What happened
Service Today (NOW 6.44%) is making huge gains in trading today following a better than expected first quarter result. The share price of the customer relationship management (CRM) software specialist rose approximately 6.9% at 11:30 am ET Thursday.
ServiceNow publishes Q1 results after the market closed yesterday, and it delivered top results and bottom lines ahead of market expectations. The company posted earnings per share of $ 1.73 on sales of $ 1.72 billion, while the average analyst estimate targeted earnings per share of $ 0.23 on revenue of $ 1.7 billion.
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E what now
ServiceNow’s earnings in Q1 crushed market expectations, and the business overall delivered encouraging results overall. Total sales during that period increased 26%, or 29% on a currency-adjusted basis, and subscription revenue increased in line with total sales growth reaching approximately $ 1.63 billion. The outlook for demand for the company’s services also remains strong, with management reporting outstanding performance obligations of $ 5.69 billion-up 29% compared to last year.
What now
With the right rise in interest rates this year, growth stocks are under the microscope when it comes time to report earnings and provide guidance. Luckily, ServiceNow kicked it out of the park on either side of that.
The company expects subscription revenue to increase approximately 26% annually between $ 1.67 billion and $ 1.68 billion, and it expects outstanding performance obligations to increase by 28% annually by the end of the quarter. It also expects 25% increase for operating income, a non-GAAP (adjusted) operating margin of 22%, and 31% growth for free cash flow. For the full year, management guided subscription revenue to between $ 7.03 billion and $ 7.04 billion, representing growth of approximately 26%.
ServiceNow has a market capitalization of approximately $ 99.5 billion and is worth approximately 13.4 times expected sales this year and 67.6 times expected revenue.