Crispr Therapeutics shares tumble after significant earnings miss
On Thursday, Bernstein SocGen Group updated its financial outlook on ServiceNow (NYSE: NYSE:NOW), increasing the price target from $913.00 to $1,021.00, while maintaining an Outperform rating on the company’s shares. Currently trading at $1,143.63 and with a market capitalization of $236 billion, InvestingPro analysis suggests the stock is trading above its Fair Value, though it maintains a "GREAT" financial health score. The adjustment follows ServiceNow’s report of fourth-quarter earnings for the year 2024, where the company saw its smallest constant currency growth beat since the COVID period, surpassing guidance by only 0.4%. Typically, ServiceNow exceeds expectations by 1% or more.
ServiceNow’s fourth-quarter performance fell short of GAAP revenue projections due to significant foreign exchange headwinds. In response to these results, ServiceNow’s stock experienced an approximately 8% decline in after-market trading. Despite these challenges, the company maintains impressive gross profit margins of 79.2% and has achieved 23.5% revenue growth over the last twelve months. InvestingPro subscribers can access 15+ additional key insights about ServiceNow’s financial performance. The company also set its 2025 constant currency growth forecast at 19.5-20%, which was slightly lower than the consensus expectations of 20.6% prior to the earnings release.
Despite these challenges, ServiceNow’s management highlighted the promising uptake of their GenAI functionality, which saw a quarter-over-quarter increase of 150% in deals. Additionally, more than a quarter of customers on the Pro SKU have already adopted this feature. The company’s executives also underscored a pivotal shift in their commercial model, which introduces consumption tiers on top of seat licenses.
This new strategy allows ServiceNow to sell a limited number of AI seats as a proof-of-concept, a departure from their usual practice of requiring licenses for all employees. This approach could potentially lead to greater monetization opportunities, as customers may opt to increase their AI consumption without necessarily expanding the number of seats. For detailed analysis of ServiceNow’s AI initiatives and their potential impact on future growth, access the comprehensive Pro Research Report available exclusively on InvestingPro.
In other recent news, ServiceNow has reported a 21% year-over-year increase in both subscription and total revenues for the fourth quarter of 2024, amounting to $2,866 million and $2,957 million respectively. JMP Securities reaffirmed their Market Outperform rating on ServiceNow’s shares, maintaining a price target of $1,300. The company also unveiled its AI Agent Orchestrator, a new feature designed to streamline enterprise operations. In strategic alliances, ServiceNow has expanded its partnership with Google (NASDAQ:GOOGL) Cloud and entered a collaboration with Visa (NYSE:V) to modernize Visa’s Dispute Management Service using ServiceNow’s AI technology. These recent developments highlight ServiceNow’s continuous growth and innovation.
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