ServiceNow tops estimates, approves 5-for-1 stock split

ServiceNow has delivered impressive third-quarter results that exceeded Wall Street's predictions, along with an announcement of a five-for-one stock split. Following the news, shares saw a 4% increase. The enterprise software giant reported subscription revenues of $3.3 billion for the third quarter, surpassing the $3.26 billion forecast from StreetAccount. This marks a 22% growth compared to the same period last year. The company has also raised its annual guidance, now projecting subscription revenue to fall between $12.84 billion and $12.85 billion for the year, an increase from the previous forecast of $12.78 billion to $12.80 billion. ServiceNow is capitalizing on the ongoing artificial intelligence revolution that is prompting businesses to adopt advanced tools. CEO Bill McDermott emphasized in a release that this trend represents a significant innovation opportunity for enterprises across all sectors. He described the recent results as a clear indication of how businesses are increasingly relying on ServiceNow's capabilities. CFO Gina Mastantuono shared insights with CNBC, revealing that the company's AI sector is expected to exceed an annual contract value of $500 million this year, with ambitions to hit the $1 billion mark by 2026. "The value that AI will bring to enterprises is unprecedented," she stated, adding that the company has genuine customers and is achieving real results. Net income for the quarter reached $502 million, equating to $2.40 per share, a rise from $432 million or $2.07 per share during the same quarter last year. Current remaining performance obligations were reported at $11.35 billion. Looking ahead, ServiceNow provided fourth-quarter guidance that reflects ongoing uncertainties from the U.S. government and the recent shutdown, estimating subscription revenues between $3.42 billion and $3.43 billion. Mastantuono noted that once the government reopens, its focus on efficiency and modernization aligns with ServiceNow's strengths, highlighting a growth of over 30% in the company's federal business in Q3. Additionally, the board announced the forthcoming five-for-one stock split, scheduled for early December, aimed at making shares more accessible to retail investors. Despite the recent positive developments, the stock remains down approximately 13% year-to-date.