ServiceNow (NYSE: NOW) Q4 Earnings In Line, Stock Drops 10.5%



Key Takeaways

* ServiceNow met revenue expectations with $2.96 billion, up 21.3% YoY.
* Adjusted EPS of $3.67 aligned with analysts' estimates.
* Subscription revenue guidance for Q1 2025: $3.0 billion (19% YoY growth).
* Adjusted operating margin guidance for Q1 2025: 30%.
* Stock price fell 10.6% to $1,023 post-earnings.

Company Overview

ServiceNow automates workflows in IT, HR, and customer service.

Sales Growth

* Compounded annual growth rate of 23.1% over the last three years.
* Revenue grew 21.3% YoY in Q4, in line with estimates.
* Sell-side analysts expect a 20.3% revenue increase in the next 12 months.

Enterprise Customer Base

* 2,109 customers paying over $1 million annually, an increase of 89 from the previous quarter.

Key Findings

* Quarterly results were largely in line with expectations.
* RPO missed Wall Street's estimates slightly.
* Adjusted operating margin beat expectations marginally.
* AI remains a top priority for ServiceNow, with recent product developments.

Investment Considerations

* Valuation and expectations were high heading into earnings.
* Stock price decline reflects some disappointment.
* Long-term business quality and valuation should be assessed before investment decisions.