- NOW has narrowed its forecast for FY subscription revenue to $10.56 billion to $10.58 billion, which misses the estimated of $10.59 billion.
- Subscription adjusted gross margin is expected to remain at 84.5%, below the estimated 84.6%.
- The forecast for the second quarter sees subscription revenue between $2.525 billion to $2.53 billion, falling short of the $2.54 billion estimate.
- First quarter results show adjusted EPS at $3.41, up from $2.37 y/y, beating the estimate of $3.16.
- Adjusted revenue for Q1 was $2.60 billion, above the $2.58 billion estimate.
- Q1 subscription revenue met expectations at $2.52 billion.
- Professional Services & Other revenue stood at $80 million, over the estimated $74 million.
- Adjusted gross profit was recorded at $2.17 billion, higher than the estimated $2.14 billion.
- Adjusted gross margin came at 83%, just above the estimated 82.6%.
- Subscription adjusted gross margin was reported as 86%, surpassing the estimated 84.7%.
- The Professional Services & Other adjusted gross margin was 16%, well over the estimated 8.37%.
- Remaining performance obligations are at $17.8 billion, exceeding the estimated $17.32 billion.
- Current remaining performance obligation is $8.45 billion, a bit over the estimated $8.42 billion.
- Free cash flow was at $1.23 billion, surpassing the estimate of $961.1 million.
- As of March 31, 2024, cRPO (contract revenue to be recognized in the next 12 months) was $8.45 billion, showing a 21% YoY growth.
- ServiceNow is investing $500 million in Saudi Arabia for business transformation, job creation, and digital skills development, including two dedicated in-country data centers.
- During the quarter, the company bought back 225,000 shares of its stock for $175 million as part of its share buying program to manage dilution impact. An amount of approximately $787 million remains for future share buybacks under the current program.
Servicenow Inc on Smartkarma
Analysts on Smartkarma are optimistic about Servicenow Inc, with recent coverage highlighting key growth drivers for the company. Baptista Research‘s report, “ServiceNow Inc: The Increasing Scope Of Its Gen AI technology And Other Major Drivers,” emphasizes the company’s strong Q4 2023 earnings, fueled by artificial intelligence (AI). Servicenow reported robust subscription revenue growth of 25.5% and significant cRPO growth of 23%, outperforming its own guidance. The company also secured 168 deals exceeding $1 million in net new ACV, marking a 33% increase from the previous year.
Steven Holden‘s analysis, titled “ServiceNow, Inc: Global Funds Ramp Up Exposure,” highlights Servicenow’s increasing global fund ownership, reaching a record high of 20.6%. Despite this milestone, Holden suggests there is still room for broader market penetration compared to its technology sector peers. The positive rotation across all metrics driven by growth and aggressive growth managers signals a promising outlook for Servicenow’s continued expansion in the market.
A look at Servicenow Inc Smart Scores
| Factor | Score | Magnitude |
|---|---|---|
| Value | 2 | |
| Dividend | 1 | |
| Growth | 5 | |
| Resilience | 4 | |
| Momentum | 4 | |
| OVERALL SMART SCORE | 3.2 |
Smart Score is a compound score for the Company indicating its overall outlook. It is derived by taking an equally weighted average of underlying Factor scores computed by Smartkarma
ServiceNow Inc, a company that provides IT management software, stands out with a promising long-term outlook based on its Smartkarma Smart Scores. With a top-notch Growth score of 5, Servicenow Inc is positioned for substantial expansion in the future. This indicates that the company is expected to experience significant growth opportunities in the coming years, making it an attractive investment option for those looking for long-term gains.
Furthermore, the company’s high scores in Resilience and Momentum, at 4 each, suggest that Servicenow Inc has strong staying power and is on a positive trajectory in the market. While the lower scores in Value and Dividend, at 2 and 1 respectively, indicate that the company may have room for improvement in these areas, the overall outlook remains optimistic for ServiceNow Inc as it continues to be a key player in the IT management software sector.
Disclaimer: This article by Smartkarma is general in nature and based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Note that our articles may not factor in the latest price-sensitive company announcements or qualitative material.
While all reasonable care has been taken in the preparation, Smartkarma makes no assurance about the accuracy of any generated data or content. All content is indicative only and should be independently checked for accuracy and confirmed before use. Smartkarma accepts no responsibility for any loss or damage caused as a result of any inaccuracy or error within the Lab online tools or generated data.
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