ServiceNow (NYSE:NOW) Inc. shares surged 5% on Wednesday following robust growth in subscription sales and the launch of 5,000 new innovations under CEO Bill McDermott's leadership. The company reported a 27% increase in quarterly subscription sales to $2.2 billion, fuelled by a strategic shift into artificial intelligence (AI) through a partnership with Nvidia Corp . (NASDAQ:NVDA)
The collaboration with Nvidia involves using their software, services, and infrastructure for large language model development, reflecting ServiceNow's aggressive pursuit of AI capabilities. This strategy appears to be paying off as the company's revenue soared by 25% to reach $2.7 billion, despite a drop in net income from $603 million to $242 million year-on-year.
ServiceNow's earnings per share stood at $1.18, while adjusted earnings came in at $2.95 per share, surpassing FactSet analysts' less bullish projections. The company has secured 83 new deals worth more than $1 million each in Q2, accounting for a 20% YoY increase in net new annual contract value.
Looking ahead, ServiceNow expects annual subscription sales to land between $8.635 billion and $8.64 billion, outperforming FactSet analysts' prediction of $8.9 billion. The company's stock has enjoyed a 40% rise year-to-date (YTD), outperforming the S&P 500 (SPX).
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