ServiceNow reported first-quarter earnings that handily topped views while revenue edged by consensus estimates. NOW stock dipped on Thursday as full-year 2023 guidance disappointed some investors.
Reported after the close on Wednesday, ServiceNow earnings were $2.37, up 37% from the year-earlier period.
Revenue climbed 22% to $2.096 billion, said the Santa Clara, Calif-based enterprise software maker.
Meanwhile, NOW stock analysts expected the company to report earnings of $2.04 a share on revenue of $2.09 billion.
NOW Stock: Gain In Subscription Revenue
In addition, ServiceNow said subscription revenue rose 24% to $2.02 billion, topping the consensus estimate of $1.996 billion.
ServiceNow's first-quarter current remaining performance obligations, or CRPO, came in above expectations. CRPO bookings came in at $7.01 billion, up 23% from a year earlier. The software maker had forecast 21% growth to $6.884 billion.
CRPO bookings are an aggregate of deferred revenue and order backlog and serve as a sales growth metric.
For the June quarter, ServiceNow predicted subscription revenue in a range of $2.04 billion to $2.045 billion vs. estimates of $2.03 billion.
"Investors may nitpick management's decision to raise the full-year 2023 subscription revenue outlook by less than the Q1 beat," said Jefferies analyst Samad Samana in a report. "We appreciate management embracing conservatism in the uncertain backdrop."
NOW stock edged up 0.7% to 457.11 in afternoon trading on the stock market today. ServiceNow stock holds a new cup-with-handle buy point of 485.68.
ServiceNow Stock: Analyst Day May 16
At BMO Capital Markets, analyst Keith Bachman said in a report: "While investors may be disappointed in the guide, we think management took the right approach in not raising guidance, particularly in light of the backdrop." Bachman added: "For example, despite the beat in the quarter for subscription revenue, management is raising subscription revenue 2023 guidance by $25 million at the midpoint and (currency exchange rates) are contributing $21 million in incremental help."
Heading into the ServiceNow earnings report, NOW stock had gained 14% in 2023.
The company's software tracks and manages services provided by information-technology departments. Also, its self-service tech portal enables company employees to access administrative and workflow tools.
Further, ServiceNow has expanded from its core business into software for human resources, customer service management and security.
ServiceNow plans to host an analyst day May 16, where it's expected to discuss long-term business trends.
"Next catalyst is analyst day next month, where it will introduce new products (expect new generative AI investments to be announced, in partnership with OpenAI/Microsoft) and an update on 2024/2026 guidance," said TD Cowen analyst Derrick Wood in a report.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
