Shares of enterprise software giant ServiceNow Inc. came out in after-hours trading on Wednesday after the company delivered a first quarter earnings report that topped expectations.
The company reported earnings before certain expenses such as stock compensation of $ 1.76 per share to revenue of $ 1.72 billion, up 27% from a year earlier. Net income for the period reached $ 75 million.
Performance was better than expected, with analysts looking for revenues of $ 1.70 per share on revenue of $ 1.7 billion. Shareholders were clearly more than satisfied, as ServiceNow stock rose 7% in after-hours trading, following a 2% gain early in the day.
ServiceNow President and Chief Executive Bill McDermott (pictured) praised what he called “another outstanding performance” of the company.
“We are in a sustained demand environment. Companies are investing with a sense of urgency in technologies that bring them to the right outcomes, quickly, “he said.” It’s very clear that businesses can no longer return to the ‘status quo.’ We’re in a tech-to-compete world today. The ServiceNow Platform enables employees, customers, and citizen developers with the experiences they want. “
ServiceNow sells software used by businesses ’information technology departments to monitor and manage the services they provide. Its platform also provides administrative and workflow management tools, and in recent times it has expanded from core business to provide human resources, customer service management and IT security tools.
The company has been so successful that it is credited with helping popularize the workflow as a concept. It is also hugely ambitious, aiming to make more than $ 15 billion in annual revenue by 2026.
ServiceNow’s success is evident elsewhere in its financial numbers. The company reported subscription revenue growth of 26% in the quarter, which rose to $ 1.63 billion, ahead of estimates of $ 1.62 billion. In addition, it reported current outstanding performance obligations in the first quarter, or CRPO bookings, that rose 29% to $ 5.69 billion. CRPO is a cumulative deferred revenue and order backlog.
Just last quarter, ServiceNow announced an important update to its Now Platform with the release of San Diego. One of the most important new capabilities is a new robotic process automation tool called Automation Engine that helps workers automate repetitive business tasks. The service, based on ServiceNow’s existing Integration Hub and RPA Hub offerings, enables workers to create RPA workflows that automatically perform tasks such as responding to frequent customer support requests. .
Holger Mueller of Constellation Research Inc said. that ServiceNow delivered a strong quarter but he worries that the company looks like it could be combined with a high level of growth.
“The company showed impressive year-on-year growth but almost no quarter-over-quarter growth, which is new for ServiceNow,” the analyst said. “The good news is ServiceNow’s continued investment in R&D, especially in its platform, as seen in the San Diego release. Investments in the platform are taking time to leave, so we’ll see where ServiceNow takes this in the coming quarters. “
In anticipation of the second quarter, ServiceNow estimates subscription revenue to be between $ 1.67 billion to $ 1.675 billion, its midpoint just below Wall Street’s guide of $ 1.675 billion.
Photo: World Economic Forum/Flickr
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