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On Thursday, ServiceNow (NYSE:NOW), currently valued at $168.2 billion, received a reaffirmation of its Market Outperform rating and a $1,300.00 price target from JMP analysts. According to InvestingPro data, the company is currently fairly valued based on its proprietary Fair Value model. This endorsement follows the company’s release of its first-quarter earnings for 2025, which surpassed expectations. ServiceNow reported non-GAAP earnings per share (EPS) of $4.04, exceeding the consensus estimate of $3.83. The company’s revenue reached $3.088 billion, slightly above the forecasted $3.084 billion.
The growth figures presented an 18.5% year-over-year increase as reported, and a 19.5% rise in constant currency terms. This performance, however, represented a slight deceleration from the previous quarter’s 21% growth in both reported and constant currency figures. Subscription revenue, a key metric for the company’s business model, was reported at $3.005 billion, topping the consensus of $2.998 billion and marking a 19% year-over-year growth as reported, with a 20% increase in constant currency. InvestingPro analysis shows ServiceNow maintains impressive gross profit margins of 79.2% and has achieved a robust 26% revenue CAGR over the past five years, with 14 additional ProTips available to subscribers.
The most notable beat came from the company’s current remaining performance obligations (cRPO), which amounted to $10.310 billion. This figure not only exceeded the consensus estimate of $10.103 billion but also represented a robust 22% year-over-year growth in both reported figures and constant currency. The cRPO growth outperformed the company’s constant currency guidance by 150 basis points, a significant improvement compared to the 50, 150, and 200 basis points from the past three quarters.
Following the earnings release, ServiceNow’s stock surged by 10% in after-market trading. This movement came as a recovery from the stock’s 23% decline year to date, a figure that contrasts with a 9% drop in the Russell 3000 index over the same period. The strong quarterly results, particularly the cRPO figures, have played a pivotal role in the stock’s positive after-market performance. InvestingPro data reveals the company maintains a healthy financial profile with a "GOOD" overall score of 2.87, suggesting strong fundamentals despite recent price volatility. Discover comprehensive analysis and 1,400+ detailed Pro Research Reports by subscribing to InvestingPro.
In other recent news, ServiceNow has announced a strategic partnership with Devoteam to modernize customer relationship management (CRM) across Europe, the Middle East, and Africa. This collaboration aims to enhance CRM strategies by combining ServiceNow’s artificial intelligence capabilities with Devoteam’s digital transformation expertise. Meanwhile, ServiceNow faces challenges regarding product pricing and adoption rates, as a system integrator reported that many customers find the license costs excessive and are seeking ways to optimize expenses. Additionally, BMO Capital Markets has revised its outlook on ServiceNow, lowering the price target to $950 while maintaining an Outperform rating, citing macroeconomic uncertainties as a factor. Similarly, JPMorgan adjusted its price target for ServiceNow to $970, retaining an Overweight rating despite concerns over trade war impacts and federal budget changes. Cantor Fitzgerald continues to hold an Overweight rating on ServiceNow, with a 12-month price target of $1,048, acknowledging near-term caution due to uncertainties in the U.S. Federal sector. The anticipated acquisition of Moveworks has been positively received, expected to enhance ServiceNow’s AI-driven capabilities. Despite these challenges, ServiceNow’s diverse growth vectors and platform vision are seen as strengths by analysts.
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