ServiceNow Hits Stride with Strong Q4 Results and AI Leadership Position
ServiceNow, the enterprise software leader, has kicked off the new year on a high note with impressive fourth-quarter 2024 results. The company's outstanding business fundamentals and leadership position in the seismic shift to agentic AI were highlighted by Chairman and Chief Executive Officer Bill McDermott during their recent earnings conference call.
McDermott emphasized that ServiceNow has consistently beaten expectations and raised guidance twice in 2024, culminating in a strong Q4 performance. Subscription revenue growth was an impressive 21%, with current RPO (remaining performance obligations) growing by 22%. This far exceeded IDC's 2024 growth rate for the IT sector.
The company's operating margin was a healthy 29.5%, beating expectations once again. ServiceNow also demonstrated its strong cash flow generation, with free cash flow margin reaching 31.5% in full-year 2024.
ServiceNow continues to expand its enterprise platform, with notable deals that showcase the effectiveness of their AI platform message. The company landed its largest new logo deal ever and had two additional customers cross the $100 million mark in total ACV (annual contract value), doubling their total in just one quarter.
The tech workflow deals were particularly strong, with 76 deals exceeding $1 million, including one massive deal worth over $15 million. IT asset management was featured in all of the top 20 deals, underscoring its importance in the company's product offerings.
Customer and industry workflows continue to disrupt the category, with 30 deals over $1 million. Employee and Creator Workflows also had a good quarter, each securing at least 17 deals worth over $1 million.
The company's leadership position in agentic AI was another key highlight, with stunning 150% quarter-over-quarter deal growth in their Pro Plus AI offerings. This significant growth is expected to continue, driven by the new innovations announced by ServiceNow.
ServiceNow is well-positioned at the center of data, AI agents, workflow orchestration, and enterprise governance, making it a key player in the massive value creation opportunity presented by AI. The company's ability to deliver business impact through its platform will be critical as we move forward into this new era.
As the company looks to 2025, it is clear that ServiceNow has set itself up for another strong year. With a platinum balance sheet and nearly $23 billion in remaining performance obligations, the company is well-equipped to continue delivering on its business fundamentals and AI leadership position.
