HomeFinanceServiceNow's stock gains on doubling of earnings, strong subscription sales forecast

ServiceNow’s stock gains on doubling of earnings, strong subscription sales forecast

ServiceNow Inc.’s stock was gaining 2% in extended trading Wednesday after the software company reported quarterly earnings more than doubled on strong subscription sales.

“That’s the economics of the cloud,” ServiceNow Chief Executive Bill McDermott said in an interview Wednesday. “What’s incredible is we have a 99% renewal rate.”

The software company

has gained even more momentum from a 25% jump in quarterly subscription sales, to $2.075 billion, and an aggressive push into AI. In May, ServiceNow announced a generative-AI partnership with Nvidia Corp.

to develop customized large language models for data using Nvidia software, services and infrastructure. On Wednesday, ServiceNow, Nvidia and Accenture announced the launch of AI Lighthouse, a program to fast-track the development and adoption of enterprise gen-AI.

Read more: ServiceNow, Nvidia team up on generative AI

ServiceNow posted fiscal second-quarter net income of $1.04 billion, or $5.08 a share, compared with net income of $486 million, or $2.38 a share, in the year-ago quarter. Adjusted earnings were $5.12 a share.

Revenue soared 23% to $2.15 billion, compared with $1.75 billion a year ago. ServiceNow also raised its annual subscription-sales forecast to between $8.58 billion and $8.6 billion. ServiceNow boasted 70 transactions worth more than $1 million in net new annual contract value in Q2, up 30% year-over-year.

Analysts surveyed by FactSet had expected, on average, quarterly net earnings of $2.05 a share on revenue of $2.13 billion. They also forecast $8.5 billion in annual subscription sales for ServiceNow.

Shares of ServiceNow have gained 49% so far this year, while the broader S&P 500 

has improved 19%.

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