Results: ServiceNow, Inc. Beat Earnings Expectations And Analysts Now Have New Forecasts

It's been a good week for ServiceNow, Inc. (NYSE:NOW) shareholders, because the company has just released its latest yearly results, and the shares gained 2.7% to US$769. ServiceNow reported US$9.0b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$8.42 beat expectations, being 5.3% higher than what the analysts expected. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

Check out our latest analysis for ServiceNow

Taking into account the latest results, the current consensus from ServiceNow's 34 analysts is for revenues of US$10.9b in 2024. This would reflect a major 21% increase on its revenue over the past 12 months. Statutory earnings per share are expected to plunge 34% to US$5.57 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$10.8b and earnings per share (EPS) of US$4.80 in 2024. There was no real change to the revenue estimates, but the analysts do seem more bullish on earnings, given the nice increase in earnings per share expectations following these results.

The consensus price target rose 11% to US$826, suggesting that higher earnings estimates flow through to the stock's valuation as well. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values ServiceNow at US$910 per share, while the most bearish prices it at US$640. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We can infer from the latest estimates that forecasts expect a continuation of ServiceNow'shistorical trends, as the 21% annualised revenue growth to the end of 2024 is roughly in line with the 24% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 12% per year. So although ServiceNow is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around ServiceNow's earnings potential next year. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for ServiceNow going out to 2026, and you can see them free on our platform here..

We don't want to rain on the parade too much, but we did also find 1 warning sign for ServiceNow that you need to be mindful of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.