U.S. software company ServiceNow (NOW) has reported financial results for this year’s third quarter that topped Wall Street forecasts.
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The company announced earnings per share (EPS) of $3.72, which beat consensus expectations of $3.45 a share. Revenue in the quarter totaled $2.80 billion. Sales rose 22% from a year earlier. Despite the strong results, NOW stock dipped 1% in after hours trading on October 23.
The company also reported $2.715 billion in subscription revenue for Q3, up 22.5% from a year ago, which was also ahead of analyst estimates that called for $2.66 billion. ServiceNow raised its full-year outlook for subscription revenue by $78 million at the midpoint to a range of $10.655 billion to $10.660 billion.
Growth Fueled by AI
Management said much of the growth at ServiceNow is being driven by artificial intelligence (AI). The company’s “Now Assist AI” is the fastest-growing product in its history, attracting customers and getting clients to pay more money.
ServiceNow CEO Bill McDermott said the company’s database product is also resonating as customers move to connect their data to ServiceNow’s platform. Along with its financial results, the company announced the appointment of Amit Zavery as its new president and chief operating officer (COO), who joins from Google Cloud (GOOGL) and Oracle (ORCL).
The stock of ServiceNow has increased 28% so far in 2024.
Is NOW Stock a Buy?
ServiceNow has a consensus Strong Buy rating among 29 Wall Street analysts. That rating is based on 26 Buy, two Hold and one Sell recommendations made in the last three months. The average NOW price target of $946.40 implies 4.27% upside from current levels.
