ServiceNow delivers strong Q4 as it expands wallet share

CEO Bill McDermott said ServiceNow closed 89 transactions worth more than $1 million in net new annual contract value.

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ServiceNow's revenue in the fourth quarter jumped 31% and earnings were better than expected amid strong demand.

The company reported fourth quarter revenue of $1.25 billion with non-GAAP earnings of $1.17 a share (8 cents a share GAAP).

Wall Street was looking for fourth quarter revenue of $1.21 billion with non-GAAP earnings of $1.05 a share.

CEO Bill McDermott said ServiceNow closed 89 transactions worth more than $1 million in net new annual contract value. Overall, ServiceNow has 1,093 customers with annual contract values topping $1 million.

McDermott added that ServiceNow is seeing gains due to "secular tailwinds of digital transformation, cloud computing, and business model innovation." Indeed, ServiceNow, which is aiming to be a $10 billion revenue company, has expanded from IT service management to HR to industries and COVID-19 vaccine management as it extends its platform.

Fourth quarter developments include:

ServiceNow said it saw adoption across its IT, employee and customer workflow businesses and strength in AI and machine learning.

Here's a look at ServiceNow's outlook. 

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For 2020, ServiceNow delivered revenue of $4.52 billion, up 31%, with net income of $119 million, or 59 cents a share.

On a conference call, McDermott said:

The workflow revolution is happening, and the pandemic is accelerating digital transformation. Every business needs speed, agility and resilience. And every C-suite leader wants to deliver great experiences for their employees and their customers. Businesses are changing the way they operate. They need to deliver fierce customer loyalty and deep employee engagement to win. It's all about people, empathy at mass scale as the business imperative of the 21st century. The secular tailwinds of digital transformation, cloud computing and business model innovation have all intersected at a perfect moment in time. A paradigm shift is happening worldwide. In 2020, for the first time in history, we saw digital transformation spending accelerate despite GDP declining globally. Digital investments are at an all-time high and are expected to continue growing.

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ServiceNow's fourth quarter in a nutshell. 

ServiceNow's David Wright on innovation, expansion, and AI