Software maker ServiceNow reported first-quarter earnings and revenue that topped consensus estimates while guidance came in above views. ServiceNow stock popped on the news.
Reported after the market close on Wednesday, ServiceNow earnings for the quarter ending March 31 rose 18% to $4.04 per share on an adjusted basis. Revenue climbed 18.5% to $3.09 billion, the Santa Clara, Calif-based enterprise software maker said.
ServiceNow stock analysts had expected the company to report earnings of $3.83 a share on revenue of $3.08 billion. The company said subscription revenue rose 19% to $3 billion, in-line with estimates.
ServiceNow Stock: Q2 Guidance
The company's current remaining performance obligations, or CRPO, rose 22% to $10.31 billion. Analysts had projected CRPO of $10.11 billion.
CRPO bookings are an aggregate of deferred revenue and order backlog and serve as a sales growth metric.
For the current quarter ending in June, ServiceNow forecast subscription revenue in a range of $3.03 billion to $3.035 billion, topping estimates of $3.02 billion. Also, ServiceNow said it expects CRPO growth of 19.5%.
Heading into the ServiceNow earnings report, analysts were focused on the company's U.S. federal business, currency exchange rates and the impact of Trump administration trade tariffs on its customer base.
"Against negative sentiment, ServiceNow delivered a solid quarter and outlook, which likely leaves investors with a better tone around software spending than what was previously expected," said RBC Capital analyst Matthew Hedberg in a report.
Federal Business Outlook
At TD Cowen, analyst Derrick Wood said in a report: "We think this was the best scenario print, delivering strong Q1 upside, taking risk out of its federal business for 2025, and maintaining its overall growth construct, all alongside signs of continued momentum in its AI product cycle."
Further, ServiceNow said it had 72 customer transactions over $1 million in net new annual contract value in Q1. It ended the quarter with 508 customers with more than $5 million in ACV, up 20% from a year earlier.
However, ServiceNow said it expects management expects net new public sector ACV, including the federal business, to remain flat for the rest of 2025.
BMO Capital Market's Keith Bachman said in a report: "Against low expectations, ServiceNow delivered a solid quarter and thoughtful guide. Management is appropriately lowering sub revenue expectations for the next three quarters, which equates to about 4% of revs not coming from the balance sheet. We think ServiceNow's differentiated and expanding platform, solid quarter and modest trim to expectations can help support the shares."
On the stock market today, ServiceNow stock popped over 8% to 892 in early trading.
ServiceNow hosts an analyst day on May 5.
ServiceNow Stock: Technical Ratings
Heading into the ServiceNow earnings report, the software stock had retreated 24% in 2025.
The company's software tracks and manages services provided by information-technology departments. Also, its self-service tech portal enables company employees to access administrative and workflow tools.
Further, ServiceNow has expanded from its core business into software for human resources, customer service management and security.
In March, ServiceNow agreed to buy artificial intelligence software maker Moveworks for $2.85 billion, marking its biggest acquisition ever. Moveworks' platform features a generative AI assistant for employee support.
Coming into the ServiceNow earnings report, NOW stock had an IBD Composite Rating of 81 out of a best-possible 99, according to IBD Stock Checkup. The score combines five separate proprietary ratings into one rating. The best growth stocks have a Composite Rating of 90 or better.
Follow Reinhardt Krause on X, formerly Twitter, @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
