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Cloud Stocks: Expect ServiceNow to Acquire From App Marketplace

Posted on Wednesday, May 1st 2019

Last week, cloud-based enterprise services provider ServiceNow (NYSE: NOW), announced its first quarter results that outpaced market expectations and sent the stock soaring. ServiceNow’s stock has soared 275% in the last three years and 28% in the previous quarter alone. Analysts expect its price rise to continue in the next twelve months with some forecasting price rise of over 10% in the period.

ServiceNow’s Financials

ServiceNow’s first quarter revenues grew 34% over the year to $789 million, significantly ahead of the market’s expectations of $766.2 million. Adjusted earnings came in at $0.67 per share, again ahead of the market’s forecast of $0.54. A year ago, ServiceNow had reported an EPS of $0.56 for the quarter.

Revenues excluding the impact of foreign exchange grew 38% to $811.3 million with subscription revenues growing 40% to $760.4 million and Professional services and other revenues growing 11% to $50.8 million. The market was looking for subscription revenues of $802 million.

Total billings for the quarter grew 30% to $899.5 million with adjusted subscription billings growing 33% to $849.7. Professional services and other billings declined 2% to $49.8 million.

ServiceNow raised its full-year 2019 subscription revenue guidance to $3.235-$3.25 billion. It now expects fiscal 2019 subscription billings of $3.725-$3.74 billion. Overall, analysts had forecast ServiceNow’s fiscal 2019 revenues to come in at $3.11 billion.

ServiceNow’s Adobe Alliance

Earlier this quarter, ServiceNow entered into a strategic partnership with Adobe to integrate Adobe customer experience data with customer data. The companies realize that organizations use customer engagement solutions to understand and personalize digital experiences for customers, but this data often does not integrate with other enterprise applications. The alliance will leverage the Adobe Experience Platform and the ServiceNow Now Platform to enhance Adobe’s real-time customer profiles with rich customer data.

A centralized Customer Experience Management tool will provide customers with the ability to streamline work between teams and build real-time customer profiles. Organizations will be able to see a more comprehensive view of a customer across their entire digital journey. Together, their mutual customers will be able to integrate and leverage digital workflows, service catalogs, intelligent content, and knowledge management capabilities.

ServiceNow’s Mobile Initiative

Recently, ServiceNow also announced several enhancements to its Now Platform with native mobile enterprise capabilities in a move to make work for employees mobile friendly. The enhancements will accelerate digital transformation by unlocking productivity and delivering mobile experiences across ServiceNow’s IT, employee, and customer workflows. Users will be able to create new, native mobile apps quickly and easily and organizations will benefit from mobile-first experiences that simplify common workflows for agents such as looking up information and updating incidents.

ServiceNow has built for itself a flourishing platform to drive its growth. Developers have access to its Now platform and can build and deploy apps that are available for other users through its marketplace. ServiceNow had launched its marketplace ServiceNow Store in 2015 with nearly 80 applications. As of February 2018, the marketplace was offering nearly 350 applications. Today, ServiceNow not only offers apps that provide enhanced capabilities through the Now Platform but also provide apps that can help integrate other services with ServiceNow. Together, these apps provide capabilities that span HR, IT, Risk, and Service management capabilities across multiple industries.

Its stock is currently trading at $271.69 with a market cap of $50.4 billion. It touched a record high of $273.47 soon after result announcement. Like other technology stocks, its stock had also fallen to a 52-week low of $147.63 in December last year.

This segment is a part in the series : Cloud Stocks

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