Bill McDermott, chairman and CEO of ServiceNow, speaks during an interview on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., October 26, 2023.
Brendan Mcdermid | Reuters
ServiceNow shares surged 15% on stronger-than-expected first-quarter results and an upbeat forecast despite the uncertain macroeconomic environment.
The enterprise technology company posted adjusted earnings of $4.04 per share on $3.09 billion in revenue. That topped a consensus estimate of $3.83 in EPS and $3.08 billion in sales, according to LSEG. Revenues grew about 19% from a year ago.
ServiceNow reported net income of $460 million, or $2.20 per share. That’s up from $347 million, or $1.67 per share in the year-ago quarter. Current remaining performance obligations reached $10.3 billion, jumping 22% year over year. The company also lifted its full-year forecast.
“While our business remains strong, we are only flowing through part of those benefits into our full‑year outlook,” to account for any pending risks from the geopolitical environment, the company said in a release.
Shares of ServiceNow have slumped about 12% this year amid a volatile market environment. Investors this earnings season are laser-focused on how companies are managing the macroeconomic backdrop in the wake of President Donald Trump’s sweeping tariff plans. Another fear for some companies operating in the public sector is cuts from the Department of Government Efficiency cost-cutting campaign.
Public sector business grew 30% during the period, which included 11 federal deals topping $1 million. CEO Bill McDermott said during the earnings call that the company has had “very positive” discussions with DOGE, which is run by Tesla CEO Elon Musk.
Both DOGE and ServiceNow have a “shared ambition to transform government and the way it interacts with citizens,” he said. “The common thread is that ServiceNow is set up for sustainable growth as the market’s leading enterprise AI platform.”
Subscription revenue, which consumes a large chunk of the company’s revenues, came in at $3.01 billion, narrowly topping a $3 billion estimate. The company said it expects subscription revenues in the second quarter to range between $3.03 and $3.04 billion, ahead of a $3.02 billion estimate.
The digital workflows software provider said it ended the period with 508 customers totaling about $5 million in annual contract value.
WATCH: ServiceNow shares spike more than 7% on Q1 beat
