ServiceNow, a software and IT services provider, saw its stock price drop by 12% intraday on Thursday due to slower-than-expected subscription revenue growth in the fourth quarter. The company had projected an 18.5%-19% increase in first-quarter growth but instead reported a slight decline.
In the fourth quarter, ServiceNow’s subscription revenue rose 21%, beating estimates of $2.88 billion. However, this was below the company’s earlier forecast of 21.5%-22% year-over-year growth. The adjusted earnings per share also beat expectations, coming in at $3.67.
Despite the mixed results, CEO Bill McDermott remains optimistic about the prospects for its artificial intelligence (AI) platform. He sees huge potential gains from AI demand and believes it is driving a significant shift in the enterprise technology landscape.
The company has secured contracts with over 500 clients, valued at $5 million per year. ServiceNow shares have surged nearly 50% over the past year and are currently up around 28%.
Source: https://www.investopedia.com/servicenow-stock-plunges-on-slowing-subscription-revenue-growth-forecast-8782933