ServiceNow (NYSE:NOW) reported stronger-than-expected Q1 earnings, driving its shares up more than 10% in premarket trading Thursday.
The enterprise software maker reported EPS before certain costs of $1.76, above analyst estimates of $1.70 per share. Revenue came in at $1.72 billion, up 27% YoY and compared to the consensus estimates of $1.7 billion.
Net income in the quarter stood at $75 million, according to the financial report. Subscription revenue grew 26% in the period to $1.63 billion, just above the analyst expectations of $1.62 billion. CRPO bookings surged 29% to $5.69 billion in the quarter.
Moving forward, ServiceNow expects Q2 subscription revenue in the range of $1.67 billion to $1.675 billion, compared to analyst estimates of $1.675 billion.
“We are in a sustained demand environment. Companies are investing with a sense of urgency in technologies that get them to the right outcomes, fast,” said CEO Bill McDermott. “It’s very clear that businesses can no longer revert to the ‘status quo.’ We’re now in a tech-to-compete world.”
BofA analyst Brad Sills said that Q1 and outlook showed “resilient strength.” The analyst reiterated a Buy rating and Top Pick designation.
“Channel feedback suggests very solid pipeline builds for creator, suggesting possible incremental growth as we move through the year. Guidance for 28% cc cRPO growth suggests that 30%+ is again achievable, with commentary indicating isolated deals pushing into Q2 from the Russia war (most of which have already closed),” Bills said.
Barclays analyst Raimo Lenschow lowered the price target to $613.00 per share from $652.00 while the Overweight rating reflects his belief in the strength of the company’s business.
“ServiceNow followed in MSFT’s footsteps and delivered solid Q1 results. True, beat levels were slightly lower than normal given the macro and FX headwinds, but management still delivered better than expected results. In normal markets, this might be seen as not good enough but investor sentiment was very negative going into earnings and hence, we can see how shares start working from here again, especially considering the upcoming analyst day and customer conference (24th May),” the analyst wrote in a note.
By Senad Karaahmetovic