ServiceNow Inc.’s stock leaped 5% in extended trading Wednesday after the company reported a quarterly bounce in revenue on strong subscription sales.
“It’s incredible. Innovation is the well-spring of growth: We have introduced 5,000 new innovations this year,” ServiceNow Chief Executive Bill McDermott said in an interview Wednesday. “The tailwind of generative-AI when you have real product and real growth works.”
The software company NOW, -4.37% is riding the momentum of a 27% jump in quarterly subscription sales, to $2.2 billion, and an aggressive push into AI. In May, ServiceNow announced a generative-AI partnership with Nvidia Corp. NVDA, -4.31% to develop customized large language models for data using Nvidia software, services and infrastructure.
ServiceNow posted fiscal third-quarter net income of $242 million, or $1.18 a share, compared with net income of $80 million, or 39 cents a share, in the year-ago quarter. Adjusted earnings were $2.95 a share.
Revenue soared 25% to $2.28 billion from $1.83 billion a year ago. ServiceNow expects annual subscription sales of between $8.635 billion and $8.64 billion. ServiceNow boasted 83 new transactions worth more than $1 million in net new annual contract value in Q2, up 20% year-over-year.
Analysts surveyed by FactSet had expected, on average, quarterly adjusted net earnings of $2.56 a share on revenue of $2.27 billion. They forecast $8.9 billion in annual subscription sales for ServiceNow.
Shares of ServiceNow have gained 40% so far this year, while the broader S&P 500 SPX has improved 9%.