ServiceNow, Inc. (right now – “Free Report” is scheduled to release 2020 third quarter results on October 28.
The company’s third-quarter performance is expected to benefit from the strong appeal of the company’s digital workflow solution, which stems from the coronavirus-led wave of remote work and rapid digital transformation across all industries.
The Zacks revenue consensus estimate is currently $1.11 billion, an increase of 25.3% over the same period last year.
In the past 7 days, Zacks’ estimate of third-quarter earnings has stabilized at 1.03 cents, a 4% increase from the same period last year.
It is worth noting that the average earnings of the company for four consecutive quarters were 12.57%, which was unexpected.
Factors that may affect the third quarter performance
The heavy adoption of ServiceNow’s customer service management (CSM) solutions may drive the reported results this quarter.
It’s worth noting that the ServiceNow CSM solution is helping Zoom movie (ZM – Free report) update its customer service operations. Zoom Video also uses ServiceNow’s AIOps capabilities to enable its new hardware as a service business model.
This momentum is likely to contribute to the third quarter’s revenue, as the pandemic caused the company’s customer support department to flood with calls and inquiries.
ServiceNow expects subscription revenue in the third quarter to be between $1.055 billion and $1.06 billion. It is worth noting that the Zacks Consensus subscription revenue estimate is currently $1.058 billion, an increase of 30% over the same period last year.
In addition, the company’s platform is becoming more and more popular among US government agencies, and the company is hopeful for its third quarter results. It is worth noting that the emergency response application developed on the Now platform has been adopted by Washington, Los Angeles, and San Francisco states in response to the growing pandemic threat.
The growing influence of the company’s products makes the stock optimistic. It is worth noting that the company’s stock has returned 79.2% so far this year, while the industry’s gain is 31.7%. ServiceNow currently carries a Zacks Rank #3 (hold).you can see The full list of today’s Zacks #1 ranking (strong buy) is here.
Due to the increasing demand for efficient employee management in a constantly changing work environment, ServiceNow’s HR solutions are also becoming more and more popular. This may have a positive impact on revenue for the quarter to be reported. In fact, in this quarterly review, ServiceNow announced the expansion of its partnership with Deloitte to help customers enhance their HR Service Delivery (HRSD) workload and provide employees with an enhanced digital experience.
In addition, the company and Microsoft (Microsoft – Free reports) and Accenture are expected to help get more customers. This factor may be reflected in ServiceNow’s third-quarter revenue.
However, the weakness of SMEs caused by the coronavirus may limit their growth. Similarly, the increase in product innovation spending may affect profit margins this quarter.
Return to work initiative deserves special mention
As the gradual unlocking phase begins, as the economy reopens and people begin to return to work, companies will need to ensure that their employees are provided with the highest safety standards. This forces employers to take effective measures. Therefore, employers may increase their demand for effective contact tracking tools in order to protect their employees.
In this regard, ServiceNow announced this quarter Ciscoof(CSCO – Free report) DNA Spaces has enhanced its Contact Tracing app to create a safer workplace environment during the COVID-19 outbreak. By integrating location-based cloud platform Cisco DNA Spaces, ServiceNow’s Contact Tracing application can import employee location-based data.
In addition, the company has expanded ServiceNow Safe Workplace Suite with a new employee travel safety application. It is worth noting that the suite has more than 700 clients. The employee security application will help organizations provide employees with prior authorization for business travel based on the security level of the destination. It will include daily contact tracking check-in and pre-health verification to ensure that virus exposure is minimized.
In addition, it is worth noting that ServiceNow’s WorkPlace Suite and dashboard were launched in May 2020. It is worth noting that ServiceNow Workplace Suite provides customers with various solutions, such as workplace safety management, employee health checks and Workplace PPE (personal protective equipment) inventory management, as well as the latest Contract Tracing application, which can be used when employees return to the office Always ensure a safe workplace environment.
These moves may promote the adoption of ServiceNow’s products focused on returning to work, including the Contact Tracing application, which boosted third-quarter revenue.
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