ServiceNow’s Q1 Results Are Overshadowed By Weak Guidance

(CTN News) – During extended-hours trading on Wednesday, ServiceNow (NYSE:NOW) stock fell nearly 6% after the company reported slightly weaker-than-expected guidance that clouded the company’s strength in the first quarter.

The company expects subscription revenue to be between $2.525B and $2.53B for the second quarter of 2012, which is lower than the estimate of $2.54B.

In terms of subscription revenues for the full year, it is now forecasting an amount between $10.56B and $10.58B, which is higher than its previous forecast of $10.555B to $10.575B.

As a result of the weak guidance, ServiceNow announced that revenue from subscriptions grew 24.5% year-over-year in constant currency to $2.52B during the first quarter, which was higher than the high end of the company’s previous guidance.

There was also an increase of 21% over last year in the remaining performance obligations, as the closely watched metric came in at $8.45B, as the remaining performance obligations exceeded previous guidance.

As adjusted, ServiceNow earned $3.41 per share on $2.6B in revenue, translating into $3.41 per share on an adjusted basis. As a result of a consensus of analysts, the company is expected to earn $3.13 in earnings per share on revenues of $2.59 billion.

The adjusted operating margins during the period exceeded 30%, which was a record for the company.

The company signed eight contracts during the quarter, totaling more than $5M in annual contract value, a 100% increase from last year. A total of eight deals were signed during the quarter.

The company said that four deals were signed for more than $10M, up 300% year-over-year, in comparison to last year.

During this same period, ServiceNow also announced that it repurchased 225,000 shares at a cost of $175 million and that it has approximately $787 million remaining on its balance sheet.

Among other topics, ServiceNow will hold an analyst day on May 6, under the direction of chief executive officer Bill McDermott, during which he will provide an update on the company’s strategy and generative artificial intelligence roadmap.

A conference call is scheduled to be held by ServiceNow at 5 pm Eastern Standard Time (EST) in order to discuss the results.

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