ServiceNow Q3 beats expectations on strong subscription revenues

ServiceNow delivered better-than-expected third quarter financial results on Wednesday driven by continued growth in subscription revenue. The company, which makes of a cloud automation platform used for IT service and other functions, reported non-GAAP earnings of $1.21 a share on revenue of $1.15 billion, up 30% from a year ago. 

Wall Street was looking for non-GAAP earnings of $1.03 a share on revenue of $1.11 billion.

ServiceNow said 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. 

As for the outlook, ServiceNow said it will have fourth quarter subscription revenue of $1.141 billion to $1.146 billion with subscription billings of $1.61 billion to $1.63 billion.

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"In a challenging pandemic environment, Q3 was a fantastic quarter for ServiceNow," said ServiceNow CFO Gina Mastantuono. "We exceeded the high end of our subscription revenues and subscription billings guidance, underscoring the power of our product portfolio and our ability to meet the evolving needs of our customers. Overall, we see strong momentum heading into the last quarter of the year and our robust pipeline gives me confidence in our ability to continue executing well into 2021." 

Shares of ServiceNow were up as much as 4% after hours.