ServiceNow Inc. experienced a 2% increase in its stock during after-hours trading on Wednesday, following a surge in quarterly revenue driven by strong subscription sales. Chief Executive Bill McDermott expressed his satisfaction with the company’s performance, stating that their gen-AI solutions outsold any other product in the market. This success can be attributed to ServiceNow’s strategic partnerships with industry leaders such as Nvidia Corp. and Amazon.com Inc.’s AWS, which have facilitated their aggressive push into artificial intelligence.
In terms of financials, ServiceNow’s fiscal fourth-quarter net income rose to $295 million, or $1.44 per share, compared to $150 million, or 74 cents per share, in the same period last year. Adjusted earnings per share were $3.14. The company also experienced a substantial increase in revenue, reaching $2.44 billion, a 26% improvement from the previous year’s quarter.
Industry analysts had high expectations for ServiceNow, with the average forecast predicting quarterly adjusted net earnings of $2.78 per share on revenue of $2.4 billion. However, the company outperformed these estimates. Furthermore, analysts noted the exceptional quarter, attributing it to faster-than-expected adoption of generative-AI and key partnerships with companies like Visa and Ernst & Young. Notably, ServiceNow’s remaining performance obligation and annual contract value have now exceeded $10 billion.
Looking ahead, ServiceNow is optimistic about its future performance. They anticipate fiscal first-quarter subscription sales to range between $2.51 billion and $2.515 billion, slightly below analysts’ forecast of $2.54 billion.
Investors have responded positively to ServiceNow’s strong quarterly results, with the company’s stock increasing by 70% over the past 12 months. In comparison, the broader S&P 500 has only improved by 21.5% during the same period.