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Earlier last week, ServiceNow (NYSE: NOW) reported its third quarter results that continues to surge past market expectations. However, a weak outlook for the coming quarters did not impress the market, and the stock fell 1% in the after-hours trading session.
ServiceNow’s Financials
For the third quarter of the year, ServiceNow’s revenues grew 22% to $2.8 billion, ahead of the market’s forecast of $2.746 billion. EPS of $3.72 grew 27% and was ahead of the market’s estimates of $3.45.By segment, subscription revenues rose 23% to $2.72 billion, ahead of the consensus estimate of $2.66 billion. Professional and other services revenues grew 14% to $82 million.Current remaining performance obligations (RPO) grew 26% to $9.36 billion, ahead of the analyst expectations of $9.01 billion.For the third quarter, ServiceNow expects subscription revenues of $2.875-$2.88 billion. The market was looking for subscription revenues of $2.855 billion.
ServiceNow’s Growth Focus
During the quarter, ServiceNow continued to incorporate AI in its offerings. The Now Platform Xanadu release includes some of the largest AI releases with additional AI capabilities including Now Assist Skill Kit and purpose-built GenAI industry solutions for telecom, media, and technology.ServiceNow also announced plans to integrate Agentic AI into the ServiceNow platform so that customers will have access to improved productivity at massive scale. AI tools have powered the Now Platform with advanced reasoning capabilities. It also has access to cross enterprise data that allow ServiceNow AI Agents to continuously improve their comprehension capabilities while providing for oversight and governance. Some of the first use cases of this technology are expected to be published next month for the Customer Service Management (CSM) and IT Service Management (ITSM) teams.Keeping with the AI-theme, it expanded its partnership with NVIDIA to continue to expand its own ecosystem. As part of the expanded agreement, ServiceNow and NVIDIA will co-develop native AI Agents using NVIDIA NIM Agent Blueprints within the ServiceNow platform. This will create use cases that are powered by business knowledge that customers can choose to turn on.ServiceNow has been partnering with several other technology companies as well to continue to increase AI use case deployment. It announced a collaboration with Siemens that is designed to strengthen industrial cybersecurity and integrate GenAI into shop floor operations. Similarly, it entered into an agreement with Rimini Street to address legacy ERP systems.Recently, ServiceNow also announced the release of Workflow Data Fabric, an integrated data layer that integrates business and technology data across the enterprise. The solution powers all workflows and AI agents with real-time, secure access to data from any source, thus allowing organizations to automate at a faster speed and scale.ServiceNow’s stock is trading at $950.85 with a market capitalization of $195.9 billion. It had touched a 52-week high of $979.78 prior to the results announcement. It has been steadily climbing form the year low of $558.09 that it was trading at in October last year.More By This Author:Cloud Stocks: IBM’s Smaller Granite AI Models Eye Vertical AI
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