Service Today (NYSE: NOW) shares fell 7% pre-market on lowered full-year subscription revenue forecasts that greeted a better-than-expected Q2 showing.
The software firm generated adj EPS of $1.62 on revenue of $1.82B (+30.0% Y/Y), with subscription revenues up 29.5% Y/Y to $1.72B.
As of June 30, 2022, non-GAAP current outstanding performance obligations (cRPO) was $6.02B (+27% Y/Y). However, cRPO came in below the guidance of 28%.
Results were impacted by a 500bp currency headwind caused by a strengthening US dollar and lengthening sales cycles at the end of the quarter.
As a result, the company cut its full-year subscription revenue guidance from $7.03B-$7.04B previously to $6.915B-$6.925B, indicating 24% Y/Y growth. For Q3, subscription revenue is seen at $1.75B-$1.755B and cRPO of +20%.
BofA Securities and Truist Securities maintained their Buy ratings on the stock, while Oppenheimer and William Blair reiterated their Outperform ratings for ServiceNow despite lower guidance. Truist cut its forecasts on the company for the remainder of the year in anticipation of additional headwinds and lowered its price target accordingly to $550 from $600.
In general, analysts suggested that while additional headwinds are expected due to FX pressures and longer sales cycles, the company’s underlying business and pipeline drivers remain strong and growth will return as the macro environment.
The SA Quant system rates the stock as a hold