ServiceNow (NOW) Q3 2024 earnings summary

Executive summary

• Q3 2024 delivered strong outperformance across all growth and profitability metrics, with subscription revenue and CRPO growth exceeding guidance and robust large deal activity.

• Total revenues for Q3 2024 were $2.80 billion, up 22% year-over-year, driven by strong subscription growth and digital workflow products.

• AI and digital transformation remain top C-suite priorities, fueling demand for the Now Platform and Now Assist, with significant traction in GenAI products and new innovations like Xanadu and RaptorDB.

• Strategic partnerships and expanded addressable market, including collaborations with NVIDIA, Microsoft, Snowflake, Databricks, and others, are driving further growth.

• Leadership strengthened with the appointment of Amit Zavery as President, Chief Product Officer, and COO.

Financial highlights

• Q3 2024 subscription revenues reached $2.715 billion, up 23% year-over-year in constant currency, beating guidance by 200 basis points.

• Remaining performance obligations (RPO) ended at $19.5 billion, up 36% year-over-year; current RPO at $9.36 billion, up 26%.

• Q3 GAAP net income was $432 million; non-GAAP net income $775 million; diluted EPS $2.07; non-GAAP EPS $3.72.

• Free cash flow margin was 17% in Q3, with $2.06 billion free cash flow for the nine months ended September 30, 2024.

• Share repurchases totaled 272,000 shares in Q3, with $562 million remaining under the current authorization.

Outlook and guidance

• 2024 subscription revenue guidance raised to $10.655–$10.66 billion, representing 23% year-over-year growth.

• Q4 2024 subscription revenues expected between $2.875–$2.88 billion, up 21.5–22% year-over-year.

• 2024 operating margin expected at 29.5%, free cash flow margin at 31%, and subscription gross margin at 84.5%.