ServiceNow delivers strong Q1, confident in long-term outlook

ServiceNow's outlook accounts for customer segments that may be affected by the COVID-19 pandemic, but is confident it can weather a difficult economy.

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ServiceNow delivered strong first quarter earnings and said it was confident that it can hit $10 billion in annual revenue.

The company reported first quarter net income of $48 million, or 24 cents a share, on revenue of $1.046 billion, up 33% from a year ago. Non-GAAP earnings in the first quarter were $1.06 a share.

Wall Street was expecting ServiceNow to report non-GAAP earnings of 96 cents a share on revenue of $1.02 billion.

ServiceNow said its bookings in the quarter were up 30%. Subscription revenue in the first quarter was up 34%.

The company said it inked 37 transactions worth more than $1 million in net new annual contract value. ServiceNow had 933 customers with more than $1 million in contract value.

CEO Bill McDermott said that ServiceNow is in a unique position as a workflow platform. CFO Gina Mastantuono added that the company remained "confident in our path to $10 billion in revenue and beyond."

As for the outlook, ServiceNow said it was in a strong position to weather the COVID-19 pandemic's economic fallout, but many of its customers were struggling. The company's outlook factored in what is known about COVID-19's impact now.

ServiceNow projected subscription revenue growth in the second quarter of 27% to 28% on a GAAP basis and 29% to 30% non-GAAP. For 2020, ServiceNow said it expects subscription revenue of $4.125 billion to $4.14 billion, up 27% from 2019.