625 billion to $8.64 billion, up 25.5%.
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ServiceNow CEO Bill McDermott said the company's platform play for transformation and AI is rolling. "This is a highly unique, differentiated company that is reshaping business as the intelligent super platform for the enterprise."
The company is gaining wallet share and has 1,789 customers with more than $1 million in annual contract value.
On a conference call with analysts, McDermott said the following:
- "All of our workflow businesses were in 14 or more of the top 20 deals, ITSM, ITOM, ITAM, security and risk, customer, employee, and creator. Within our technology workflows, security and risk had a very strong quarter, with 10 deals over 1 million. Employee workflows had a stellar quarter with seven deals over 1 million and one deal over 10 million."
- ServiceNow's federal business posted its best quarter in the company's history. "We had 19 federal deals over 1 million, including three deals over 10 million," he said.
- "GenAI represents 36% of AI spending overall. We believe every dollar of global GDP will be impacted by AI over the next several years. This isn't a hype cycle. It is a generational movement."
- "GenAI represents a tailwind of growth for ServiceNow. We have over 300 customers in our pipeline from every industry, every buying center and every stage of testing. Our GenAI SKU drove the highest number of customer requests for a pre-release product in our history."
- "All CEOs right now are either in a move to increase productivity or take costs out. And obviously, while doing so, they also have the added challenge of new business model innovation."
