ServiceNow Profit and Revenue Beat Estimates on Moves to Digital

ServiceNow rose after the workflow-software provider reported fourth-quarter revenue and adjusted profit exceeded Wall Street's expectations.
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ServiceNow  (NOW) - Get Report shares on Thursday rose after the workflow-software provider reported fourth-quarter revenue and adjusted profit exceeded Wall Street's expectations, stemming from businesses turning digital and requiring cloud computing.

Profit at the Santa Clara, Calif., company totaled $16.6 million, or 8 cents a share, in the quarter, down from $598.7 million, or $3.03 a share, in the year-earlier quarter.

The latest adjusted earnings came in at $1.17 a share, beating the FactSet consensus analyst estimate of $1.06 a share.

Revenue ascended to $1.25 billion in the quarter from $951.8 million last year. The FactSet analyst consensus called for revenue of $1.21 billion.

ServiceNow shares recently traded at $549.76, up 6.4%. They have soared 79% over the past 12 months amid pandemic-inspired demand for the software.

“The secular tailwinds of digital transformation, cloud computing, and business-model innovation have all intersected at the perfect moment," Chief Executive Bill McDermott said in a statement.

"Now, we are focused on managing the world’s greatest workflow challenge: helping convert vaccines into vaccinations.”

In November, Morgan Stanley analyst Keith Weiss upgraded ServiceNow to overweight from equal weight, citing the company's growth potential. 

He lifted his share-price target to $652 from $559. At the time that new price target was the highest on Wall Street, according to Bloomberg,

“A rising priority for workflow automation post-covid well positions NOW to sustain 25%-plus revenue growth” and sustainable free-cash-flow growth above 30%, Weiss wrote in a commentary, Bloomberg reported. 

That rate of free cash flow through 2023 “should prove the current valuation still attractive,” he said.