Powered by a whopping 31.5% jump in Q2 RPO to $18.6 billion, ServiceNow has committed to “transform entire industries” from healthcare and utilities to manufacturing and consumer goods as CEO Bill McDermott declared, “We’re going for it all.”
As anyone who follows Cloud Wars has come to know, I’m a big fan of big visions. But big vision without big results is BS — wasn’t it the legendary philosopher-athlete-warrior Yogi Berra who first said that? — so let’s take a look at ServiceNow’s Q2 results to see if McDermott’s grand vision is backed up by big-time Q2 achievements:
- subscription revenues rose 23% to $2.542 billion;
- total RPO up 31.5% to $18.6 billion;
- current RPO up 22.5% to $8.78 billion;
- TCV (total contract value) from 5-plus-year deals tripled year over year; and
- guidance for 2024 was boosted by $33 million to about $10.58 billion, which represents year-over-year growth of 22%.
Plus, the Q2 results boosted ServiceNow’s market cap near to about $166 billion, just off it’s all-time high.
So yeah, I think McDermott’s justified in his bullish ambitions — and in the crazy world we’re living in today, dreaming little dreams can be dangerous. But that’s not something Bill McDermott needs to worry about, as you can see from these excerpts from his opening remarks on ServiceNow’s Q2 earnings call last week.
Utility industry: “But to answer your question in terms of where are we headed, where we’re headed is we’re going to transform entire industries. And to give you an example of that, take the utility industry: They have to maximize the power grid uptime, and they’re trying to detect and mitigate vulnerabilities of critical assets.
“And they need to do everything in real-time, whether it’s repairing things, taking care of equipment, skills, parts, field-service technicians, equipment suppliers — there’s a whole distributed value chain.
“Well, we’re going to reinvent the whole industry, and we’ve got to put it on the ServiceNow platform. And we’ve got to take the data, and we’re going to connect all the disparate parts that are suffocating companies, and we’re going to move it into the Now platform, and we’re going to reimagine the way work flows.”
Manufacturing: “Think about predictive maintenance across multiple sites, combining Internet of Things (IoT) data with advanced analytics to optimize profitability, improve operational efficiency.”
CPG: “Think about consumer goods: they want AI-powered chatbots to deliver personalized shopping experiences. Just think about your own shopping experience: you could buy a great product, but if you can’t return it in a streamlined way, you drop the brand. You’re not going to do business with them anymore. So it’s a virtuous cycle to think about the quality of the product, the service experience of the customer and, ultimately, advocating for the customer and giving them what they want. That’s all workflow, and we’re going to automate that entire industry.”
Across the board: “And so we’re rethinking healthcare, rethinking manufacturing, rethinking utilities, and rethinking consumer goods.
“We’re going for it all.”
Final Thought
While much smaller than the six companies above it on the Cloud Wars Top 10, ServiceNow has been a disruptive force because of its unique technology, its unique position in the marketplace, and its unique culture.
Oh yes — and because of having a CEO whose idea of a fun new challenge is transforming many of the major industries in the world.
