What happened

Shares of ServiceNow (NYSE:NOW) climbed last month after the cloud-based IT solutions provider delivered another blowout earnings report. According to data from S&P Global Market Intelligence, the stock finished January up 24%. 

As the chart below shows, most of the stock's gains came after it released its earnings report at the end of the month.

NOW Chart

NOW data by YCharts.

So what

ServiceNow shares jumped 13.4% on Jan. 31, building on gains from the day before, as the cloud-computing specialist showed off 30% revenue growth to $715.4 million. Adjusted for constant currency, revenue was up 32% to $723.7 million, beating estimates at $717 million.  

A digital cloud image.

Image source: Getty Images.

Adjusted earnings per share in the quarter more than doubled from $0.35 to $0.77, easily topping expectations at $0.63. The company, which counts nearly 75% of Fortune 500 companies as its customers, continued to add new ones and expand existing relationships. During the quarter, ServiceNow closed 51 contracts with more than $1 million in annual revenue, bringing the total to 678. Total backlog increased 35% to $5.1 billion.

CEO John Donahoe said, "We finished 2018 with our strongest fourth quarter ever, continuing our momentum as the leading digital workflow company shaping the future of work." 

Now what

Like other cloud stocks, ServiceNow shares have surged in recent years as the stock has more than tripled over the last three years. Revenue has continued to grow rapidly, and expanding customer relationships have allowed profits to ramp up as well.

Looking ahead to 2019, management expects 33% to 34% subscription revenue growth to $3.215 billion to $3.235 billion, and a non-GAAP operating margin of 21%, or about $675 million. While ServiceNow shares are expensive, the market has been kind to cloud stocks, as it believes in the long-term opportunity in the sector.

As long as the market remains bullish, ServiceNow shares should have another year of solid returns ahead of it.

 

Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool owns shares of ServiceNow. The Motley Fool has a disclosure policy.