ServiceNow, Inc. (NOW) Bundle
A Brief History of ServiceNow, Inc.
ServiceNow, Inc. has established itself as a leader in digital workflow solutions since its inception in 2004. The company has focused on delivering enterprise cloud services to help organizations streamline their operations and enhance productivity.
Founding and Early Growth
Founded by Fred Luddy, ServiceNow started its journey by addressing the need for IT service management (ITSM) solutions. The company launched its first product, a cloud-based IT service management platform, which quickly gained traction among enterprises seeking efficient IT operations.
Public Offering and Expansion
In June 2012, ServiceNow went public, raising approximately $210 million in its initial public offering (IPO) on the New York Stock Exchange under the ticker symbol "NOW." The IPO was a pivotal moment, allowing the company to expand its product offerings beyond ITSM to include IT operations management (ITOM) and IT business management (ITBM).
Recent Financial Performance (2024)
As of September 30, 2024, ServiceNow reported total revenues of $8.027 billion for the nine months ended September 30, 2024, marking a 23% increase compared to $6.534 billion in the same period of 2023.
| Financial Metric | 2024 (Nine Months Ended) | 2023 (Nine Months Ended) | % Change |
|---|---|---|---|
| Total Revenues | $8.027 billion | $6.534 billion | 23% |
| Net Income | $1.041 billion | $1.436 billion | -27.5% |
| Subscription Revenues | $7.780 billion | $6.315 billion | 23% |
| Operating Income | $1.652 billion | $1.455 billion | 13.5% |
Subscription Revenue Breakdown
Subscription revenues, which account for 97% of total revenues, reached $7.780 billion for the nine months ended September 30, 2024, driven by strong demand for digital workflow products.
| Subscription Revenue Type | 2024 (Nine Months Ended) | 2023 (Nine Months Ended) | % Change |
|---|---|---|---|
| Digital Workflow Products | $6.877 billion | $5.587 billion | 23% |
| ITOM Products | $903 million | $728 million | 24% |
Stock Performance and Shareholder Returns
ServiceNow's stock has shown significant growth since its IPO, reflecting the company's robust financial performance and strategic market position. As of September 30, 2024, the company repurchased $400 million worth of its common stock, with approximately $562 million remaining under its buyback program initiated in May 2023.
Future Outlook
Looking ahead, ServiceNow expects continued growth in subscription revenues and plans to enhance its product offerings. The company is focused on expanding its market presence and improving customer value through innovative solutions.
Key Performance Indicators
As of September 30, 2024, ServiceNow reported:
- Remaining Performance Obligations (RPO): $19.5 billion
- Customers with Annual Contract Value (ACV) greater than $1 million: 2,020
- Net cash provided by operating activities for the nine months ended September 30, 2024: $2.632 billion
Conclusion on ServiceNow's Financial Position
In summary, ServiceNow, Inc. has demonstrated resilience and growth in its financial performance through strategic expansions and a strong subscription model. The company remains well-positioned to capitalize on the increasing demand for digital workflows and enterprise solutions.
A Who Owns ServiceNow, Inc. (NOW)
Major Shareholders
As of 2024, the ownership structure of ServiceNow, Inc. (NOW) includes a mix of institutional investors, individual stakeholders, and company insiders. The largest shareholders are typically large institutional investors.
| Shareholder Type | Shareholder Name | Ownership Percentage | Number of Shares Owned |
|---|---|---|---|
| Institutional Investor | The Vanguard Group, Inc. | 8.1% | 16,800,000 |
| Institutional Investor | BlackRock, Inc. | 7.5% | 15,500,000 |
| Institutional Investor | Fidelity Investments | 6.7% | 14,000,000 |
| Individual Investor | William R. McDermott (CEO) | 1.5% | 3,100,000 |
| Institutional Investor | State Street Corporation | 4.2% | 8,700,000 |
| Institutional Investor | T. Rowe Price Associates, Inc. | 3.9% | 8,000,000 |
Insider Ownership
Insiders of ServiceNow, including executives and board members, also hold a significant portion of the company's shares. As of September 30, 2024, the total insider ownership is approximately 2.5% of the total shares outstanding.
| Insider Name | Position | Shares Owned | Ownership Percentage |
|---|---|---|---|
| William R. McDermott | CEO | 3,100,000 | 1.5% |
| Gina Mastantuono | CFO | 800,000 | 0.4% |
| Paul Smith | Chief Commercial Officer | 500,000 | 0.2% |
| Russell Elmer | General Counsel | 250,000 | 0.1% |
Recent Stock Performance
ServiceNow's stock has shown significant growth in recent years. The stock price as of January 2024 was approximately $1,650 per share, reflecting a substantial increase compared to previous years.
| Date | Stock Price | Market Capitalization |
|---|---|---|
| January 2024 | $1,650 | $34 billion |
| September 2023 | $1,450 | $30 billion |
| January 2023 | $1,250 | $26 billion |
Institutional Ownership Trends
The trend in institutional ownership has generally increased over the past few years, indicating a growing confidence in the company's growth prospects.
| Year | Institutional Ownership Percentage |
|---|---|
| 2024 | 78% |
| 2023 | 75% |
| 2022 | 73% |
As of September 30, 2024, the total number of shares outstanding is approximately 207 million, with a total market capitalization of around $34 billion.
ServiceNow, Inc. (NOW) Mission Statement
Mission Statement Overview
The mission of ServiceNow, Inc. is to make the world of work, work better for people. This mission underscores the company's commitment to providing innovative solutions that enhance productivity and simplify workflows across various sectors.
Core Values
- Customer Focus: ServiceNow prioritizes customer success and satisfaction.
- Innovation: The company continuously invests in technology to remain at the forefront of the industry.
- Integrity: ServiceNow upholds high ethical standards in all business practices.
- Collaboration: The company fosters teamwork and partnerships to drive mutual success.
Recent Financial Performance
As of September 30, 2024, ServiceNow reported significant financial metrics that reflect its operational efficiency and growth trajectory.
| Financial Metric | Q3 2024 (in millions) | Q3 2023 (in millions) | % Change |
|---|---|---|---|
| Total Revenues | $2,797 | $2,288 | 22% |
| Subscription Revenues | $2,715 | $2,216 | 23% |
| Net Income | $432 | $242 | 79% |
| Gross Profit | $2,213 | $1,792 | 23% |
| Sales and Marketing Expenses | $944 | $799 | 18% |
| Research and Development Expenses | $626 | $549 | 14% |
Customer Engagement
As of September 30, 2024, ServiceNow had 2,020 customers with an Annual Contract Value (ACV) greater than $1 million, up from 1,772 in the previous year, indicating a strong growth in customer base and engagement.
Product Offerings
ServiceNow's digital workflow products, which constitute the majority of its offerings, generated $2,398 million in revenue for Q3 2024, reflecting a 22% increase from $1,961 million in Q3 2023. The IT Operations Management (ITOM) products also saw a significant rise, with revenues of $317 million, up 24% from $255 million in the previous year.
Market Positioning
ServiceNow has established a leading position in the IT service management (ITSM) sector, characterized by high customer retention rates and expanding market share through continuous innovation and enhancements to its cloud-based platform.
Future Outlook
The company anticipates continued revenue growth driven by increasing demand for digital transformation solutions across industries. Subscription revenues are projected to remain strong, driven by both new customer acquisitions and increased usage from existing clients.
How ServiceNow, Inc. (NOW) Works
Company Overview
ServiceNow, Inc. (ticker: NOW) operates as a cloud computing company, providing enterprise cloud solutions to manage digital workflows for global enterprises. The company's primary offerings include a wide range of digital workflow products, IT Operations Management (ITOM) products, and professional services.
Financial Performance
As of the third quarter of 2024, ServiceNow reported the following financial results:
| Financial Metric | Q3 2024 (in millions) | Q3 2023 (in millions) | % Change |
|---|---|---|---|
| Total Revenues | $2,797 | $2,288 | 22% |
| Subscription Revenues | $2,715 | $2,216 | 23% |
| Professional Services and Other Revenues | $82 | $72 | 14% |
| Gross Profit | $2,213 | $1,792 | 23% |
| Net Income | $432 | $242 | 79% |
| Net Income per Share - Basic | $2.09 | $1.18 | 77% |
| Net Income per Share - Diluted | $2.07 | $1.17 | 77% |
Cost Structure
The cost of revenues for Q3 2024 was reported as follows:
| Cost Category | Q3 2024 (in millions) | Q3 2023 (in millions) | % Change |
|---|---|---|---|
| Subscription Costs | $496 | $420 | 18% |
| Professional Services Costs | $88 | $76 | 16% |
| Total Cost of Revenues | $584 | $496 | 18% |
Research and Development (R&D)
R&D expenses for the third quarter of 2024 were as follows:
| R&D Metric | Q3 2024 (in millions) | Q3 2023 (in millions) | % Change |
|---|---|---|---|
| R&D Expenses | $626 | $549 | 14% |
Sales and Marketing
Sales and marketing expenses for Q3 2024 were detailed as follows:
| Sales and Marketing Metric | Q3 2024 (in millions) | Q3 2023 (in millions) | % Change |
|---|---|---|---|
| Sales and Marketing Expenses | $944 | $799 | 18% |
Operating Income
The operating income for ServiceNow for the third quarter of 2024 was:
| Operating Income Metric | Q3 2024 (in millions) | Q3 2023 (in millions) |
|---|---|---|
| Income from Operations | $418 | $231 |
Tax Provision
Tax provisions for the third quarter of 2024 were as follows:
| Tax Metric | Q3 2024 (in millions) | Q3 2023 (in millions) |
|---|---|---|
| Provision for Income Taxes | $84 | $57 |
Cash Flow
Cash flows from operating activities for the nine months ended September 30, 2024, were:
| Cash Flow Metric | 2024 (in millions) | 2023 (in millions) |
|---|---|---|
| Net Cash Provided by Operating Activities | $2,632 | $1,793 |
Stock Repurchase Program
As of September 30, 2024, ServiceNow had a stock repurchase program with the following details:
| Repurchase Activity | Shares Purchased (in thousands) | Average Price Paid per Share | Approximate Dollar Value of Shares Remaining (in millions) |
|---|---|---|---|
| Q3 2024 | 272 | $829.16 | $562 |
How ServiceNow, Inc. (NOW) Makes Money
Revenue Streams
ServiceNow primarily generates revenue through two main streams: subscription revenues and professional services revenues.
| Revenue Type | Q3 2024 Revenue (in millions) | Q3 2023 Revenue (in millions) | 9M 2024 Revenue (in millions) | 9M 2023 Revenue (in millions) |
|---|---|---|---|---|
| Subscription Revenues | $2,715 | $2,216 | $7,780 | $6,315 |
| Professional Services and Other | $82 | $72 | $247 | $219 |
| Total Revenues | $2,797 | $2,288 | $8,027 | $6,534 |
Subscription Revenue Breakdown
Subscription revenues consist mainly of digital workflow products and IT Operations Management (ITOM) products.
| Product Type | Q3 2024 Revenue (in millions) | Q3 2023 Revenue (in millions) | 9M 2024 Revenue (in millions) | 9M 2023 Revenue (in millions) |
|---|---|---|---|---|
| Digital Workflow Products | $2,398 | $1,961 | $6,877 | $5,587 |
| ITOM Products | $317 | $255 | $903 | $728 |
Cost Structure
ServiceNow's cost structure includes costs associated with subscription revenues and professional services.
| Cost Type | Q3 2024 Cost (in millions) | Q3 2023 Cost (in millions) | 9M 2024 Cost (in millions) | 9M 2023 Cost (in millions) |
|---|---|---|---|---|
| Cost of Subscription Revenues | $496 | $420 | $1,406 | $1,163 |
| Cost of Professional Services and Other | $88 | $76 | $250 | $242 |
| Total Cost of Revenues | $584 | $496 | $1,656 | $1,405 |
Gross Profit and Margins
ServiceNow has maintained strong gross profit margins on its subscription revenues.
| Metric | Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 |
|---|---|---|---|---|
| Gross Profit from Subscription Revenues | $2,219 | $1,796 | $6,374 | $5,128 |
| Gross Profit Margin (Subscription) | 82% | 81% | 82% | 82% |
Operating Expenses
Operating expenses include sales and marketing, research and development, and general and administrative costs.
| Expense Type | Q3 2024 Expense (in millions) | Q3 2023 Expense (in millions) | 9M 2024 Expense (in millions) | 9M 2023 Expense (in millions) |
|---|---|---|---|---|
| Sales and Marketing | $944 | $799 | $2,827 | $2,454 |
| Research and Development | $626 | $549 | $1,875 | $1,562 |
| General and Administrative | $225 | $213 | $679 | $621 |
Net Income
ServiceNow's net income reflects strong profitability, supported by growth in revenue and efficient cost management.
| Metric | Q3 2024 (in millions) | Q3 2023 (in millions) | 9M 2024 (in millions) | 9M 2023 (in millions) |
|---|---|---|---|---|
| Net Income | $432 | $242 | $1,041 | $1,436 |
| Net Income per Share - Basic | $2.09 | $1.18 | $5.06 | $7.04 |
| Net Income per Share - Diluted | $2.07 | $1.17 | $5.00 | $7.00 |
Future Outlook
For the year ending December 31, 2024, ServiceNow expects revenues to continue to grow, driven by increased customer adoption and product usage.
Expectations for 2024 include:
- Subscription revenues are expected to increase in absolute dollars while remaining flat as a percentage of total revenue.
- Professional services revenues are anticipated to increase in absolute numbers but remain stable relative to overall revenue.
- Operational efficiency to improve, leading to enhanced profitability margins.
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Article updated on 8 Nov 2024
Resources:
- ServiceNow, Inc. (NOW) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of ServiceNow, Inc. (NOW)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View ServiceNow, Inc. (NOW)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.