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ServiceNow shrugs off Ukraine fears with upbeat financials

Growth set to continue unabated despite headwinds, CEO says

Helpdesk software provider ServiceNow has posted revenue of $1.72 billion for the calendar first quarter of 2022, up 27 percent from a year earlier.

The workflow-focused company, led by CEO Bill McDermott, reported that subscription revenue hit $1.63 billion, an increase of 26 percent on the same period in 2021. Professional services grew 36 percent to $91m.

First-quarter total gross profit was $1.35 billion on a 79 percent margin. That's down from $1.42 billion a year earlier, a 5 percent drop. Meanwhile, overall net income was $75 million, down from $352 million in Q1 2021.

For Q2, the company expects subscription revenues between $1.67 billion and $1.675 billion, which would represent an increase of 26 percent annually.

McDermott said the business was not being affected by global instability, including Russia's invasion of Ukraine.

"While there are significant challenges in the world, particularly in the Eastern European situation, we have not seen a material impact on our market. To the contrary, the challenges have underscored the urgency of investment in digital business," he told investors during a conference call.

Last month, UiPath, which deals in automation software, warned the war in Ukraine was "having a profound impact" on business confidence in Europe and the UK.

While ServiceNow grew from software designed for IT helpdesk support and job ticketing, employee workflows now comprised 14 of the top 20 deals secured in the last quarter, McDermott said.

He argued the "low-code" approach to workflow design was another reason customers were flocking to the platform.

"With the unprecedented demand for net new innovation together with a global shortage of professional developers, low-code application development is a massive market opportunity. While tech leaders see the value of citizen developers, they don't want to sacrifice the enterprise-grade governance and security," he said.

In March, ServiceNow announced a new product with a heavy emphasis on robotic process automation (RPA).

The "San Diego" release of its Now Platform promises more modern visual design as well as the RPA capabilities.

The latter sits within the Automation Engine, which combines Integration Hub with a new RPA Hub that provides a command and a control center to monitor, manage, and deploy digital robots that automate repetitive manual tasks.

But one analyst on the conference call pointed out that RPA specialists may have a technical edge for large scale implementations. ®

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