ServiceNow comfortably beat Wall Street expectations yesterday with a year-on-year revenue boost of 32% to hit $1.41 billion for its Q2, including a 27% jump in subscription revenue. Profit for the quarter came in at $59 million.
There’s a strong pipeline out there in the Vaccine Economy, according to CEO Bill McDermott:
The global economy is recovering at the fastest pace in 80 years. The enterprise digital transformation market is expected to grow nearly three times faster than GDP in 2021. Business leaders worldwide are facing do or die moments. Business models have changed forever. The pandemic has accelerated the digital imperative. We are in a leading position to capitalize on this unprecedented tailwind.
I have real-time data on every single account and every single deal that’s moving in the global economy and I can tell you that the pipeline is incredibly robust. And it has substantially grown and the lights are all green… I think the sales cycles are moving quicker. The notoriety of the brand is resonating as the digital transformation control tower. IT is the stronghold on so many things now, if you want to give the employees a great experience, you want to provide the customers [with] an unmatched service or you want to unify IT business around creating new workflows, which is necessary because there’s not enough developers to develop all the applications that are required.
Some stats of note:
- The firm now has 1,201 million dollar plus customers and 62 million on ACV of $10 million.
- ITOM was in 15 of the top Q2 20 deals, with six deals over $1 million.
- ITSM was in 16 of the top 20 deals, with 14 deals over $1 million.
- There are now 2000 customers using CSM.
- Creative workflows were in 18 of the top 20 Q2 deals.
McDermott picked out some key customer wins for the quarter:
We saw great wins with leading companies, including Travelers and Walgreens Boots Alliance and more. They’re working with ServiceNow to support their digital transformation of their enterprises. And we’re honored that Maritime and Port Authority of Singapore is working with ServiceNow to accelerate its digital transformation efforts and it looks to make Singapore a leading global port and international maritime center. MPA will leverage the Now Platform to drive automation and to improve productivity and employee experience.
A premium German auto manufacturer faces huge logistical challenges and maintaining on target production. Every 30 million parts are processed daily and they are dispatched to more than 4,000 supplier locations to production centers in Europe and Mexico. To manage this complexity, ServiceNow provides a single connected supply chain technology platform. ServiceNow analyzes 300,000 data points per month optimizing the performance of each aspect of the value chain.
Deutsche Telekom is leveraging ServiceNow’s telecommunications solution to streamline order management to become the leading B2B telco provider. The Now Platform will be at the heart of the order management process enabling a 360 degree view of orders, inventory and infrastructure creating a seamless connected experience for DT’s employees and customers.
With creative workflows, we’re accelerating software development across the entire enterprise by giving everyone the low-code tools to quickly create applications and beautiful experiences. IDC predicts that more than 500 million apps will be developed by 2023. This is equivalent to the total number of apps that were developed in the past 40 years. For example, Airbus built an innovative tracking application in less than three months using ServiceNow’s low-code app engine. Now Airbus employees can scan barcodes of any piece of factory equipment to see the relevant information they need in real time. Manufacturing transportation incidents have dropped 20%. In Q2 creative workflows were in 18 of our top 20 deals. Nokia picked ServiceNow’s creative workflows to develop custom apps in significantly less time at a fraction of the cost of alternative platforms.
As for prospects for the second half of the year, McDermott is upbeat, particularly in the government sector, where deals tend to be large rather than point solutions:
You’re seeing business in the area of resiliency, there’s a lot of focus on business continuity, outages of course, and dealing with the COVID scenario. Cyber-security is on the top of many lists and programs that we’re involved in and vaccine management.
Vaccine management is one of the greatest workflow challenges the government faces. They’ll likely need to be re-administering things regularly and managing that process. We are front and center on that.
I’m really proud actually of the way the government is looking at digital transformation. They really are looking at this as a way to help government run like business.
A solid set of numbers and one that Wall Street responded to better than Q1. McDermott is always relentlessly on the front foot, as he should be, but the confidence he’s exuding at the moment is particularly sharp. Green for go, it is.