A record number of US $ 1-million-plus deals along with huge revenue growth and revenue increases in fiscal 2021 is ServiceNow looking to a bright future,, ServiceNow President and CEO Bill McDermott said in financial analysts on Wednesday.
McDermott, in prepared statements on an analyst call to discuss the company’s fourth fiscal 2021 results, said ServiceNow is uniquely positioned for growth.
“We are growing like a fast -moving startup with the profitability of a global market leader,” he said. “We are on a clear growth path to US $ 15 billion-plus by 2026. While our strong monetary position maintains optionality, we do not rely on M&A for growth. While rising interest rates are challenging others, ServiceNow’s business model is built to thrive in any economic environment. “
McDermott’s optimism is centered on growth in several indices, including subscription revenue growth in the fourth fiscal 2021 quarter of 30 percent, current outstanding performance obligations growth of 32 percent, free cash flow growth of 32 percent. percent, fixed growth of subscription charges of 33 percent, operating margin of 23 percent and renewal rate of 99 percent.
The company also has a record 135 deals at US $ 1 million, which McDermott said is up 50 percent compared to last year.
“There has long been a‘ Rule of 40 ’benchmark for successful software companies,” he said, referring to a rule of thumb that the combined growth rate and profit margin of a software should exceed 40 per cent. “These results show that ServiceNow works beyond the ‘Rule of 60.’ The company expands across all geographies, industries and consumer personalities. “
ServiceNow does business in what McDermott calls a sustainable demand environment. He said the environment is characterized by the structural challenges faced by every industry in every geographical region, including supply chain disruption, inflation and more.
“These underlining points we continue to make: That technology approach has become business strategy,” he said.
“Digital technologies are a stimulating deflationary force. They enable new business models, speeding up productivity while reducing costs. Eighty -five percent of chief executives will maintain or increase technology budgets this year. “
Customers responded by implementing multiple ServiceNow technologies, McDermott said. Of the company’s top 20 deals in the fourth fiscal quarter, ServiceNow IT Service Management was at 16 of them, IT Operations Management at 18, Employee Workflows human resources service delivery at 11, Customer Service Management at 13 and Creator Workflows at 19 of them .
The digital opportunity continues to expand for ServiceNow, McDermott said.
“As early as 2022, we are taking important steps on our long -term road map,” he said. “We are introducing an innovative new solution, ServiceNow Impact. Leaders need a command center to navigate the fully connected world. ServiceNow Impact includes an intuitive consumer-grade mobile application that displays value from change investments in real time on their device. As this experience accelerates user engagement, we expect a significant impact of the mix with wider consumption of our growing portfolio of solutions. “
To meet the size of ServiceNow’s growing business, McDermott released some significant changes to its executive team.
ServiceNow has appointed Chirantan “CJ” Desai to the role as COO. Desai, who most recently served as the company’s chief product and engineering officer, is now responsible for industry and solution sales in addition to product, design and engineering, he said.
Kevin Haverty, CRO of ServiceNow, has been promoted to a new strategic role as senior adviser to the CEO where he will be responsible for expanding the company’s public sector business and mentoring the company’s early-in-career professionals. .
Paul Smith, ServiceNow’s president of Europe, Middle East and Africa business, has been promoted as chief commercial officer where he will oversee regional sales teams as well as sales enablement and sales operations.
The company also brought in Karen Pavlin as the company’s new chief diversity, equity and inclusion officer. He previously held the same role at Accenture.
“As our market opportunities expand, we are advancing strong leaders for size,” he said.
Hopefully, ServiceNow’s ambition is to define the enterprise software company of the 21st century, McDermott said.
“ServiceNow’s results in 2021 and strong guidance in 2022 demonstrate our unwavering confidence in that goal,” he said. “Our performance should leave no doubt: We are making all the cylinders, and we will continue to do so. The world is looking for market leaders to develop a new, inclusive, sustainable way of long. -economic value. And ServiceNow delivers. This is why we embrace the brand, the motto and the motto ‘The world works with ServiceNow.’ “
For its fourth fiscal quarter 2021, which ended Dec. 31, ServiceNow reported revenue of US $ 1.61 billion, up 29 percent from the US $ 1.25 billion the company reported for its fourth fiscal quarter 2020 This includes subscription revenue of US $ 1.52 billion, up from US $ 1.18 billion last year, and professional services and other revenue of US $ 91 million, up from US $ 66 million last year.
ServiceNow also reported fourth fiscal quarter 2021 GAAP net income of US $ 26 million, or 13 cents per share, from US $ 17 million last year, or 8 cents per share.
Net income on a non -GAAP basis for the quarter was US $ 296 million, or US $ 1.49 per share, from last year’s US $ 235 million, or US $ 1.20 per share.
For all fiscal 2021, ServiceNow reported revenue of US $ 5.90 billion, up 30 percent compared to US $ 4.52 billion reported by the company last year. That revenue includes subscription revenue of US $ 5.57 billion, up 30 percent from last year, and professional services and other revenue of US $ 323 million, up 39 percent.
On a GAAP basis, ServiceNow reported net income of US $ 230 million, or US $ 1.16 per share, from US $ 119 million, or 61 cents per share, reported last year. On a non-GAAP basis, the company reported net income of US $ 1.20 billion, or US $ 6.07 per share, from last year’s US $ 926 million, or US $ 4.79 per share.
Expected, ServiceNow expects subscription revenue to grow in fiscal first quarter 2022 by approximately 25 percent more than its first quarter 2021 revenue, while subscription revenue is expected to increase by 26 percent throughout the year 2022 to 2021 .
ServiceNow share prices fell 2.15 percent on the trading day to US $ 484.42. However, after the company reported its finances after the close of the trading day, share prices jumped to more than US $ 530 in after -hours trading.
This article originally appeared on crn.com