ServiceNow (NOW) shares surged 6.54% in after-hours trading on Wednesday following the company's impressive second-quarter earnings report and raised full-year guidance. The enterprise software giant demonstrated strong performance driven by artificial intelligence (AI) initiatives and robust demand for its cloud-based solutions.
The company reported second-quarter adjusted earnings per share of $4.09, significantly surpassing the analyst consensus estimate of $3.57. Revenue for the quarter reached $3.22 billion, up 22.38% year-over-year and exceeding the expected $3.12 billion. Subscription revenue, a key metric for ServiceNow, came in at $3.11 billion, beating estimates of $3.03 billion.
ServiceNow's CEO Bill McDermott highlighted the company's success with AI, stating that AI deals were up 50% sequentially in the second quarter. "The AI revolution is in full flight and knows no boundaries," McDermott told MarketWatch. The company's focus on AI-driven tools and its extension of end-to-end AI agent orchestration appear to be resonating well with customers, contributing to the strong financial results.
In response to the robust performance, ServiceNow raised its full-year subscription revenue forecast to between $12.78 billion and $12.80 billion, up from the previous guidance of $12.64 billion to $12.68 billion. The company also provided an optimistic outlook for the third quarter, projecting subscription revenue between $3.26 billion and $3.265 billion, ahead of analyst expectations.
While the company noted some headwinds, including budget constraints among U.S. federal agencies and a larger-than-usual number of customer contract renewals expected in the fourth quarter, investors appeared to focus on the overall positive results and outlook. The strong after-hours stock movement reflects growing confidence in ServiceNow's ability to capitalize on the increasing demand for AI-enabled enterprise solutions and cloud-based services.
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