ServiceNow said its third-quarter results were better than expected, raised its outlook and said it will split its stock 5-for-1.
The company reported third quarter earnings of $502 million, or $2.40 a share, on revenue of $3.41 billion, up 22% from a year ago. Non-GAAP earnings were $4.82 a share.
Wall Street was expecting third quarter earnings of $4.27 a share on revenue of $3.35 billion.
ServiceNow said current remaining performance obligations were $11.35 billion in the third quarter, up 21% from a year ago. Remaining performance obligations were $24.3 billion, up 24% from a year ago.
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Bill McDermott, CEO of ServiceNow, said the company was in an elite club and that "enterprise AI was a great neighborhood to be in." McDermott touted ServiceNow CRM, the company's control tower for agentic AI and fast time to value.
CFO Gina Mastantuono aid "Now Assist, U.S. Federal, Workflow Data Fabric, and RaptorDB were all ahead of plan."
As for the outlook, ServiceNow projected fourth quarter subscription revenue of $3.42 billion to $3.43 billion, up nearly 20% from a year ago. For fiscal 2025, ServiceNow projected subscription revenue of $12.83 billion to $12.84 billion.
A few choice quotes from McDermott, who was particularly enthusiastic on the ServiceNow third quarter earnings call.
- "Here's the headline: ServiceNow is one of the most durable, consistent overperforming growth companies in the enterprise software industry. When you think about brands shaping the future, you have GPU leaders like Nvidia, hyperscalers, foundation models and one company integrating all together, the AI workflow company ServiceNow. It used to be the MAG 7. Now there's a new category. I'm calling this Super Eight. That's the Mag 7 plus ServiceNow."
- "Our AI Control Tower deal volume more than quadrupled quarter over quarter in Q3. Just since the end of May, AI agent assist consumption has increased over 55x. That's the foundation of a beautiful hockey stick that's coming to you."
- "ServiceNow's workflow engine is creating the roadmap that AI agents follow to get work done."
- "Enterprises invested a lot into legacy CRM deployments. For all that investment, they got a sprawling mess of instances and silos. They want a better way with AI. This applies to many legacy vendors, some more than others. Our AI experience turns CRM into an AI-first system of action that drives growth and customer loyalty."
