'Powering through macro headwinds': ServiceNow stock gains on Q3 beat & raised guidance

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'Powering through macro headwinds': ServiceNow stock gains on Q3 beat & raised guidance
Credit: © Reuters.

ServiceNow (NYSE: NOW ) shares surged around 4.5% in pre-market Thursday following the company’s reported Q3 results and raised guidance.

Q3 EPS of $2.92 came in better than the consensus estimate of $2.56. Revenue grew 25% year-over-year (up 22.5% in constant currency) to $2.29 billion, above the consensus estimate of $2.27B. Subscription revenues came in at $2.216B, which represents a 27% year-over-year growth (up 24.5% in constant currency).

Current remaining performance obligations increased 27% year-over-year (up 24% in constant currency) to $7.43B.

“We've released more than 5,000 new capabilities this year, including generative AI for the use cases that matter most to our customers. Innovation drives growth. This is a highly unique, differentiated company that is reshaping business as the intelligent super platform for the enterprise,” said CEO Bill McDermott.

For Q4/23, the company expects subscription revenues to be in the range of $2.320 - $2.325B, which implies 24.5%-25% year-over-year growth. For the full year, subscription revenues are seen at $8.635-$8.640B, representing around 25.5% year-over-year growth.

Bernstein analysts reiterated an Outperform rating and a $665 per share price target.

"ServiceNow reported Q3'23 earnings, and as we've grown accustomed to, delivered a beat and raise," they said.

Oppenheimer analysts added:

"ServiceNow delivered another quarter of good execution, with impressive bookings and margin growth for its size. In our view, ServiceNow has durable growth and is a defensible name, since it solves enterprisewide integration and workflow automation needs that drive productivity gains. These are priority investments in IT budgets."

Additional reporting by Senad Karaahmetovic

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