ServiceNow Inc. stock. jumped more than 9% in extended trading on Wednesday after the software company reported quarterly results that exceeded expectations, results that the chief executive said “reflect that ServiceNow’s business model is destined to thrive in any economic environment. ”
Service Now NOW
reported fourth-quarter revenues of $ 26 million, or 13 cents per share, on revenue of $ 1.61 billion, up from $ 1.25 billion last year. After adjusting for stock-based compensation and other effects, the company reported earnings of $ 1.46 per share, up from $ 1.17 per share last year. Analysts surveyed by FactSet expect revenues of $ 1.43 per share with revenue of $ 1.6 billion on average.
ServiceNow tends to focus on subscription revenue more than total revenue, removal of professional services and other forms of sales. In their forecast, executives called for first quarter subscription revenue of $ 1.61 to $ 1.615 billion and full -year subscription sales of $ 7.02 billion to $ 7.04 billion; Analysts on average expect $ 1.62 billion and $ 7.02 billion, according to FactSet.
Shares jumped more than 9% in after-hours trading immediately after the results came out.
“In this macro environment of a Great Resignation, supply chain disruption and inflation, digital technologies are a deflationary force that stimulates growth,” ServiceNow Chief Executive Bill McDermott told MarketWatch on Wednesday. “These results show that ServiceNow’s business model is set to thrive in any economic environment.”
McDermott cited an IDC survey of CEOs that revealed that most aim to support or increase IT spending, particularly through digital transformation, for the foreseeable future. As a result, he said ServiceNow is raising guidance for subscription revenue growth in the first quarter.
Strong results highlight the ServiceNow area as one of the better performing technologies as more businesses are changing their management of operational costs, investing in automation and streamlining workflows, according to analyst.
“ServiceNow continues to benefit from the rapid investment needed for businesses to keep pace with digital change,” said Daniel Newman, chief analyst at Futurum Research. With strong growth in the top line (subscription revenue in the fourth quarter was $ 1.52 billion), along with so many large customer wins, and a 99% customer retention rate, it’s hard not to dislike the prospects of ServiceNow both in the short and long term.
ServiceNow also announced that CJ Desai, chief product and engineer officer, has been promoted as chief operating officer.
Shares of ServiceNow fell 6% over the past year, while the broader S&P 500 index SPX
gained 13.2%.
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