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In today’s Cloud Wars Minute, I cover ServiceNow’s strong Q2 performance and CEO Bill McDermott’s bold strategy for revolutionizing industries.
Highlights
00:15 — ServiceNow CEO Bill McDermott said on the Q2 earnings call, “We are going to transform industries.” Secondly, he says, “We are going for it all.” He also said, “We touch every member of the C-suite” and “We are the AI platform for business transformation, not technology transformation, but business transformation.”
01:41 — Here’s a look at Q2 numbers. Total RPO was up 31.5% to $18.6 billion. Overall revenue was up 23% to $2.54 billion, and that’s for subscription revenue. The total contract value for deals of $5 million or more went up by three times compared to a year ago. It raised its revenue guidance for the calendar year by $33 million; that will result in an overall growth rate for 2024, which it is guiding to be 22%.
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02:31 — Now, that’s particularly notable in light of Salesforce, Oracle, and Workday, all saying, “Hey, we’re seeing some slowdown from customers.” On these earnings calls, the financial analysts have all been saying, “Oh, it’s a very tough environment in software.” But ServiceNow seems to be doing very well. I think we see SAP as the other outlier here, not in a slowdown.
03:39 — In hindsight, McDermott has a history at SAP, and over the past five years with ServiceNow, of dreaming big and then backing that up with the results. What we see so far in Q2 is that ServiceNow has defied the slowdown that’s hitting a lot of the software sector. The RPO shows there’s lots more coming.
04:35 — A huge part of his commentary on this Q2 earnings call was about their Now Assist Gen AI technology, and I’ll be covering that in the future.
