Enterprise workflow software maker ServiceNow (NYSE:NOW) will be reporting earnings tomorrow after market hours. Here's what investors should know.
Last quarter ServiceNow reported revenues of $1.72 billion, up 26.6% year on year, beating analyst revenue expectations by 1.32%. It was a mixed quarter for the company, with a meaningful improvement in gross margin but decelerating growth in large customers. The company added 42 enterprise customers paying more than $1m annually to a total of 1,401.
Is ServiceNow buy or sell heading into the earnings? Read our full analysis here, it's free.
This quarter analysts are expecting ServiceNow's revenue to grow 25.1% year on year to $1.76 billion, slowing down from the 31.5% year-over-year increase in revenue the company had recorded in the same quarter last year. Adjusted earnings are expected to come in at $1.55 per share.
The analysts covering the company have been growing increasingly bearish about the business heading into the earnings, with revenue estimates seeing six downward revisions over the last thirty days. The company has a history of exceeding Wall St's expectations, beating revenue estimates every single time over the past two years on average by 2.25%.
With ServiceNow being the first among its peers to report earnings this season, we don't have anywhere else to look at to get a hint at how this quarter will unravel for software stocks, but the segment has been facing declining investor sentiment following the fears around raising interest rates, with the stocks down on average 5.13% over the last month. ServiceNow is down 11.3% during the same time, and is heading into the earnings with analyst price target of $613.4, compared to share price of $440.31.
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The author has no position in any of the stocks mentioned.