News
Timothy A. Price
- October 25, 2023
ServiceNow Inc.'s stock showed no significant movement in after-hours trading on Wednesday following the company's report of a substantial increase in revenue driven by strong subscription sales.
CEO Emphasizes Innovation
ServiceNow's Chief Executive, Bill McDermott, expressed his enthusiasm for the company's achievements, stating, "It's incredible. Innovation is the well-spring of growth: We have introduced 5,000 new innovations this year." McDermott emphasized the positive impact of generative-AI when combined with actual product development and real growth.
Growth Driven by Subscription Sales and AI Expansion
The software company experienced a remarkable 27% surge in quarterly subscription sales, amounting to $2.2 billion. Their commitment to advancing in the field of AI was solidified through a partnership with Nvidia Corp. in May. Through this collaboration, ServiceNow aims to develop customized language models for data utilizing Nvidia's software, services, and infrastructure.
Financial Performance
ServiceNow achieved a net income of $242 million, or $1.18 per share, in the fiscal third-quarter, in comparison to $603 million, or $2.95 per share, in the same period last year. Adjusted earnings reached $2.95 per share.
For the quarter, revenue soared by 25% to $2.7 billion, a significant increase from $2.2 billion in the previous year. Furthermore, ServiceNow projects annual subscription sales ranging from $8.635 billion to $8.64 billion. Notably, the company secured 83 new transactions worth over $1 million in net new annual contract value in Q2, a 20% YoY growth.
Analyst Expectations
According to analysts surveyed by FactSet, the average forecast for quarterly adjusted net earnings was $2.56 per share on revenue of $2.27 billion. Additionally, they predicted ServiceNow's annual subscription sales to reach $8.9 billion.
Stock Performance
ServiceNow's stock has experienced a 40% increase since the beginning of the year, surpassing the broader S&P 500's growth of 9%.
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