Shares of ServiceNow (NOW) fell in after-hours trading after the software company reported earnings for its second quarter of Fiscal Year 2024. Earnings per share came in at $3.13, which beat analysts’ consensus estimate of $2.83 per share. In addition, sales increased by 22% year-over-year, with revenue hitting $2.63 billion. This beat analysts’ expectations by $20 million.
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It seems that the company’s generative AI offerings contributed a lot to this strong year-over-year performance. In fact, CEO Bill McDermott stated that the company’s relevance as an AI platform “remains stronger than ever” as the company tries to improve businesses’ workflows. Interestingly, according to TipRanks’ Bulls Say, Bears Say tool, AI tools are one of the bullish arguments from analysts.
Looking forward, management now expects subscription revenue for FY 2024 to be between $10.575 billion and $10.585 billion. The company also anticipates operating and free cash flow margins of 29.5% and 31%, respectively.
Is NOW Stock a Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on NOW stock based on 29 Buys, one Hold, and one Sell assigned in the past three months, as indicated by the graphic below. After a 27% rally in its share price over the past year, the average NOW price target of $853.68 per share implies 15.1% upside potential. However, it’s worth noting that estimates will likely change following today’s earnings report.
