ServiceNow delivered another outstanding quarter with revenue increasing 19% YoY to hit $3.005 billion.
The outlook looks promising with Remaining Performance Obligations (RPO) totaling $22.1 billion. If you are not familiar with RPO, it is a good sign of the committed revenue in future. It shows the contracts that are already signed but where the revenue will come in future.
Understanding RPO
For example, if ServiceNow signs a 3 year deal with an organization for $3 million in total contract value (TCV), only the first year's revenue (ACV, Annual Contract Value) will be included as part of the revenue for the year. Revenue earned in the second and third year will belong to the RPO bucket.
This RPO can also have two parts, current and non-current, depending on when the revenue is expected. Revenue expected in the next 12 months is classified as current RPO and beyond the next 12-months is called non-current RPO.
Current RPO
Revenue expected in next 12 months
Non-Current RPO
Revenue beyond next 12 months
Healthy RPO is a sign that the customers are willing to commit to the ServiceNow ecosystem for a long duration. This is a great sign and shows that the customers are willing to commit to ServiceNow for years!
500+ customers with $5m+ ACV
This slide shows that the vision of becoming the AI platform for the business transformation is a reality for many large organizations. ServiceNow has more than 500 customers with more than $5m in ACV. Moreover, the average ACV of this cohort is increasing continuously and has reached $14.2 million.
When you combine this with a retention rate of 98%, as a partner, it is comforting to know that:
- The total addressable market for ServiceNow is expanding and so there is plenty of headroom for partners to grow in this ecosystem.
- Customers are also willing to trust ServiceNow and have made their choices clear. They want to stay in the ecosystem and transform their businesses with ServiceNow.
Increasing share of CRM in Net New ACV
This is where the opportunity of ServiceNow becomes super interesting. It is the first time Technology Workflow's contribution has fallen below 50% contribution. CRM, Industry, and Core Business Workflows are growing rapidly.
Customers are giving the right mandate to ServiceNow and trusting it to deliver Core Business Workflows like CRM, Source to Pay, Lead to Cash, and so on.
As a partner, it is a great opportunity to expand our capabilities and transform core business workflows for our clients with ServiceNow.
Summary
ServiceNow delivered an amazing quarterly result in Q1 2025. Looking at the track record, it seems that the momentum will not slow down. ServiceNow will become the defining enterprise software company of the 21st century.
We are glad to be a ServiceNow partner.