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ServiceNow Inc. shares fell successful precocious trading Wednesday contempt an net beat, arsenic the bundle company’s holiday-season guidance did not handily bushed expectations arsenic immoderate analysts expected.
ServiceNow NOW, -1.77% reported third-quarter net of $63 million, oregon 31 cents a share, connected income of $1.51 billion, up from $1.15 cardinal a twelvemonth ago. After adjusting for banal compensation and different effects, the cloud-software institution reported net of $1.55 a share, up from $1.21 a stock a twelvemonth ago.
Analysts connected mean expected adjusted net of $1.39 a stock connected income of $1.48 billion, according to FactSet.
Investors thin to justice ServiceNow connected its subscription revenue, which comprises astir its full income total, and billings, which represents contracted gross successful the quarter. In the 3rd quarter, ServiceNow reported subscription gross of $1.43 cardinal and subscription billings of astir $1.38 billion, portion analysts were expecting $1.41 cardinal and $1.32 billion, respectively.
ServiceNow shares declined much than 2% successful after-hours trading instantly pursuing the merchandise of the results, aft closing with a 1.8% diminution astatine $664.76. The disappointment seemed to stem from an in-line forecast that analysts had highlighted arsenic the astir important offering wrong the report, portion looking for a large beat.
Heading into the print, analysts reported whispers that the 4th fourth would beryllium much important to the company’s second-half show than the third. UBS analysts wrote earlier this week that “ServiceNow has already prepped the Street to expect much of a 4Q skew,” and Jeffries analysts wrote that “the buy-side is chiefly focused connected 4Q guidance.”
“With ServiceNow’s valuation adjacent [all-time highs], investors look focused connected whether ServiceNow tin present robust 4Q guidance against a pugnacious comp
and already-high expectations,” wrote the Jefferies analysts, who person a bargain standing and $675 terms people connected the stock.
ServiceNow guided for fourth-quarter subscription gross of astir $1.52 cardinal and billings of astir $2.31 billion, portion analysts an mean were expecting $1.51 cardinal and $2.31 cardinal respectively, according to FactSet.
ServiceNow’s banal has gained 20.6% truthful acold this year, somewhat down the summation of 21.8% for the S&P 500 scale SPX, -0.51%, which counts ServiceNow arsenic a component.
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