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Earnings Results: ServiceNow stock jumps after topping sales and earnings estimates on subscription growth

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ServiceNow Inc.’s stock jumped more than 7% in extended trading Wednesday after the software company reported fiscal first-quarter revenue that topped Wall Street forecasts.

ServiceNow
NOW,
+2.26%

reported net income of $352 million, or $1.73 a share, compared with net income of $306 million, or $1.52 a share, in the year-ago quarter. Revenue leaped 29% to $1.75 billion from $1.36 billion a year ago. Analysts surveyed by FactSet had expected a net income of $1.70 a share on revenue of $1.7 billion.

ServiceNow Chief Executive Bill McDermott told MarketWatch in an interview that his company was able to “play above the sun” through three key factors: subscription sales grew 29% to $1.63 billion; renewal rates were 98%; and ServiceNow announced 52 transactions greater than $1 million in new annual contract value, up 41% year-over-year and the company’s fastest growth since 2018.

Like nearly every major tech stock, ServiceNow’s stock has tumbled 26% this year, while the broader S&P 500 index
SPX,
+0.21%

has declined 12%.

“ServiceNow delivered another strong quarter of top line growth while expanding its large customer base and seeing a nearly perfect retention rate,” Daniel Newman, principal analyst at Futurum Research, told MarketWatch.

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