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Earlier last week, ServiceNow (NYSE:NOW) reported its first quarter results that continued to outpace market expectations. The better than expected guidance helped the stock climb 15% in the after-hours trading session.
 

ServiceNow’s Financials

For the first quarter of the year, ServiceNow’s revenues grew 19% to $3.09 billion, ahead of the market’s forecast of $3.08 billion. EPS of $4.04 was also ahead of the market’s estimates of $3.83 per share.

By segment, subscription revenues rose 19% to $3.01 billion, marginally ahead of the consensus estimate of $3 billion. Professional and Other Services revenues grew 5% to $83 million.

Current remaining performance obligations grew 22% to $10.3 billion.

For the second quarter, ServiceNow expects subscription revenues of $3.030-$3.035 billion and expects to end the year with subscription revenues of $12.64-$12.68 billion. The market was looking for subscription revenues of $3.02 billion for the quarter. ServiceNow expects challenges in the federal market due to uncertain government budgets to impact short-term expectations. However, it believes it will be able to navigate these challenges with better planning.
 

ServiceNow’s AI Growth Focus

During the quarter, ServiceNow continued to incorporate AI in its offerings. Throughout the quarter, it continued to launch several breakthrough agentic AI innovations aimed at solving complex enterprise challenges. Customers can now access thousands of preconfigured AI agents across CRM, HR, IT, and other offerings. It also launched AI Agent Studio that allows organizations to build fully customized AI agents. ServiceNow’s latest AI Agent Orchestrator also ensures that teams of specialized AI agents work together seamlessly across multiple tasks and systems.

Recently, the company released its Yokohama platform that integrates AI agent innovations, connected data, and automated workflows on a single platform. Yokohama offers organizations the ability to create and edit AI agents more easily through its integration with ServiceNow AI Agent Studio. It simplifies the automation across workflows by integrating AI agents easily. Through the Workflow Data Fabric integration, the model has access to a trove of data that can be used for the AI models to understand and activate data from any source and then harmonize with the ServiceNow Platform. Its Service Observability features allow users to connect operators for a single source of truth and let creators and builders implement and create custom apps faster in a new developer experience.

ServiceNow is also offering vertical-focused AI solutions. It recently unveiled AI agents for the telecom industry aimed at driving productivity across service lifecycles. The agents have been built on NVIDIA AI and are currently being used to help communications service providers autonomously handle labor-intensive workflows in customer service and network operations. The agents will help accelerate common problem resolutions and improve customer experiences.
 

ServiceNow’s Logik.AI Acquisition

Earlier this month, ServiceNow announced plans to acquire AI-powered Configure, Price, Quote (CPQ) solution Logik.AI for an undisclosed sum. Logik.ai was founded in 2021 by CPQ veterans Chris Shutts and Godard Abel. Prior to founding Logik.ai, the founders had established BigMachines, another CPQ company that was acquired by Oracle.

Logik.ai integrates AI into a modern CPQ solution to accelerate transaction management cycle through an advanced rules engine. It provides customers with a faster solution that is easier to use and scale. Logik.ai already integrates with nearly 50 technology partners, including ServiceNow.

ServiceNow plans to integrate Logik.ai into its own offerings to provide an upgraded CRM solution and empower sales organizations to close deals faster and achieve greater efficiency. The solution will now seamlessly connect with ServiceNow’s Customer Service Management and Sales and Order Management solutions to streamline complex selling processes and unlock self-service capabilities for customers and partners.

Prior to the acquisition, Logik.ai was privately held and had raised $54 million in five rounds of funding with backing from Emergence Capital, Salesforce Ventures, ServiceNow Ventures, and High Alpha. Its valuation and financial details are not publicly known.

ServiceNow’s stock is trading at $937.41 with a market capitalization of $194 billion. It had touched a 52-week high of $1,198.09 in January this year and has recovered from the year low of $637.99 that it had fallen to in June last year.

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