What happened
ServiceNow (NOW -4.03%) shares were surging after the cloud software company delivered better-than-expected results on the bottom line in its third-quarter earnings report.
As a result, the stock was up 12.7% as of 12:10 p.m. ET.
So what
ServiceNow, an enterprise software company that helps businesses create intelligent and automated workflows, said that revenue in the third quarter increased 21%, or 27.5% in constant currency, to $1.83 billion, which was slightly below estimates at $1.85 billion.
Other key metrics showed the business delivering solid growth as well. Current remaining performance obligations (cRPO), which is a proxy for backlog, was up 18%, or 25% in constant currency, to $5.87 billion, and the number of customers with annual contract values above $10 million grew 60%. It now has 1,530 customers with annual contract values of more than $1 million, which increased 22% from the previous year.
On the bottom line, adjusted earnings per share increased 26.5% to $1.96, which beat estimates at $1.84.
In a statement, CFO Gina Mastantuono said: "Q3's outperformance is a testament to the mission critical nature of our platform and the strong execution of the ServiceNow team. We continue to see a robust pipeline and are maintaining our investments in growth hires as the opportunity in front of us remains enormous."
Now what
ServiceNow also issued strong guidance for the fourth quarter, calling for subscription revenue of $1.834 billion to $1.839 billion, which represents growth of 20% to 21%. It also expects cRPO growth to accelerate to 20%. Those numbers indicate that the company isn't experiencing the kind of macroeconomic headwinds that other tech companies have reported.
With the cloud stock down 40% from its peak last year, the better-than-expected profit and strong outlook was enough to give the stock double-digit gain. This could be a good entry point for this reliable growth stock.
