Bill McDermott, chairman and CEO of ServiceNow, speaks during an interview on the ground on the Recent York Stock Exchange on Oct. 26, 2023.
Brendan Mcdermid | Reuters
ServiceNow shares surged 15% on stronger-than-expected first-quarter results and an upbeat forecast despite the uncertain macroeconomic environment.
The enterprise technology company posted adjusted earnings of $4.04 per share on $3.09 billion in revenue. That topped a consensus estimate of $3.83 in earnings per share and $3.08 billion in sales, in line with LSEG. Revenues grew about 19% from a 12 months ago.
ServiceNow reported net income of $460 million, or $2.20 per share. That’s up from $347 million, or $1.67 per share within the year-ago quarter. Current remaining performance obligations reached $10.3 billion, jumping 22% 12 months over 12 months. The corporate also lifted its full-year forecast.
“While our business stays strong, we’re only flowing through a part of those advantages into our full‑12 months outlook” to account for any pending risks from the geopolitical environment, the corporate said in a release.
Shares of ServiceNow have slumped about 12% this 12 months amid a volatile market environment. Investors this earnings season are laser-focused on how corporations are managing the macroeconomic backdrop within the wake of President Donald Trump’s sweeping tariff plans. One other fear for some corporations operating in the general public sector is cuts from the Department of Government Efficiency, or DOGE, cost-cutting campaign.
Public sector business grew 30% throughout the period, which included 11 federal deals topping $1 million. CEO Bill McDermott said throughout the earnings call that the corporate has had “very positive” discussions with DOGE, which is run by Tesla CEO Elon Musk.
Each DOGE and ServiceNow have a “shared ambition to remodel government and the best way it interacts with residents,” he said. “The common thread is that ServiceNow is ready up for sustainable growth because the market’s leading enterprise AI platform.”
Subscription revenue, which consumes a big chunk of the corporate’s revenues, got here in at $3.01 billion, narrowly topping a $3 billion estimate. The corporate said it expects subscription revenues within the second quarter to range between $3.03 billion and $3.04 billion, ahead of a $3.02 billion estimate.
The digital workflows software provider said it ended the period with 508 customers totaling about $5 million in annual contract value.
