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ServiceNow’s stock wavers despite strong subscription sales, revenue jump as AI products gain hold


ServiceNow Inc.’s stock bounced between slight gains and losses in after-hours trading Wednesday, after the company reported a quarterly bounce in revenue on strong subscription sales.

“The gen-AI solutions we put into the marketplace in one quarter outsold any other product we put in the market,” ServiceNow

Chief Executive Bill McDermott said in an interview Wednesday.

The software company is riding the momentum of a 27% jump in quarterly subscription sales to $2.37 billion, and an aggressive push into artificial intelligence through partnerships with Nvidia Corp.
, Inc.’s

AWS and others.

ServiceNow posted fiscal fourth-quarter net income of $295 million, or $1.43 a share, compared with net income of $150 million, or 74 cents a share, in the year-ago quarter. Adjusted earnings were $3.14 a share.

Revenue improved 26% to $2.44 billion, from $1.94 billion in the same quarter a year ago.

Analysts surveyed by FactSet had expected, on average, quarterly adjusted net earnings of $2.78 a share on revenue of $2.4 billion. They forecast $2.3 billion in quarterly subscription sales for ServiceNow.

ServiceNow expects fiscal first-quarter subscription sales of between $2.51 billion and $2.515 billion. Analysts are forecasting $2.54 billion.

Shares of ServiceNow have rocketed 70% over the past 12 months, while the broader S&P 500 
has improved 21.5%.

Analysts characterized the quarter as exceptional.

“Faster-than-expected generative-AI adoption and key partnerships (Visa
Ernst & Young) position [ServiceNow] for continued success — especially with its robust RPO (remaining performance obligation) metric and ACV (annual contract value), which now exceeds $10 billion,” Daniel Newman, principal analyst and CEO at the Futurum Group, said in an email.

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