ServiceNow CEO: we are ‘the standard’ for business transformation

Shares of ServiceNow (NYSE: NOW), a services provider of cloud-based platforms and solutions to help enterprises improve the productivity of their workers, reported an encouraging third quarter report that sent shares higher by more than 6% on Thursday.

Q3 highlights

ServiceNow reported third quarter EPS of $1.21 on sales of $1.14 billion. Both numbers came in better than the $1.03 per share and $1.11 billion Wall Street analysts were expecting. The company reported very strong growth metrics, including a 31% year-over-year jump in subscription revenue at $1.091 billion.

The company recorded 41 transactions worth more than $1 million in net new annual contract value and now boasts 1,012 total customers that pay more than $1 million in fees.

‘The standard’

As noted by CNBC “Squawk on the Street” co-host Jim Cramer, ServiceNow is reporting the kind of growth metrics reserved for small start-ups. But ServiceNow is worth north of $100 billion and this makes it clear that ServiceNow’s platform is “the standard” for the digital transformation in businesses today, CEO Bill McDermott answered.

Many of ServiceNow’s new clients are struggling to adapt to the sudden need to change their businesses given the new realities brought on by the COVID-19 pandemic. For example, companies may not even meet face-to-face with new employees which creates new sets of challenges in managing them digitally.

ServiceNow also provides services to help companies better attract and satisfy the needs of their consumer base.

“ServiceNow’s platform is at the epicenter of all of that,” he said. “And more and more, developers are building new innovation on the fly on the Now platform.”

‘The essence of everything’

ServiceNow’s business has expanded to include U.S. Federal government entities, such as the U.S. Department of Veterans Affairs, the Air Force, and the Senate. This is consistent with management’s goals of being “the essence of everything.”

Management wants to help the Air Force build its vision for the future of space on its platform. The same goes for helping teachers feel safe in the classroom and acting as the official workflow partner of the National Basketball Association to ensure a smooth playoff experience.

“Digital transformation was the opportunity of our generation before COVID,” he said. “Now with COVID it has accelerated and exasperated all the issues: broken systems, siloed operations, people not getting things done in teams across organizations.”

Even before COVID, millennial workers had no desire to work in cubicles in offices, he said. This will not change one bit in a post COVID reality and the majority of the workforce will be digital but still expect to be given the best possible tools to complete their jobs.