So we took a look at ServiceNow a little ways back at $5B in ARR, but I thought it was worth another deep dive now for a very specific reason:
Their very seasoned CEO has sees no real slowdown or downturn in their business. At $7 Billion in ARR, growing ~30% annually, quarter over quarter over quarter. “[We’re] not fighting those headwinds”:
Given that customers sign 3+ year, $1m+ contracts, one wouldn’t expect any massive decline in revenue from any shorter-term macro effects anyway. But new bookings aren’t really down, either.
5 Interesting Learnings:
#1. Steady, steady, steady strong growth. Ok, this chart is a bit confusing, but if you look at ServiceNow’s currency-adjusted revenue, you can see super-consistent 29%-30% growth in subscription revenue each of the past 5 quarters.
#2. Steady 98%-99% Gross Renewal Rates. Whoa. No downturn or macro effects here, not yet, at least. Enterprises run on ServiceNow.
#3. 1,500+ $1m ACV Customers. And they pay, on average, a stunning $4m each. As you can see, ACV has grown ~20% over the past 2 years, from $3.4m to $4m ACV.
#4. 20,000 employees, so about $350,000 revenue per employee. That’s pretty efficient for SaaS.
#5. Some softness in EMEA. Others are seeing this as well, although some, like MongoDB, aren’t. But many in SaaS are seeing tougher times in Europe than North America. ServiceNow’s growth has slowed there:
And a few interesting learnings:
#6. It’s 2010 customers have grown their ACV … a stunning 24x over the following 12+ years. A really incredible illustration of the value of High NRR over a decade or more.
#7. New Customers Sign 3 Year Contracts, Renewals for 2 Years. I had to grab this slide from ServiceNow at $5B, because they don’t seem to present it anymore. But it’s super useful to see. Consistent growth is easier to achieve with 3+ Year contracts! 🙂
What a visceral comparison to Salesforce, which has seen a dramatic slowdown in enterprise growth. But ServiceNow? None really. Not for now, at least. Microsoft also reported strong growth overall and for Azure and Cloud especially.
The impacts of today’s shifts in the economy are … well, they’re uneven. Some are hurting. But others like ServiceNow? It’s full steam ahead. At least for now.
Published on January 25, 2023
