Executive Summary
ServiceNow delivered a solid QQ3 2024 performance with notable top-line growth and healthy profitability, supported by strong cash generation and a robust balance sheet. Revenue reached $2.797 billion, up 22.25% year over year and 6.47% quarter over quarter, as the company continues to scale its Now platform and expand adoption across IT service management, IT operations, HR, and customer service workloads. Gross margin remained high at 79.12%, and operating margin approached 14.95%, underscoring effective operating leverage as revenue grows. Net income of $432 million and GAAP EPS of $2.10 (diluted $2.07) reflect a constructive mix of growth investments and margin expansion. Free cash flow totaled $469 million, with operating cash flow of $671 million and capital expenditures of $202 million, resulting in a strong FCF conversion that supports a solid balance sheet and substantial liquidity.
The company's liquidity position is notably robust: cash and cash equivalents of $1.885 billion, plus total cash and short-term investments of $5.295 billion, against reported total debt of $2.245 billion and a neutral or modest net debt position depending on the accounting lens. This creates a substantial net cash stance and ample headroom to fund R&D, strategic acquisitions, and potential capital allocation opportunities. Management continues to emphasize the Now platform as the engine of growth, with ongoing emphasis on automation, AI capabilities, and enterprise-scale deployments across multiple lines of business.
Valuation remains demanding relative to broad SaaS benchmarks, with a through-the-cycle price-to-earnings around 106x and price-to-sales around 65x, reflecting investor confidence in durable growth and significant cash generation. The outlook hinges on sustained enterprise cloud spend, continued product expansion (including AI-enabled workflow automation), and successful cross-sell across ITSM, ITOM, ITBM, customer service, HR, and business apps. Investors should monitor demand environment, customer retention in large enterprise deals, and the pace of AI-driven product adoption that could influence future growth and profitability trajectories.
Key Performance Indicators
Key Insights
Revenue: $2,797.0 million; YoY +22.25%; QoQ +6.47%
Gross Profit: $2,213.0 million; Gross Margin 79.12%; YoY +23.49%; QoQ +6.65%
Operating Income: $418.0 million; Operating Margin 14.95%; YoY +80.95%; QoQ +74.17%
Net Income: $432.0 million; Net Margin 15.45%; YoY +78.51%; QoQ +64.89%
EPS (GAAP): $2.10; Diluted EPS: $2.07; YoY +77.97%; QoQ +65.35%
EBITDA: $641.0 million; EBITDA Margin 22.92%
Free Cash Flow: $469.0 million; FCF Margin ≈ 16.8% of revenue
Operating Cash Flow: $671.0 million; CapEx:...
Financial Highlights
Revenue: $2,797.0 million; YoY +22.25%; QoQ +6.47%
Gross Profit: $2,213.0 million; Gross Margin 79.12%; YoY +23.49%; QoQ +6.65%
Operating Income: $418.0 million; Operating Margin 14.95%; YoY +80.95%; QoQ +74.17%
Net Income: $432.0 million; Net Margin 15.45%; YoY +78.51%; QoQ +64.89%
EPS (GAAP): $2.10; Diluted EPS: $2.07; YoY +77.97%; QoQ +65.35%
EBITDA: $641.0 million; EBITDA Margin 22.92%
Free Cash Flow: $469.0 million; FCF Margin ≈ 16.8% of revenue
Operating Cash Flow: $671.0 million; CapEx: $(202.0) million; FCF/Share: $2.28; Cash per share: $25.70
Balance Sheet Highlights: Total assets $18.434B; Total liabilities $9.144B; Total equity $9.290B
Liquidity: Cash & cash equivalents $1.885B; Short-term investments $3.41B; Total cash & short-term investments $5.295B; Net debt (reported) $360M (note: cash exceeded debt by a wide margin in the period reported)
Liquidity Ratios: Current ratio 1.06; Quick ratio 1.06; Cash ratio 0.278
Capital Allocation: Free cash flow generation supports investments in R&D (R&D outlay $626M) and modest capital returns; Share repurchases reported at $(225.0) million in the period.
Valuation Multiples: P/E ~106x; P/S ~65.6x; EV/Revenue ~285.6x; P/Book ~19.74x
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
2.80B |
22.25% |
6.47% |
| Gross Profit |
2.21B |
23.49% |
6.65% |
| Operating Income |
418.00M |
80.95% |
74.17% |
| Net Income |
432.00M |
78.51% |
64.89% |
| EPS |
2.10 |
77.97% |
65.35% |
Key Financial Ratios
operatingProfitMargin
14.9%
operatingCashFlowPerShare
$3.26
freeCashFlowPerShare
$2.28
Management Commentary
Note: The provided data set does not include an earnings call transcript. As a result, there are no management quotes or thematic highlights to extract. If a transcript is supplied, I can incorporate themes around strategy execution, pipeline visibility, product roadmap (AI and Now Platform expansion), margins, and guidance into this section.
Forward Guidance
No formal forward guidance is present in the provided dataset for QQ3 2024. Absent explicit targets, the outlook row centers on the following considerations: (1) continued double-digit revenue growth supported by enterprise cloud adoption and expansion of the Now platform across ITSM, ITOM, HR, customer service, and governance, risk and compliance; (2) ongoing operating leverage with a track record of gross margin retention around 79% and rising operating efficiency as the customer base scales; (3) strong FCF conversion enabling continued R&D investment and potential capital allocation, including opportunistic buybacks if policy remains favorable. Investors should monitor: pipeline visibility into large enterprise contracts, attrition/retention trends, AI-enabled product uptake, any sign of margin pressure from increased R&D or competitive intensity, and macro conditions affecting enterprise IT budgets.