Photo Credit: Donny Gonzo / Flickr.com

According to a recent report, the global IT Service Management applications market grew 21.9% to nearly $7.7 billion in 2021. ServiceNow remained the market leader with a 40.1% market share. The researcher estimates the market to grow 3% annually to $9 billion by 2026. ServiceNow (NYSE: NOW) recently reported its strong quarterly performance.

ServiceNow’s Financials

For the third quarter of the year, ServiceNow’s revenues grew 21% to $1.83 billion, falling short of the market’s forecast of $1.85 billion. On a constant currency basis, revenues grew 27.5%. EPS of $1.96 was also ahead of the market’s estimates of $1.84.

By segment, subscription revenues grew 22% to $1.74 billion and professional and other services revenues grew 5% to $89 million.

Overall though, the company had a strong quarter. The current Remaining Performance Obligations (cRPO) grew at 25% on a constant currency basis compared with the market’s forecast of 23.5%. The company closed 69 deals over $1 million in annual contract value, growing 10%. The number of customers with more than 1 million in ACV grew 22% to 1,530. Number of customers paying over $10 million in annual contract value in the quarter grew 60%.

ServiceNow forecast subscription revenues of $1.834-$1.839 billion for the quarter and $6.865-$6.87 billion for the year. The market forecast revenues of $1.98 billion and an EPS of $2.09 for the quarter and revenues of $7.31 billion with an EPS of $7.29 for the year.

ServiceNow’s New Offerings

ServiceNow believes that despite the economic conditions, global investments will continue in hybrid multi-cloud deployments, adoption of a modern data infrastructure stack, cybersecurity and risk management, AI and data analytics, remote work, and collaboration. It forecasts that 750 million new applications will be built by 2025. In the US, nearly 100 million workers will remain in hybrid environments and over 27 billion connected devices will drive more data in cloud over the next three years. These conditions are resulting in a shortage of skilled and certified personnel who can work with its workflow platform. To help meet this shortage, ServiceNow announced the launch of RiseUp with ServiceNow, an initiative that will skill over a million ServiceNow certified professionals by 2024. The program will allow ServiceNow, its customers, and its partners to train themselves and become eligible for high skill, and in demand jobs.

ServiceNow also announced the release of the Now Platform Tokyo, a release purpose-built to deliver better employee and customer experiences, supercharge automation and trust in operations, and accelerate overall value from the platform. The Tokyo release is aimed at simplifying complex supply chains, automating asset management, and delivering auditable, investor-grade sustainability data. It will increase the power of the Now Platform to create seamless experiences, continuously generate new value by accelerating innovation at scale, and allow people to improve their overall efficiency.

ServiceNow’s Era Software Acquisition

Recently, ServiceNow announced the acquisition of observability and log management innovator Era Software. Seattle-based Era Software was founded in 2019 by CEO Todd Persen and CTO Robert Winslow. Era Software has been focused on building new approaches to log data management that resolves scale, performance, and cost issues associated with running distributed applications on modern cloud-native architectures.

The acquisition will allow for Era Software’s observability solution to be available at scale. Customers will be able to gather actionable insights that deliver value across the business, all within a single solution. Era Software’s technology and customer-centric approach to log management will complement and augment existing features within Lightstep and accelerate ServiceNow’s path toward unified telemetry. Terms of the acquisition were not disclosed. Prior to the acquisition, Era Software was privately held and had raised $22.3 million in funding from investors including Foundation Capital, Playground Global, Array Ventures, and Global Founders Capital. Its valuation and financial details are not known.

Its stock is currently trading at $425.98 with a market capitalization of $85.8 billion. It had climbed to a 52-week high of $707.60 in November last year and had fallen to a 52-week low of $337 earlier this month.

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