Summary
ServiceNow reported first-quarter fiscal 2024 total revenues of $2.60 billion, up 24.2% from the prior-year quarter. Gross profit reached $2.08 billion, up 25.6%, and gross margin was 80.0%, up 0.9 percentage points. Operating income was $332 million, up 130.6%, while operating margin was 12.8%, up 5.9 percentage points. Net income was $347 million, up 131.3%, and diluted EPS was $1.67, up 128.8%. The quarter also produced operating cash flow of $1.34 billion, up 48.7%, and capital expenditures of $135 million, down 18.2%.
Subscription revenue growth was 25% year over year, or 24.5% in constant currency. Current remaining performance obligations grew 21% year over year, or 21% in constant currency. Remaining performance obligations were $17.70 billion, up 26.4%, and the current portion of deferred revenue was $5.70 billion, up 20.2%. The company added 1,933 customers with more than $1 million in annual contract value, up 15% year over year, and signed 8 transactions over $5 million in net new ACV, up 100% year over year. Renewal rate was 98%.
Operational momentum centered on GenAI. Now Assist, ServiceNow's GenAI powered experience, continued to see the largest net new ACV contribution to date of any new product family launch for the comparable period. The company launched its Washington, D.C. Platform release, delivering Now Assist for ITOM AIOps and Impact AI Accelerators. ServiceNow, NVIDIA, and Hugging Face released StarCoder2, a family of open access LLMs for code generation. An expanded NVIDIA partnership gave ServiceNow access to NVIDIA NIM inference microservices for LLM development, and the companies introduced new telco-specific GenAI solutions. Acquisitions announced during the quarter included 4Industry, EY Smart Daily Management Application, and Atrinet NetACE. ServiceNow also announced a strategic investment in AoraNow and committed to a direct investment of $500 million in the Kingdom of Saudi Arabia. The company repurchased 225,000 shares for $175 million, leaving approximately $787 million available under its share repurchase program.
Guidance points to continued growth but with a foreign currency drag. For the second quarter of 2024, management guided subscription revenue growth of 21.5% to 22%, cRPO growth of 20.5%, and non-GAAP operating margin of 25%. For full-year 2024, management guided subscription revenue growth of 21.5% to 22%, non-GAAP subscription gross margin of 84.5%, non-GAAP operating margin of 29%, and free cash flow margin of 31%. ServiceNow said the strengthening U.S. dollar since December 31, 2023 has adversely affected its 2024 guidance. The Q3 2023 strength of the U.S. Federal business created a higher mix of contracts containing 12-month renewal terms. That mix will create a negative 2-point impact to Q2 2024 cRPO growth as the balance amortizes into revenue. The company expects those contracts to renew in Q3 2024 and notes that U.S. Federal renewal rates have been 99%.
Risks remain familiar for a large enterprise software vendor. ServiceNow cited macroeconomic uncertainty, higher interest rates, global inflation, bank failures, armed conflicts in Ukraine and Israel and the Gaza Strip, competition, cyber-security events, and foreign exchange fluctuations. The company also noted that it may not convert remaining performance obligations into revenue as expected. Seasonality is another factor. ServiceNow signs a significantly higher percentage of agreements with new and existing customers in the fourth quarter, driven by enterprise buying patterns and commission plans. Free cash flow, a non-GAAP measure, was $1,225 million, up 66%, and free cash flow margin was 47%.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2024 | Q4 FY2023 | QoQ | Q1 FY2023 | YoY |
|---|---|---|---|---|---|
| Revenue | $2.60B | $2.44B | +6.8% | $2.10B | +24.2% |
| Gross profit | $2.08B | $1.92B | +8.4% | $1.66B | +25.6% |
| Gross margin | 80.0% | 78.8% | +1.2 pp | 79.1% | +0.9 pp |
| Research & development | $606.0M | $562.0M | +7.8% | $492.0M | +23.2% |
| Sales & marketing | $923.0M | $847.0M | +9.0% | $823.0M | +12.2% |
| General & administrative | $222.0M | $242.0M | -8.3% | $199.0M | +11.6% |
| Total operating expenses | $1.75B | $1.65B | +6.1% | $1.51B | +15.7% |
| Operating income (loss) | $332.0M | $270.0M | +23.0% | $144.0M | +130.6% |
| Operating margin | 12.8% | 11.1% | +1.7 pp | 6.9% | +5.9 pp |
| Net income (loss) | $347.0M | $295.0M | +17.6% | $150.0M | +131.3% |
| Net margin | 13.3% | 12.1% | +1.2 pp | 7.2% | +6.2 pp |
| Diluted EPS | $1.67 | $1.43 | +$0.24 | $0.73 | +$0.94 |
Risks
The company continues to maintain a valuation allowance against its California deferred tax assets as of March 31, 2024 because they have not met the more likely than not realization criteria, particularly as R&D tax credit generation is expected to exceed its ability to use the credits in future years. This effective tax rate pressure could persist for FY2024.
MD&A calls out the ongoing Russian invasion of Ukraine and the armed conflict in Israel and the Gaza Strip, plus higher interest rates, global inflation and bank failures, as sources of global economic disruption. Management states these conflicts are not expected to be material, but worsening conditions could materially affect results.
SaaS KPIs
All quarters →Non-GAAP operating margin
Free cash flow margin
Free cash flow
Renewal rate
Current remaining performance obligations (cRPO)
Remaining performance obligations (RPO)
Non-GAAP subscription gross margin
Customers with ACV > $1 million
Summary, forecast, risks and KPIs are extracted from ServiceNow, Inc.'s SEC filings for Q1 FY2024 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 1, 2026.