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ServiceNow Expands Its AI Portfolio

Aug. 06, 2018 8:18 PM ETServiceNow, Inc. (NOW)4 Comments
Sramana Mitra profile picture
Sramana Mitra


  • During the second quarter in May, ServiceNow announced plans to acquire Parlo to expand its AI capabilities.
  • Silicon Valley-based Parlo is an AI platform that trains algorithms for conversational machines.
  • ServiceNow will integrate Parlo's natural language understanding technology called Broca into its Now platform for business process automation.

ServiceNow (NYSE:NOW) recently reported a strong second quarter that beat estimates. However, the company's revenue outlook for the third quarter was below analyst estimates.

ServiceNow's Financials

Revenues for the second quarter of the year grew 41% over the year to $631.1 million, ahead of the market's expectations of $618.3 million. Net loss was $52.7 million or $0.30 per share. Adjusted EPS of $0.49 was up 121% and beat analyst estimates of $0.43 for the quarter.

By segment, revenues from subscriptions grew 45% over the year to $585.3 million and professional services revenues were flat at $45.8 million. Subscription billings grew 36% to $616.9 million.

The strong performance in the quarter was driven by 28 deals with net new average contract value of more than $1 million. ServiceNow has 575 customers with annual contract values of $1 million.

For the third quarter, ServiceNow projected subscription revenues of $610 -$615 million and subscription billings of $648-$653 million compared with the market's projections of $674 million. It expects to end the current year with subscription revenues of $2.4 -$2.41 billion.

ServiceNow's Acquisitions

ServiceNow continues to leverage the unprecedented opportunity that the SaaS companies have today and make acquisitions within the SaaS space. This year, it already announced two acquisitions.

Last quarter, ServiceNow announced the acquisition of Seattle-based VendorHawk for an undisclosed sum. VendorHawk is a SaaS player whose cloud systems help customers discover, rationalize, and optimize SaaS subscriptions across their organization. It supports its customers by helping them manage spending on more than 36,000 SaaS applications and mapping redundant applications for them. It analyzes application utilization and optimizes SaaS subscriptions for top applications such as Salesforce, Box, and Google G Suite.

ServiceNow plans to leverage VendorHawk's capabilities to strengthen its Software Asset Management offering. It will integrate VendorHawk within the Now Platform and offer

This article was written by

Sramana Mitra profile picture
Sramana Mitra is the founder of One Million by One Million (1M/1M), a global virtual accelerator that aims to help one million entrepreneurs globally to reach $1 million in revenue and beyond. She is a Silicon Valley entrepreneur and strategy consultant, she writes the blog Sramana Mitra On Strategy, and is author of the Entrepreneur Journeys book series and Vision India 2020. From 2008 to 2010, Mitra was a columnist for Forbes. As an entrepreneur CEO, she ran three companies: DAIS, Intarka, and Uuma. Sramana has a master’s degree in electrical engineering and computer science from the Massachusetts Institute of Technology. Full bio can be found at http://www.sramanamitra.com/bio/

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