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This statistic highlights ServiceNow’s Revenue by Segment from 2016 onwards, split between Subscription, and professional services & others.
ServiceNow’s Revenue by Segment
|Segment||Q1 2021||Q1 2020||YoY Growth||Revenue share in Q1 2021|
|Professional services and other||$67||$52||29%||5%|
(All figures in millions, except percentages)
ServiceNow provides a cloud automation platform that helps to automate the existing processes for their customers which helps in establishing an efficient and digitized workflow. ServiceNow serves customers across industries like government, healthcare, education, financial services, manufacturing, technology, oil and gas, and telecommunications. The revenue earned by ServiceNow is further bifurcated in this article.
In Q1 2021, the total revenue generated by ServiceNow was $1.36 billion. Total revenue grew by 30% year-over-year from $1.05 billion from Q1 2020.
ServiceNow offers its service on an annual subscription fee basis, which also includes access to the related ordered subscription service and updates to the subscription service during the subscription period. It sells its products through subscription services and primarily through direct sales, managed service providers, and resale partners. The price charged for subscription services is based on several factors like the duration of the subscription term, the mix of products purchased, volume, and discounts. The revenue generated from subscription services is recognized over the contract term. Its contract with customers includes a fixed amount of consideration which is non-refundable. The subscription revenue of ServiceNow is generated from Digital workflow products and ITOM products.
Revenue from Subscription was 95% of total revenue in Q1 2021 amounting to $1.29 billion. In Q1 2021, subscription revenues increased by 30% year-over-year from $994.70 million in Q1 2020. This increase in revenue was driven by an increase in purchases made by existing customers and by an increase in new customers.
Professional service and other revenue
ServiceNow also generates revenue from professional services it renders on a time-and-materials basis which primarily focuses on strategic advisory, implementation, and consulting services to help customers accelerate platform adoption and drive outcomes. Customers are charged monthly in arrears for the professional services based on actual hours and expenses incurred. The revenue from professional services is recognized by ServiceNow as the services are delivered. Such services are delivered both directly and through partners.
Other revenue consists of fees charged on customer training which is provided on-site or through publicly available classes. ServiceNow offers a portfolio of training across Customer Service, IT, HR, and other sections that are covered by the Now Platform. This training helps to understand how to work quickly and maximize platform utilization.
In Q1 2021, revenue from professional services and other means was $67 million which was 5% of the total revenue generated by ServiceNow. Revenue from this segment witnessed 29% year-over-year growth from $52 million of Q1 2020. This increase in revenue was primarily due to an increase in professional service and training provided to the existing as well as new customers.
ServiceNow, Inc. is an American-based company established in 2003 by David Loo, Bow Rugger, Don Goodliffe, and Fred Luddy. Its headquarters is located in Santa Clara in California. ServiceNow completed its initial public offering in 2012 and its common stock is traded on the New York Stock Exchange under the trading symbol “NOW”.
Through a single enterprise cloud platform called the Now Platform, ServiceNow creates and provides digital workflows. Its products are more focused on providing IT, Customer, and Employee workflows. ServiceNow’s customer can also build their custom workflow applications using our Creator workflows also called as Now Platform App Engine.
ServiceNow has collaborated with global partners like Deloitte, EY, Accenture, KPMG, DXC, and IBM. Its strategic technology alliance partners are Adobe, AWS, CISCO, IBM, Microsoft, SAP, and Slack. Major competitors of ServiceNow are BMC Software, Pegasystems, Yonyou, Atlassian, and ServiceMax.
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