So there’s a new member of the $10 Billion ARR Club.
ServiceNow is the enterprise workflow leader that most folks have sort of heard of, but don’t fully understand or know too much about. It’s because you don’t work in a big enterprise. ServiceNow simply dominates there.
It’s a $10 Billion ARR rocketship, still growing a stunning 27% (!) at that scale, with 1,900 $1m+ customers. And it’s trading now at an all-time high of $160 Billion, or 16x (!) ARR. Far, far ahead of the average of 6x today.
If you'd just invested in ServiceNow's IPO
You'd be up 3,094.02%!! pic.twitter.com/5nlCV6Nlns
— Jason ✨Be Kind✨ Lemkin 🇮🇱 (@jasonlk) January 30, 2024
Wow. These are the Best of Times for ServiceNow. Period.
5 Interesting Learnings:
#1. Growing as Fast at $10B ARR as it Was at $8B ARR, and Almost as Fast as $5B ARR
Back at $8B ARR, ServiceNow was growing at 25% a year. Today, it’s growing even faster at 27%! And at $5B ARR, it was growing 32%.
#2. Seeing Strong Bookings As Well Going Into 2024. No Downturn At All.
You can see below, “RPO” — contracts that are signed but not yet fully delivered — stayed strong through 2022 and 2023 and actually accelerated during the end of 2023. Times are a bit more challenging at ServiceNow for sure — but there’s no downturn.
#3. Almost 1,900 $1m+ Customers, Growing 15% a Year
ServiceNow does an incredible job of growing its customer spend.
#4. The Big Customers Pay $4.5 Million a Year — Up From $3.8 Million 24 Months Ago
Slowly and steadily, ServiceNow grows its biggest accounts … even bigger, year over year. From $3m on average in 2020 to $4.5m on average in 2024.
#5. 99% Renewal Rate — And No “Downturn” or Macro Impacts Here
ServiceNow customers often sign 3+ year customers, and it is very enterprise. So you wouldn’t expect much overnight churn. Still, seeing consistent 98%-99% logo renewal rates is very, very impressive.
And a few other interesting learnings:
#6. 63% of Revenue from North America
Global revenues are slowly creeping up as a percent of total.
#7. $440,000 in Revenue Per Employee
ServiceNow is very efficient, handily exceeding the $300,000 or so average revenue per employee for the average public SaaS company. As you can see below, ServiceNow keeps steadily hiring. But like most other leaders today, it’s hiring more slowly than it’s growing revenue. That keeps the operating margins going up.
Wow, ServiceNow. The enterprise workflow engine that just keeps on going.
Even at $10,000,000,000 in ARR.
