Cloud software firm ServiceNow (NOW 126.22, +1.60 +1.28%) trades modestly higher this afternoon after it beat market expectations on the top and bottom lines for Q3 and guided Q4 revenues ahead of market expectations.
While results came in modestly ahead of expectations, NOW stock stumbled a bit after hours as the beat perhaps wasn’t as large as some were forecasting. The stock has gone also red-to-green intraday despite the billings number which seems to have under-performed as well.
For Q3, NOW reported better than expected earnings of $0.38 per share on revenue growth of 39.3% to about $498.2 million. Billings in the period increased 35% to $546.1 million.
Revenues across business segments were strong as Subscription revenues grew 43% year-over-year to $455.4 million while Professional services revenues were up 10% to $42.7 million. Additionally, total gross margins were 78% on gross profit of $390.5 million.
Net Global 2000 adds were 24 in the period, giving NOW 815 total G2K customers. The company also signed 22 new deals and 35 additional customers exceeding $1 million ACV.
Guidance was also better than expected; NOW sees Q4 GAAP total revenues between $531-536 million, representing 38% to 39% year-over-year growth (or non-GAAP total revenues between $517-522 million, representing 34% to 35% year-over-year growth adjusted for constant currency). Also for Q4, the company expects non-GAAP total billings between $694-699 million, representing 30% to 31% year-over-year growth (or between $692-697 million, representing 29% to 30% year-over-year growth adjusted for constant currency and constant billings duration). Non-GAAP operating margins for the period are expected at 17%.
This also moves NOW's FY17 guidance higher. Now, the company sees GAAP total revenues between $1,918-1,923 million, representing 38% year-over-year growth from the previous $1,901 and $1,911 million, or 37% year-over-year growth. Total gross margins for the full year are also now higher, expected to be 78% versus the 77% prior. And lastly, for the full year NOW sees non-GAAP total billings between $2,274-2,279 million, representing 35% year-over-year growth from the previous range of $2,271-2,281 million, which would have seen 34% to 35% year-over-year growth