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Why ServiceNow Inc. Shares Popped Today

By Jeremy Bowman - Apr 21, 2016 at 12:32PM

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Shares of the enterprise cloud company jumped on a strong first-quarter earnings report.

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What: Shares of cloud management provider ServiceNow (NOW 7.78%) were soaring today after a strong earnings report. As of 11:10 a.m. ET today, the stock was up 15.2%.

So what: ServiceNow easily cleared expectations on the top and bottom lines. Adjusted earnings per share came in at $0.09, beating estimates of $0.07, while revenue surged 44% to $305.9 million, ahead of the consensus at $301 million. CEO Frank Slootman summarized the quarter, saying, "We're off to a strong start with our best first quarter ever. Strong upsells and traction with our emerging products were two key growth vectors during the quarter." Slootman also noted that the company now has 249 customers with annualized contract values of $1 million or more.

Now what: ServiceNow shares had dropped sharply in the beginning of the year on disappointing guidance in its previous report and as high-priced stocks got punished in the market sell-off. With today's gains, the stock is back to where it was before that slide.   

Management held its guidance for the current quarter and full year, projecting total revenue of $330 million-$335 million and $1.35 million-$1.38 million, enough for full-year growth 35%-37% The company seems to have quelled the earlier concerns of slowing growth and also benefited from the settlement of a patent infringement case last month. As long the top-line growth feeds into profits, Service Now should be in good shape going forward.


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