ServiceNow Q3 mixed, but strong Control Tower demand

ServiceNow's third quarter was mixed, but the company indicated that AI Control Tower demand is strong.

The company reported third quarter earnings of $277 million, or 27 cents a share, on revenue of $4.1 billion, up 20.5% from a year ago. Non-GAAP earnings were $1 a share.

Wall Street was looking for third quarter earnings of $1.02 a share on revenue of $4.09 billion.

CEO Bill McDermott said the quarter represented "the inflection point" for the company as the Super Intelligence Control Tower, formerly known as the AI Control Tower. "Our customers have validated our strategic relevance as the single harness for enterprise intelligence and security," said McDermott.

ServiceNow had 19 transactions of more than $5 million in net new annual contract value. The company said it had 680 customers with more than $5 million in ACV.

President and CFO Gina Mastantuono said the customers are increasing their consumption of AI agents.

As for the outlook, ServiceNow projected subscription revenue of $4.24 billion to $4.25 billion, up about 23%.

Separately, ServiceNow announced a series of partnerships and deals. Here's the rundown.

• ServiceNow expanded a partnership with OpenAI that includes a plug-in for ChatGPT with Action Fabric integration. ServiceNow and OpenAI plan to develop security and risk offerings powered by OpenAI models, a Codex integration with AI Workflow Factory as well as a risk assessment in Control Tower.
• The company won a deal with HPE to transform customer support and field service.
• Stagwell chose ServiceNow AI Platform to consolidate four service desks into one platform.
• ServiceNow also announced the Control Tower Alliance, an ecosystem designed for cloud infrastructure, security and governance. Founding members include Anthropic, AWS, Cisco, Nvidia, OpenAI and Okta to name a few.