What Will Drive ServiceNow’s Revenue Going Forward?


Jun. 25 2019, Updated 2:05 p.m. ET

Digital transformation of companies

ServiceNow (NOW) is one of the top players in the enterprise software space. It operates in a high-growth segment. ServiceNow is a company in the software-as-a-service cloud segment. According to a report, the cloud IT market is estimated to reach $260 billion by the end of 2020, up from $129 billion in 2016.

The digital transformation of companies has also driven demand for ServiceNow’s subscription products and solutions. During ServiceNow’s first-quarter earnings release, CEO John Donahoe stated, “We are focused on driving customer success and we’re expanding our footprint across almost 75% of the Fortune 500, enabling digital transformation as a strategic partner to the world’s largest enterprises, and we’re delivering digital workflows that create great experiences and unlock productivity.”

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Focus on improving enterprise efficiency

One of ServiceNow’s key focuses is the improvement of operational efficiency and enterprise productivity within its portfolio of products. ServiceNow continues to gain customer traction. It closed 25 deals with ACVs (annual contract value) of over $1 million in the first quarter. It now has ~717 customers with ACVs of $1 million or more, up 33.0% year-over-year.

ServiceNow is also winning contract deals with US federal agencies. In the first quarter, three of its top ten deals were with federal agencies. ServiceNow has six federal customers with ACVs of over $10 million. The company can hope to gain traction in the public sector as it moves toward cloud-based solutions.

Demand across verticals

Enterprises are able to deliver better outcomes after leveraging ServiceNow’s solutions. The company’s Customer Service Management product has bagged one of the largest deals in the last quarter. Its IT and human resources products are also gaining in popularity, and it’s bagged a deal with Humana, a Fortune 100 company.

Humana aims to use the ServiceNow platform to improve its employee productivity and its employee experience.


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