Workflow biz ServiceNow ServiceWows itself by beating Q4 guidance and posting hefty top line growth of 31% for FY2020

'It's all about people, empathy at mass scale,' says Big McD

IT helpdesk vendor ServiceNow has beat its own forecasts for calendar Q4 revenue and posted 2020 growth of 31 per cent.

Led by Bill McDermott, the ebullient former SAP boss, the workflow software biz reported revenue for Q4 of $1.25bn, representing a 31 per rise year-on-year. The vast majority of this was based on subscriptions sales.

Gross profit for the quarter hit $971m – yes, that's a margin of 78 per cent. But operating expenses almost wiped that out, leaving a profit from operations of $17.9m, lower than the $28.5m made a year earlier.

Full‑year 2020 revenue was also up 31 per cent to hit $4.5bn, while the total gross profit for the year was $3.5bn, up 32 per cent. Operating income came in at $198.8m, better thn the $42.1m reported for ServiceNow's 2019.

McDermott, who last year declared his firm the "defining enterprise software company of the 21st century", couldn't resist the opportunity afforded by an earnings call to launch into hyperbole.

"It's all about people, empathy at mass scale is the business imperative of the 21st century," he said. "The secular tailwinds of digital transformation, cloud computing and business model innovations have all intersected at the perfect moment in time, a paradigm here is happening worldwide."

Don't forget, though, that empathy seemed to be in short supply last year when ServiceNow was said to be "tone deaf", accused as it was of failing to allow customers to cut contractual commitments in the face of an economy-shattering pandemic. At the time the company said contracts are non-cancellable, but it had taken measures to provide customers in highly affected industries with greater flexibility.

But back to the smile of last night's results. Line-of-business leaders were leading the charge of workflow adoption, McDermott said.

"We're not inhibited by pre-packaged software or doing things that are quite complex in development in the case of the platform because all you need is an idea. And if you have an idea, a business analyst can code on this platform. If you have an idea that's a little bit more complex, you can have a low-code situation where somebody with a little bit of computer intelligence skills can navigate this platform."

The low-code approach may be all well and good, but as seasoned application architects have pointed out, it can leave an unfathomable mess at the back end where no one quite knows what is connected to what.

ServiceNow's Q4 financial festivities were dampened slightly by guidance for 2021, which foresees more muted growth. For the full year, subscription revenues are expected to hit between $5.48bn and $5.5bn, up 28 per cent year-on-year and down from 31 per cent; hardly a tragedy but it does include a three-point FX tailwind. ®