ServiceNow stock is rising due to better-than-expected earnings

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After the workflow management software company reported better-than-expected profits in the second quarter, the stock price rose slightly late Wednesday.

ServiceNow (stock code: NOW) is a cloud-based management software manufacturer that reported adjusted revenue of US$1.41 billion, a year-on-year increase of 32%, higher than Wall Street’s consensus estimate of US$1.36 billion in revenue for the quarter. Subscription revenue was US$1.33 billion, an increase of 31%, which exceeded the guidance range of US$1.29 billion to US$1.295 billion.

The current remaining performance obligations (measured work completed within 12 months) increased by 34% to $4.7 billion, better than the company’s expected growth rate of 30%. Non-GAAP profit was US$287 million, or US$1.42 per share, higher than the consensus estimate of US$1.21 per share. According to generally accepted accounting principles (GAAP), the company earned $59 million, or 29 cents per share.

For the September quarter, the company expects subscription revenue to be US$1.4 billion to US$1.405 billion, an increase of 28% to 29%, higher than Wall Street’s consensus estimate of US$1.386 billion. The company expects subscription fees for the quarter to be between US$1.32 billion and US$1.325 billion, again slightly higher than Wall Street’s US$1.305 billion, and roughly the same as the US$1.33 billion recorded in the June quarter.

ServiceNow expects full-year revenue of US$5.53 billion to US$5.54 billion, an increase of 29%. This is an increase to 5.47 billion U.S. dollars from the previously estimated 5.455 billion U.S. dollars. ServiceNow now sees annual subscription fees ranging from US$6.315 billion to US$6.325 billion, an increase of 27%, which is higher than the previous forecast range of US$6.19 billion to US$6.205 billion.

ServiceNow’s chief financial officer, Gina Mastantuono, said in a statement that the company had “a huge quarter,” driving a balance between growth and profitability. She said the company saw “very strong demand in all regions and workflows.”

In late trading, ServiceNow shares rose 1.1% to $590.

Write to Eric J. Savitz at [email protected]