HomeMarket NewsWhat to Do With ServiceNow (NOW) Stock Ahead of Q1 Earnings?

What to Do With ServiceNow (NOW) Stock Ahead of Q1 Earnings?

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ServiceNow NOW is scheduled to release its first-quarter 2024 results on Apr 24.

The workflow and IT operations management platform providerโ€™s near-term results are expected to reflect the negative impacts of a challenging macroeconomic environment, including persistent inflation that has pushed back chances of an early rate cut by the Federal Reserve.

Nevertheless, ServiceNow has been benefiting from the rising adoption of its workflows by enterprises undergoing digital transformation. NOW is benefiting from strong demand for its generative AI-powered solutions with the availability of the Vancouver platform and Pro Plus offerings.

This is expected to have driven subscription revenues in the to-be-reported quarter. For first-quarter 2024, subscription revenues are projected between $2.51 billion and $2.515 billion, suggesting an improvement in the range of 24.5-25% year over year on a GAAP basis. At cc, subscription revenues are expected to grow in the 23.5-24% range.

cRPO is expected to grow 20% year over year on both non-GAAP and GAAP basis, indicating significant strength in federal business.

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ServiceNow, Inc. Price and EPS Surprise ServiceNow, Inc. Price and EPS Surprise

ServiceNow, Inc. price-eps-surprise | ServiceNow, Inc. Quote

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Portfolio Strength Aids Prospects

ServiceNow further strengthened its portfolio with the introduction of the Washington, D.C. platform in the going-to-be-reported quarter. The latest platform introduces a host of cutting-edge features aimed at streamlining operations, enhancing productivity and advancing the adoption of generative AI across various sectors.

ServiceNowโ€™s portfolio strength and an expanding partner base that includes the likes of NVIDIA NVDA, Amazon AMZN and DXC Technology are expected to boost clientele.

This Zacks Rank #4 (Sell) company had 1897 total customers with more than $1 million in annual contract value at the end of the fourth quarter of 2023.

NOW has collaborated with DXC to integrate ServiceNowโ€™s advanced analytics and enhanced AI capabilities into DXC Platform X. It also announced a five-year collaboration agreement with Amazon Web Services (AWS) to provide the ServiceNow Platform and a comprehensive suite of solutions on the AWS Marketplace.

Amazon and DXC will co-develop and launch industry-specific, AI-powered applications.

In the first quarter of 2024, ServiceNow added Visa V to its client list, while EY and Genpact were notable expansions.

Early in the quarter, ServiceNow inked a five-year strategic alliance with Visa. The initial phase includes the launch of ServiceNow Disputes Management, Built with Visa, a single, connected dispute resolution solution for issuers.

Moreover, ServiceNow announced the release of StarCoder2, a family of open-access large language models for code generation in collaboration with Hugging Face and NVIDIA.

ServiceNow and NVIDIA have also broadened their partnership with the introduction of telco-specific generative AI solutions to elevate service experiences. The first solution, Now Assist for Telecommunications Service Management, is built on the Now Platform and uses NVIDIA AI to help boost agent productivity, speed time to resolution and enhance customer experiences.

ServiceNow is also riding on acquisitions. It has announced a plan to acquire NetACE network management and automation technology from Atrinet to accelerate business transformation for telecommunications companies.

The acquisition of UltimateSuite will further strengthen ServiceNowโ€™s process mining solutions, thereby improving its automation and AI capabilities.

ServiceNow also entered into an agreement to acquire 4Industry, a Netherlands-based partner known for its manufacturing technology application. It announced the completion of the acquisition of Smart Daily Management, a connected digital worker application from EY.

Earnings Estimate Remains Steady

The Zacks Consensus Estimate for first-quarter revenues is currently pegged at $2.58 billion, indicating 23.22% growth from the figure reported in the year-ago quarter.

The consensus mark for first-quarter earnings is pegged at $3.15 per share, indicating growth of 32.91% from the figure reported in the year-ago quarter. The earnings figure has remained unchanged over the past 30 days.

ServiceNowโ€™s earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 14.64%.

You can see the complete list of todayโ€™s Zacks #1 Rank (Strong Buy) stocks here.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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