5 Interesting Learnings from ServiceNow at ~$10 Billion in ARR
"It’s trading now at an all-time high of $160 Billion, or 16x (!) ARR. Far, far ahead of the average of 6x today."
So there’s a new member of the $10 Billion ARR Club.
ServiceNow is the enterprise workflow leader that most folks have sort of heard of, but don’t fully understand or know too much about. It’s because you don’t work in a big enterprise. ServiceNow simply dominates there.
It’s a $10 Billion ARR rocketship, still growing a stunning 27% (!) at that scale, with 1,900 $1m+ customers. And it’s trading now at an all-time high of $160 Billion, or 16x (!) ARR. Far, far ahead of the average of 6x today.
Wow. These are the Best of Times for ServiceNow. Period.
5 Interesting Learnings:
#1. Growing as Fast at $10B ARR as it Was at $8B ARR, and Almost as Fast as $5B ARR
Back at $8B ARR, ServiceNow was growing at 25% a year. Today, it’s growing even faster at 27%! And at $5B ARR, it was growing 32%.
#2. Seeing Strong Bookings As Well Going Into 2024. No Downturn At All.
You can see below, “RPO” — contracts that are signed but not yet fully delivered — stayed strong through 2022 and 2023 and actually accelerated during the end of 2023. Times are a bit more challenging at ServiceNow for sure — but there’s no downturn.
#3. Almost 1,900 $1m+ Customers, Growing 15% a Year
ServiceNow does an incredible job of growing its customer spend.
#4. The Big Customers Pay $4.5 Million a Year — Up From $3.8 Million 24 Months Ago
Slowly and steadily, ServiceNow grows its biggest accounts … even bigger, year over year. From $3m on average in 2020 to $4.5m on average in 2024.
#5. 99% Renewal Rate — And No “Downturn” or Macro Impacts Here
ServiceNow customers often sign 3+ year customers, and it is very enterprise. So you wouldn’t expect much overnight churn. Still, seeing consistent 98%-99% logo renewal rates is very, very impressive.
And a few other interesting learnings:
#6. 63% of Revenue from North America
Global revenues are slowly creeping up as a percent of total.
#7. $440,000 in Revenue Per Employee
ServiceNow is very efficient, handily exceeding the $300,000 or so average revenue per employee for the average public SaaS company. As you can see below, ServiceNow keeps steadily hiring. But like most other leaders today, it’s hiring more slowly than it’s growing revenue. That keeps the operating margins going up.
Wow, ServiceNow. The enterprise workflow engine that just keeps on going.
Even at $10,000,000,000 in ARR.
Frank Slootman's (Service Now CEO 2011-18, now CEO of Snowflake) Amp It Up is a great read for people who want to understand how such a company was scaled up.
There are tons of quotes I saved from it, but this paragraph is my favorite:
Passengers are people who don't mind simply being carried along by the company's momentum, offering little or no input, seemingly not caring much about the direction chosen by management.
They are often pleasant, get along with everyone, attend meetings promptly, and generally do not stand out as troublemakers. They are often accepted into the fabric of the organization and stay there for many years. The problem is that while passengers can often diagnose and articulate a problem quite well, they have no investment in solving it. They don't do the heavy lifting. They avoid taking strong positions at the risk of being wrong about something. They can take any side of an issue, depending on how the prevailing winds are blowing. In large organizations especially, there are many places to hide without really being noticed. Passengers are largely dead weight and can be an insidious threat to your culture and performance. They inadvertently undermine the mojo of the organization. They sap the animal instinct and spirits you need in business to thrive.
Drivers, on the other hand, get their satisfaction from making things happen, not blending in with the furniture. They feel a strong sense of ownership for their projects and teams and demand high standards from both themselves and others. They exude energy, urgency, ambition, even boldness. Faced with a challenge, they usually say, “Why not” rather than “That's impossible.” These qualities make drivers massively valuable. Finding, recruiting, rewarding, and retaining them should be among your top priorities. Recognize them privately and publicly, promote them, and elevate them as example of what others should aspire to. That will start waking up those who are merely along for the ride. Celebrate people who own their responsibilities, take and defend clear positions, argue for their preferred strategies, and seek to move the dial.