ServiceNow saw its shares surge more than 15% after posting stronger-than-expected first-quarter results and issuing an optimistic full-year forecast, despite the ongoing macroeconomic uncertainties. The company reported adjusted earnings of $4.04 per share on revenue of $3.09 billion, exceeding Wall Street’s expectations of $3.83 in earnings per share and $3.08 billion in sales. The revenue marked a 19% increase from the same period last year, showcasing the company’s growth in a challenging economic environment.
ServiceNow’s net income for the quarter reached $460 million, or $2.20 per share, a significant rise from $347 million, or $1.67 per share, reported in the same quarter last year. Additionally, its current remaining performance obligations (RPO) jumped 22% year-over-year to $10.3 billion, a key indicator of future revenue. Despite this strong performance, the company moderated its full-year outlook, considering potential risks from the geopolitical landscape.
The company’s public sector business also showed impressive growth, rising 30% during the period, which included 11 federal deals worth over $1 million each. CEO Bill McDermott emphasized that ServiceNow had “very positive” discussions with the Department of Government Efficiency (DOGE), a cost-cutting initiative led by Tesla CEO Elon Musk. The alignment between DOGE’s goals and ServiceNow’s vision to transform government operations positions the company for continued growth.
Subscription revenue, which constitutes a significant portion of ServiceNow’s earnings, totaled $3.01 billion, slightly above the $3 billion estimate. Looking ahead, the company expects subscription revenue for the second quarter to range between $3.03 billion and $3.04 billion, surpassing the previous forecast of $3.02 billion.
ServiceNow also reported a strong customer base, ending the quarter with 508 customers, each generating annual contract values of about $5 million. The company’s solid performance amid macroeconomic challenges underscores its leading position in enterprise AI solutions, with a focus on sustainable growth and continued expansion in both public and private sectors.
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