ServiceNow (NOW) stock popped after the enterprise software maker delivered a strong second-quarter earnings report, beating on adjusted profit, revenue and a key growth metric.
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Also, the enterprise software maker said its president and chief operating officer, Chirantan “CJ” Desai, has resigned.
Reported after the market close on Wednesday, ServiceNow earnings for the quarter ended June 30 rose 33% to $3.16 per share on an adjusted basis. Also, revenue rose 22% to $2.627 billion, the Santa Clara, Calif-based enterprise software maker said.
ServiceNow stock analysts expected the company to report earnings of $2.83 a share on revenue of $2.607 billion.
Additionally, ServiceNow said subscription revenue rose 23% to $2.54 billion, edging by the consensus estimate of $2.53 billion.
Current remaining performance obligations, or CRPO, for ServiceNow came in above expectations. CRPO rose 22% to $8.78 billion. Analysts had projected CRPO of $8.68 billion.
CRPO bookings are an aggregate of deferred revenue and order backlog and serve as a sales growth metric.
Meanwhile, analysts reacted to the departure of COO Desai. “We believe he played a very important role in setting the product agenda and we see his departure as a loss,” said Jefferies analyst Samad Samana in a report. “We believe the impact to the R&D organization and strategy will be worth monitoring. With that said, we believe NOW has a deep management bench overall and, more specifically, within the R&D organization.”
ServiceNow Stock: Subscription Revenue Outlook
For the current quarter ending in September, ServiceNow forecast subscription revenue in a range of $2.66 billion to $2.665 billion, just below analyst consensus estimates of $2.672 billion. Also, ServiceNow predicted Q3 CRPO growth of 22.5% year over year.
Guidance is expected to be key for software companies in June/July earnings reports as analysts focus on trading multiples and valuation heading into 2025. Most software companies have yet to monetize generative artificial intelligence tools, including ServiceNow.
On the stock market today, ServiceNow stock popped more than 7% to 783.50 in extended trading. In Wednesday’s regular session, shares were down 4.5%.
Further, heading into the ServiceNow earnings report, the software stock gained 9% in 2024.
The company’s software tracks and manages services provided by information-technology departments. Also, its self-service tech portal enables company employees to access administrative and workflow tools.
In addition, ServiceNow has expanded from its core business. It’s branched into software for human resources, customer service management and security.
Moreover, ServiceNow stock holds a Composite Rating of 88, according to IBD Stock Checkup.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
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