ServiceNow CFO on why the vendor finds going through the channel tough

IT services management vendor saw revenues hit $788m for its 2019 Q1

ServiceNow is facing challenges trying to convince its customers to do business through the channel, according to its CFO.

The cloud-based IT services management vendor trumped analyst expectations by posting revenues of $788m (£612m) for the three months to 31 March 2019, a 34 per cent year-on-year increase.

CFO Michael Scarpelli told investors on an earnings call that the organisation has increased its focus on enterprise customers and wants partners to get involved in these deals.

"We tend to focus more on enterprise. The commercial segment was around 20 per cent of our business and even of that, that's really high-end commercial," he explained on the call, transcribed by Seeking Alpha.

"It's typically the 3,000 to 5,000 employees we focus on, and it's still very much a direct selling model.

"We are trying to do more through the channel, [but] when you have customer data they want to have a direct relationship with you.

"So channel partners are more involved in that segment, but we still have direct contracting relationships with those customers."

The growth it is seeing is a combination of numerous elements, including broadening its services base and architecting solutions, CEO John Donahue said on the same call.

"[It] is that combination of capabilities that allows us to deliver that kind of end-to-end customer coverage that allows us to expand those customer relationships," he stated.

Donahue also said that ServiceNow will continue to look into inorganic growth opportunities in response to a question from an analyst.

"M&A to date has largely been focused on what I would call aqua hires - that's defined as acquiring technologies and teams that help build out and accelerate the platform - we'll continue to do those," he stated.

"But if and when we see opportunities to acquire adjacent capabilities or acquire new growth engines - and we've got the resource to do it - we'll act on it.

"One of the luxuries we have is the luxury of choice and time because we have such a strong organic innovation agenda."