ServiceNow tops Q2 earnings targets

ServiceNow said it has achieved $4 billion subscription revenues annual run rate.

ServiceNow, makers of a cloud automation platform used for IT service and other functions, delivered better-than-expected second quarter financial results on Wednesday. 

The company reported non-GAAP earnings of $1.23 a share on revenue of $1.07 billion, up 30% from a year ago. Wall Street was looking for non-GAAP earnings of $1.01 a share on revenue of $1.05 billion.

ServiceNow said it has achieved $4 billion subscription revenues annual run rate. The company said subscription billings were $1.02 billion and grew 25% year-over-year. Subscription revenue was $1.01 billion, up 30% from a year ago. ServiceNow ended the quarter with 964 total customers with more than $1 million in annual contract value, an increase of 26% year-over-year.

"In Q2, we achieved our $4 billion revenues run rate milestone. We exceeded the high end of our subscription revenues and billings guidance, while continuing to drive margin expansion and strong free cash flow," said ServiceNow CFO Gina Mastantuono. "Our best-in-class renewal rate remained at 97%, and customers continue to expand on the Now Platform, giving us conviction to raise our growth and profitability guidance for the year. I am confident in our ability to deliver our second half."

As for the outlook, ServiceNow said it will have subscription revenue of $1.05 billion to $1.06 billion with subscription billings of $995 million to $1.015 billion.

Shares of ServiceNow were down as much as 6% after hours. 

Separately, ServiceNow announced that Kevin Haverty has been named Chief Revenue Officer, leading all global sales activities; and Lara Caimi has been named Chief Customer and Partner Officer, a new role within the company. Both will report to ServiceNow CEO Bill McDermott.