ServiceNow (NOW) Q2 2023 Earnings Call Transcript

For the period ending June 30, 2023

July 26, 2023 5:00 p.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Operator

Good afternoon, ladies and gentlemen. Welcome to the ServiceNow Second Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode, and please be advised that this call is being recorded. After the speakers' prepared remarks, there will be a question-and-answer session. [Operator Instructions]

And at this time, I would like to turn things over to Mr. Darren Yip, Vice President, Investor Relations. Please go ahead, sir.

Darren Yip

Thank you. Good afternoon. And thank you for joining ServiceNow’s second quarter 2023 earnings conference call. Joining me are Bill McDermott, our Chairman and Chief Executive Officer; Gina Mastantuono, our Chief Financial Officer; and CJ Desai, our President and Chief Operating Officer.

During today’s call, we’ll review our second quarter 2023 results and discuss our guidance for the third quarter and full-year 2023.

Before we get started, we want to emphasize that the information discussed on this call, including our guidance, is based on information as of today and contains forward-looking statements that involve risks, uncertainties and assumptions. We undertake no duty or obligation to update such statements as a result of new information or future events. Please refer to today’s earnings press release and our SEC filings including the most recent 10-Q and 2022 10-K for factors that may cause actual results to differ materially from our forward-looking statements.

We’d also like to point out that we present non-GAAP measures in addition to, and not as a substitute for, financial measures calculated in accordance with GAAP. Unless otherwise noted, all financial measures and related growth rates we discuss today are non-GAAP, except for revenue, remaining performance obligations, or RPOs, current RPOs and cash and investments.

To see the reconciliation between these non-GAAP and GAAP measures, please refer to today’s earnings press release and investor presentation, which are both posted on our website at investors.servicenow.com. A replay of today’s call will also be posted on our website.

With that, I’ll turn the call over to Bill.

Bill McDermott

Thank you, Darren, and thank you, everyone, for joining us today. Once again, ServiceNow's Q2 results beat expectations for all key performance metrics. Subscription revenue grew 25% in constant currency, 1% above the high-end of our guidance. CRPO grew 24% in constant currency, 1.5% above our guidance, and operating margin was 25%, 2 points above our guidance. We had 70 deals greater than $1 million in net new ACV, which was up from 54 a year ago or a 30% increase.