ServiceNow anticipates moderate revenue growth of up to 19% for the current year, despite still seeing significant potential in the field of artificial intelligence.
The cloud-based software company recorded a 21% increase in revenue in the fourth quarter of 2024 and grew its customer base by 12%. Currently, ServiceNow has nearly 500 customers with average contract volumes of 5 million US dollars per year.
CEO Bill McDermott emphasized that the company is only at the beginning of a profound technological upheaval through AI. "AI is driving a comprehensive realignment of corporate IT," McDermott said. Customers increasingly use ServiceNow for productivity enhancements and comprehensive digital transformations.
Despite these positive prospects, the market reacted skeptically to the forecast. The stock fell by 7.6% in after-hours trading to $1,055.85. Since the beginning of the year, the stock had previously gained 45%.
For the fourth quarter, ServiceNow reported earnings of $384 million ($1.83 per share), an increase from $295 million ($1.43 per share) in the previous year. Adjusted earnings per share were $3.67, slightly exceeding analyst expectations of $3.65.
Revenue rose to $2.96 billion but fell short of expectations. Subscription revenue grew by 21% to $2.87 billion, slightly below the company's forecast of $2.88 billion.
For the first quarter of 2025, the company predicts subscription revenue growth of up to 19% to around 3 billion USD. Analysts had expected 3.03 billion USD. For the full year, ServiceNow expects subscription revenues between 12.64 and 12.68 billion USD, also below market expectations of 12.86 billion USD.
ServiceNow announced several new and expanded partnerships, including collaborations with Alphabet (Google), Oracle, and Visa. Simultaneously, the company adjusted its leadership structure to specifically harness AI potential.
Chief Financial Officer Gina Mastantuono additionally takes on the role of President. Chief Customer Officer Chris Bedi becomes Special Advisor to the Board for AI Transformation. Paul Smith, previously Chief Commercial Officer, now leads global customer and sales operations, while Chief Human Resources Officer Jacqui Canney receives the title of Chief People and AI Enablement Officer.
In addition, the Board of Directors has approved a share buyback program of up to 3 billion US dollars.
