ServiceNow Inc.'s stock was up 2% in extended trading on Wednesday following the company's announcement of more than doubled quarterly earnings driven by strong subscription sales. ServiceNow Chief Executive, Bill McDermott, stated in an interview that the company has achieved an impressive 99% renewal rate, highlighting the success of their cloud-based approach.
The software company NOW, -0.88% experienced additional momentum from a significant 25% increase in quarterly subscription sales, reaching $2.075 billion. Furthermore, ServiceNow made a strategic move into the field of artificial intelligence (AI). In collaboration with Nvidia Corp. NVDA, -0.50%, they announced a generative-AI partnership aimed at developing customized large language models for data using Nvidia's software, services, and infrastructure. Recently, ServiceNow, Nvidia, and Accenture launched AI Lighthouse, a program designed to expedite the adoption of enterprise gen-AI.
In terms of financial performance, ServiceNow reported a second-quarter net income of $1.04 billion, or $5.08 per share, compared to $486 million, or $2.38 per share, in the same quarter of the previous year. Adjusted earnings came in at $5.12 per share. Additionally, the company's revenue skyrocketed by 23% to $2.15 billion compared to $1.75 billion in the previous year. As a result, ServiceNow raised its forecast for annual subscription sales to a range of $8.58 billion to $8.6 billion. Notably, Q2 saw ServiceNow achieve 70 transactions worth over $1 million in net new annual contract value, a 30% increase year-over-year.
In an analysis conducted by FactSet, analysts had anticipated average quarterly net earnings of $2.05 per share on revenue of $2.13 billion. Moreover, their forecast for ServiceNow's annual subscription sales was $8.5 billion.
Throughout the year, ServiceNow's stock has grown by an impressive 49%, while the broader S&P 500 SPX, -0.02% has shown a 19% improvement.
