What happened

Shares of ServiceNow (NOW -4.03%) were moving higher last month as the cloud software company posted solid results in its fourth-quarter earnings report and benefited from a broader tailwind in the tech sector. 

According to data from S&P Global Market Intelligence, ServiceNow stock finished the month up 17%.

So what

ServiceNow has a long track record of steady growth, and its focus on streamlining workflows and breaking up silos has made it a popular choice in enterprise software.

Despite its consistent results, the stock still fell sharply last year but followed the rest of the tech sector higher in January even though there was no major news out on the company prior to its earnings report. The Nasdaq gained nearly 11% last month, fueled by cooling inflation and signs that the Fed would slow down its pace of interest rate hikes.

Rising rates have been one of the factors that have cooled off growth in the tech sector, weighing on valuations and growth rates.

The company reassured investors that it was capable of delivering solid growth even in a difficult environment in its Q4 earnings report, which came out on Jan. 25. Revenue in the quarter rose 20%, or 25.5% in constant currency, to $1.94 billion, which matched the consensus.

ServiceNow also saw solid growth in current remaining performance obligations (cRPO), a measurement of backlog, as cRPO grew 22%, or 25.5% in constant currency, a sign the company should be able to maintain its Q4 growth rate. 

Customers with annual contract values above $1 million grew by 22% to 1,637, showing the company is delivering steady growth with its highest-value customer segment, and management said new business growth was particularly strong with net new annual contract value up 30%.

On the bottom line, the company reported adjusted earnings per share of $2.28, which beat the analyst consensus at $2.02.

Now what

ServiceNow's guidance for the current quarter was also solid with the company forecasting subscription revenue growth of 22% to 22.5% ($1.99 billion to $2 billion), cRPO growth of 21%, and adjusted operating margin of 24%, which excludes share-based compensation. CEO Bill McDermott also pledged that he wouldn't do any job cuts this year.

The results and guidance show ServiceNow experiencing little of the headwinds that are buffeting the rest of the software sector, and that's a good reason for the stock to trade at a premium, especially considering its strong profit margins.