How ServiceNow’s 3Q15 Results Beat Analyst Expectations



ServiceNow’s healthy billings

Previously in the series, we discussed Citrix Systems’ (CTXS) 3Q15 results, which the company released on October 21, 2015. ServiceNow (NOW), another company in the cloud space that announced its 3Q15 results on the same date, posted revenues and non-GAAP (generally accepted accounting principles) earnings per share, or EPS, of $261.2 million and $0.15 per share, respectively.

ServiceNow’s revenue and EPS beat analyst expectations by $5 million and $0.07 per share, respectively. Its revenues of $261.2 million grew by 46% on a YoY (year-over-year) basis in 3Q15.

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ServiceNow is a Paas (platform-as-a-service) provider that provides cloud automation platforms for IT (information technology) services as well as other services. The company’s total billings stood at $286.4 million—an increase of more than 38% on a YoY basis—in 3Q15. In constant currency terms, its billings grew by 46%.

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Strong dollar and ServiceNow’s performance

The strong dollar (UUP) continued to impact ServiceNow’s performance in 3Q15, impacting the company’s revenues by ~9%. The dollar is expected to have a 4%–5% impact on its revenue growth in 4Q15. Leading technology companies like IBM (IBM) and Microsoft (MSFT) have felt the impact or expect to feel the impact of the appreciating US dollar against major currencies as well.

As for fiscal 2015, ServiceNow expects to generate revenues of about $1 billion—an increase of 47% on YoY basis. In 4Q15, the company expects its revenues to land in the range of $277–$282 million. Analysts expect the company to post $281.4 million and $996.9 million in revenues for 4Q15 and fiscal 2015, respectively.

The reason ServiceNow’s share price fell on October 21, 2015—even after exceeding the analysts’ expectations with its fiscal 3Q15 results—could be that investors were concerned about the company’s revenue forecast for 4Q15 and 2015, which only marginally exceeded analyst estimates.

Keep checking here at Market Realist for updates and further analysis.


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