ServiceNow is looking to move from being a strategic vendor for CIOs to be a digital transformation engine for CEOs. And CEO Bill McDermott's playbook from SAP is being put in place quickly to grow the company.
The company, which started as an IT service platform, has branched out to customer service as well as human resources. Its ecosystem of third-party developers has also expanded use cases. Now McDermott is taking ServiceNow vertical with industry specific use cases and recruiting systems integrators.
On ServiceNow's fourth quarter earnings conference call, McDermott was enthusiastic as ever. The master salesman has big plans for ServiceNow and a bet that it can ramp annual revenue. And he has a good base to work with.
See:Top cloud providers in 2020: AWS, Microsoft Azure, and Google Cloud, hybrid, SaaS players
ServiceNow reportedfourth quarter revenueof $951.8 million, up 33% from a year ago. Net income was $598.7 million due to a one-time tax benefit. Non-GAAP earnings were $186.9 million, or 96 cents a share. For 2019, ServiceNow reported revenue of $3.46 billion with net income of $626.7 million.
ServiceNow had 76 deals worth more than $1 million in the quarter largely due to IT service management. For 2020, ServiceNow is projecting subscription revenue of $4.22 billion to $4.24 billion, up 30% from 2019.
On a conference call with analysts, McDermott sketched out ServiceNow's expansion plan.
Using its Now Platform, which has one architecture and data model, McDermott plans to pitch more CEOs on the digital transformation possibilities. For instance, ServiceNow is aimed to be a "system of action" to complement systems of record, explained McDermott.
McDermott's argument is that ServiceNow can resolve problems end-to-end instead of in an ad hoc way. For CEOs, ServiceNow could be a way to drive employee engagement, customer loyalty and productivity. He cited wins at the Veterans Administration, Department of Defense, Bristol-Myers Squibb and Roche. "The opportunity to scale ServiceNow is right in front of us, and we have our sights set on achieving $10 billion in revenue and beyond," said McDermott.
The priorities for ServiceNow in 2020 go like this:
"ServiceNow is hungry and humble, and we have an unwavering focus on serving our customers," said McDermott. "I'm truly fired up to lead the next phase of ServiceNow's journey."
Analysts bought in. In a research note, JMP Securities analyst Patrick Walravens said:
McDermott is inheriting a company that's well established, running well and just needed a bit more focus and a sales strategy. The odds are pretty good that McDermott can juice ServiceNow's growth without a lot of disruption to derail the master plan.
He said there won't be sales coverage changes at ServiceNow, and the plan really revolves around global expansion. Sixty five percent of ServiceNow's revenue was from North America in the fourth quarter.
McDermott noted:
Comments
Post a Comment