ServiceNow Shares Drop on Weaker Subscription Growth and Q1 Forecast
ServiceNow (NOW) shares plunged 9% in premarket trading Thursday after the software and IT services company reported slower-than-expected subscription revenue growth and projected a modest decline for the first quarter.
Key Takeaways:
* Q4 subscription revenue grew 21% to $2.87 billion, below the company's forecast and analyst estimates.
* Q4 total revenue of $2.96 billion met analyst estimates, representing a 21% year-over-year increase.
* Adjusted earnings per share (EPS) of $3.67 beat estimates of $3.65.
* ServiceNow predicts Q1 2025 subscription revenue of $2.995-$3 billion, an increase of 18.5%-19% year-over-year, reflecting a slight decline from the prior quarter.
Despite the mixed results for Q4, ServiceNow CEO Bill McDermott expressed optimism about the company's AI platform, which he believes "is fueling a top-to-bottom re-ordering of the enterprise technology landscape."
ServiceNow reports that it now has nearly 500 clients with contracts valued at $5 million or more per year.
Over the past year, ServiceNow shares have climbed almost 50%.