ServiceNow Stock Rallies After Q1 Beat, Positive Outlook: Retail Lauds String Of Upbeat Prints
Synopsis
CEO Bill McDermott said the company’s position as the “platinum standard for enterprise‑grade AI drove these outstanding first quarter results.”
ServiceNow, Inc. (NOW) stock jumped in Wednesday’s after-hours session after the Santa Clara, California-based company announced better-than-expected quarterly results, riding on tailwinds from the artificial intelligence (AI) boom.
The end-to-end intelligent workflow automation platform solutions provider reported adjusted earnings per share (EPS) of $4.04 for the first quarter of the fiscal year 2025, up from $2.20 for the year-ago quarter and $3.67 in the preceding quarter.
The bottom-line result also beat the Finchat-compiled consensus estimate of $3.83 per share.
Total adjusted revenue jumped 19.5% year over year (YoY) and 5.6% sequentially to $3.12 billion, compared to the $3.09 billion consensus estimate.
ServiceNow noted that its first-quarter subscription revenue jumped 20% to $3.03 billion, exceeding the $2.995 billion to $3.000 billion guidance.
Current remaining performance obligations (cRPO) climbed 22% to $10.31 billion versus the 20.5% guidance, while the RPO was $22.1 billion, marking 25% growth.
The company noted that the number of customers with annual contract value (ACV) of over $5 billion exceeded 500.
Operating income rose 31% YoY on a constant currency basis to $953 million, faster than the 30% growth guidance.
CEO Bill McDermott said, “ServiceNow’s position as the platinum standard for enterprise‑grade AI drove these outstanding first quarter results.”
ServiceNow expects subscription revenue of $3.03 billion to $3.035 billion for the second quarter, cRPO growth of 19.5%, and operating income growth of 27% on a constant currency basis.
The company raised its 2025 subscription revenue guidance to $12.64 billion to $12.68 billion from a prior range of $12.635 billion to $12.675 billion. It maintained its subscription gross profit growth guidance at 83.5% on a constant currency basis and adjusted operating income growth guidance at 30.5%.
In March, ServiceNow announced an agreement to acquire Mountain View, California-based agentic AI assistant provider Moveworks, for $2.85 billion in cash and stock.
On Stocktwits, retail sentiment toward Service Now stock turned to ‘extremely bullish’ (97/100) by late Wednesday from ‘bullish’ a day ago, with the message volume spiking to ‘extremely high’ levels.
A bullish watcher complimented the company for delivering, adding that it has had 29 consecutive earnings beats.
Incidentally, even after reporting solid fourth-quarter results in late January, the stock tumbled over 11% as traders whined over the slim beat.
Another said ServiceNow’s McDermott was the best CEO after Nvidia’s Jensen Huang.
ServiceNow stock jumped 10.52% in Wednesday’s after-hours after tacking on nearly 6% in the regular session. The stock is down over 23% this year.
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