Santa Clara-based digital workflow company, ServiceNow recently announced its financial results for its third quarter ending September 30. Despite the challenges of the pandemic, the company has taken advantage of the push for digital transformation and has seen growth across the board.
The company revealed that Q3 subscription billings were $1.08 billion and grew 25% year-over-year. Subscription revenue was $1.07 billion, up 29% from a year ago. ServiceNow ended the quarter with 1,012 total customers with more than $1 million in annual contract value, an increase of 25% year-over-year.
“Our outstanding Q3 performance beat expectations across the board and we are raising our full-year guidance,” said ServiceNow CEO Bill McDermott in a statement. “COVID is redefining the future of work, accelerating digital transformation and amplifying the need to unify systems, silos, and processes into holistic enterprise workflows. ServiceNow is the platform for digital business.”
The company, which offers a cloud automation platform used for IT service and other functions, also boasted an impressive renewal rate in the third quarter of 97%, only slightly lower compared to the previous two quarters which achieved renewal rates of 98%. If anything, the continued high renewal rates indicate an impressive standard of customer satisfaction.
The company’s software subscription model has an average contract duration of three years. ServiceNow has also claimed that over 75% of the customer base subscribes to more than one service—up from 30.0% in 2016.
ServiceNow earnings and revenue exceeded Wall Street's third-quarter estimates while adjusted subscription billings guidance met expectations. ServiceNow stock climbed in extended trading following a broad market sell-off.
The company has shown no signs of slowing down and instead has continued to thrive during the global pandemic. During this time, ServiceNow has helped the NBA and WNBA resume their seasons with its software, while McDermott revealed on a call with analysts that the U.S. Senate, Air Force, and Department of Veteran Affairs signed contracts with the company during their momentous third quarter.
As it surpasses competitors like Workday and gains traction on rival Salesforce, ServiceNow has cemented itself as a vital software provider critical to enterprise workflows.