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ServiceNow stumbles with revenue miss and tepid guidance for the year ahead
- ServiceNow reported mixed Q4 results with earnings of $3.67 per share, which barely beat the estimate of $3.65 per share but missed on revenue, coming in at $2.957bn compared to an expected $2.963bn.
- The company's Q4 subscription revenue was $2.866bn, up 21%, but below the $2.879bn forecast.
- Despite missed estimates, the company shared highlights included strong revenue growth and growing interest in its flagship AI product, Now Assist.
- The company is also forecasting slower-than-expected growth in the year 2021.
- Foreign-exchange perspectives and the strengthening of the US dollar are impacting the subscription revenue forecast for 2021.
- Shares in the company slipped in after-hours trading by more than 8%, which follows a decline of 2% during regular trading hours.
- ServiceNow's share price is still up by more than 50% in the last year.
- However, the company will need to work hard to convince some investors as to whether its investments in AI technology will deliver results.
- In particular, investors may look for a justification of ServiceNow's investment in AI in the context of recent developments in DeepSeek, a Chinese AI startup that has developed powerful models, which could reduce costs.
- ServiceNow CFO Gina Mastantuono suggested AI was the key to driving worker productivity.
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