Profit declines to $298 million year-over-year
ServiceNow’s second-quarter profit fell to $298 million, or 29 cents per share, from $385 million, or 37 cents per share, a year earlier. Stripping out certain one-time items, adjusted earnings were 90 cents per share, ahead of the 86 cents anticipated by analysts polled by FactSet.
Revenue rose 24% to $3.99 billion, boosted by a similar growth rate for subscription revenue. Analysts had forecast $3.93 billion. The company said sales were driven by strong demand from the U.S. federal government, which accelerated some on-premise subscription revenues.
The company closed 123 transactions with contract values exceeding $1 million in net new annual contract value, marking a nearly 40% increase from the same quarter last year. The performance prompted ServiceNow to raise the bottom end of its full-year subscription sales outlook. The company now expects full-year subscription revenue of $15.76 billion to $15.78 billion, compared with a prior range of $15.74 billion to $15.78 billion. Analysts project $15.75 billion in annual sales.
For the third quarter, ServiceNow guided for subscription revenue of $3.98 billion, below the $4.01 billion Wall Street is estimating.
ServiceNow’s AI business crossed $1 billion in annual contract value during the quarter, the company said, reflecting growing adoption of its artificial intelligence tools. Remaining performance obligations totaled $29 billion as of the end of the second quarter, representing 21% year-over-year growth.