ServiceNow Stock: Earnings Rise, Guidance Light. Software stocks are falling

Service now (NOW) on Wednesday reported first-quarter earnings and revenue that topped Wall Street estimates. ServiceNow shares fell as other key financial metrics were dominated by expectations, while forecasts came in slightly below expectations.

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ServiceNow reported after the market closed that earnings for the quarter ended March 31 rose 44% to $3.41 per share on an adjusted basis from the same period a year earlier.

Additionally, revenue rose 24% to $2.6 billion, the Santa Clara, California-based enterprise software maker said.

ServiceNow equity analysts had expected the company to report earnings of $3.14 per share on revenue of $2.59 billion.

Additionally, ServiceNow said subscription revenue rose 25% to $2.52 billion, below the consensus estimate of $2.51 billion.

ServiceNow Stock: Light Subscription Revenue Outlook

Current remaining performance obligations (CRPO) for ServiceNow exceeded expectations. CRPO rose 21% to $8.45 billion. Analysts had forecast a CRPO of $8.41 billion.

CRPO bookings are an aggregation of deferred revenue and order backlogs and serve as a measure of revenue growth.

Meanwhile, on the stock market today, shares of ServiceNow fell more than 5% to 708.39.

For the current quarter ending in June, ServiceNow expects subscription revenue between $2.525 billion and $2.53 billion. The consensus analyst estimate is $2.533 billion.

In the first quarter, ServiceNow repurchased $175 million worth of its own shares. About $787 million remains in a buyback authorization from the company’s board of directors.

Furthermore, the ServiceNow earnings report shows that software stocks are up 6% in 2024 and 59% over the past 52 weeks.

The company’s software tracks and manages the services provided by information technology departments. In addition, the self-service technology portal provides company employees with access to administrative and workflow tools.

Moreover, ServiceNow has expanded from its core business. It has branched out into human resources, customer service management, and security software.

ServiceNow is organizing an investor day on May 6, parallel to the Knowledge customer conference. It is expected to update its artificial intelligence strategy and discuss financial targets.

Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.

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