Photo Credit: Donny Gonzo / Flickr.com
 

Earlier last week, ServiceNow (NYSE: NOW) reported its second quarter results that soared past market expectations. The impressive performance and outlook sent the stock climbing 13% in the after-hours trading session.
 

ServiceNow’s Financials

For the second quarter of the year, ServiceNow’s revenues grew 22% to $2.63 billion, beating the market’s forecast by 0.8%. EPS of $3.13 grew from $2.37 last year and was ahead of the market’s estimates of $2.85.

By segment, subscription revenues rose 23% to $2.54 billion, ahead of the consensus estimate of $2.53 billion. Professional and other services revenues grew 13% to $85 million, again ahead of the market’s estimated $79.2 million.

Current remaining performance obligations (RPO) came in at $18.6 billion, ahead of the analyst expectations of $17.67 billion.

For the third quarter, ServiceNow expects subscription revenues of $2.660-$2.665 billion. The market was looking for subscription revenues of $2.672 billion.
 

ServiceNow’s Growth Focus

During the quarter, ServiceNow continued to deliver several AI innovations and began to see AI deals pickup. ACV for Now Assist, ServiceNow’s GenAI offering, doubled over the quarter. It ended up signing 11 deals greater than $1 million in the quarter. Some of the innovations include the ability for organizations to bring your own (BYO) GenAI model that gives them increased flexibility and choice.

It also introduced new cross-platform GenAI capabilities such as Now Assist for Strategic Portfolio Management, Now Assist for Government Community Cloud (GCC), Creator Studio, Manufacturing Commercial Operations, and Talent Development. To support AI use cases, ServiceNow also launched its RaptorDB Lighthouse program. The program has been built on the RaptorDB database offering and will help customers ingest and analyze data at massive scale.

To enhance GenAI-powered search and knowledge management capabilities, ServiceNow also announced the acquisition of Raytion, a Germany-based industry leader in information retrieval technology. Raytion is known for its information retrieval technology that helps provide access to unified real-time access to business-critical data across multiple enterprise sources for a more powerful search experience on a single technology platform. It was set up in 2001 and has several Fortune Global 500 customers including Bayer and BMW, to name a few.

SeviceNow plans to integrate Raytion’s capabilities with the Now Assist GenAI experience to help provide users with more comprehensive, relevant search results in one centralized location. ServiceNow’s single data model will help provide a more personalized experience for users by pulling from employee history like previous searches and interactions. Prior to the acquisition, Raytion was privately held and did not disclose financial or funding details. Terms of the deal were also not revealed.

ServiceNow’s stock is trading at $799.06 with a market capitalization of $164.6 billion. It had touched a 52-week high of $850.33 soon after results announcement. It has recovered from the 52-week low of $527.24 that it was trading at in November last year.

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