ServiceNow (NOW) surged more than 15% on Thursday, notching its sharpest single-day gain since 2013 after reporting a stronger-than-expected first quarter.
The Santa Clara-based enterprise software giant posted adjusted earnings of $4.04 per share—beating consensus estimates by $0.21—on revenue of $3.09 billion, up 18.6% year-over-year.
CEO William McDermott credited “elite level execution” and accelerating AI adoption for the results, underscoring robust subscription revenue growth and expanding demand from government clients. U.S. public sector sales rose over 30% in the quarter, supported by 11 federal contracts exceeding $1 million, including two above $5 million.
“Our AI agents are helping customers, including government agencies, cut costs and increase efficiency,” McDermott said. “You don’t build a defining company by surrendering to uncertainty.”
ServiceNow's bullish forecast for subscription revenue in the second quarter—between $3.030 billion and $3.035 billion—sent a strong signal to investors that it can weather tariff pressures and slower global enterprise spending.
Government Tech Spending Fuels Public Sector Momentum
ServiceNow’s standout performance in the public sector offered a rare bright spot amid market anxiety over the Trump administration’s tariff policies. The company landed six new government clients in the quarter and emphasized alignment with Washington’s push for operational efficiency.
CFO Gina Mastantuono noted that ServiceNow’s platform is “eliminating millions of hours and dollars” for federal agencies by modernizing workflows and automating routine tasks. “Now more than ever, these agencies need a digital-first platform,” she said.
ServiceNow’s Yokohama platform—launched in Q1—integrates data, workflows, and AI agents, aimed at simplifying service delivery for large institutions. Already in deployment at one federal agency, it’s automating contract management and slashing administrative costs.
BofA (BAC) Securities analyst Brad Sills called the results “a meaningful offset to an otherwise challenging macro environment,” raising his price target to $1,085 and reiterating a Buy rating.
ServiceNow’s standout performance in the public sector offered a rare bright spot amid market anxiety over the Trump administration’s tariff policies. The company landed six new government clients in the quarter and emphasized alignment with Washington’s push for operational efficiency.
CFO Gina Mastantuono noted that ServiceNow’s platform is “eliminating millions of hours and dollars” for federal agencies by modernizing workflows and automating routine tasks. “Now more than ever, these agencies need a digital-first platform,” she said.
ServiceNow’s Yokohama platform—launched in Q1—integrates data, workflows, and AI agents, aimed at simplifying service delivery for large institutions. Already in deployment at one federal agency, it’s automating contract management and slashing administrative costs.
BofA (BAC) Securities analyst Brad Sills called the results “a meaningful offset to an otherwise challenging macro environment,” raising his price target to $1,085 and reiterating a Buy rating.
AI Partnerships and Market Optimism Lift Software Sector
The earnings beat and forward guidance come at a critical time for enterprise software firms. ServiceNow’s rally led the S&P 500 on Thursday, helping lift other major players including Salesforce (CRM +4.8%), Microsoft (MSFT +3.45%), and Adobe (ADBE +2.54%).
ServiceNow also announced new AI-focused partnerships with Vodafone Business, Aptiv, Devoteam, and High Alpha, expanding its reach into telco, automotive, and enterprise sectors. These alliances aim to enhance digital transformation and AI capabilities across global operations.
Despite Thursday’s rally, ServiceNow stock remains nearly 20% below its 52-week high of $1,170. However, analysts see upside ahead. Morgan Stanley (MS) lifted its target to $950, citing strong current remaining performance obligations and a healthy enterprise pipeline.
The earnings beat and forward guidance come at a critical time for enterprise software firms. ServiceNow’s rally led the S&P 500 on Thursday, helping lift other major players including Salesforce (CRM +4.8%), Microsoft (MSFT +3.45%), and Adobe (ADBE +2.54%).
ServiceNow also announced new AI-focused partnerships with Vodafone Business, Aptiv, Devoteam, and High Alpha, expanding its reach into telco, automotive, and enterprise sectors. These alliances aim to enhance digital transformation and AI capabilities across global operations.
Despite Thursday’s rally, ServiceNow stock remains nearly 20% below its 52-week high of $1,170. However, analysts see upside ahead. Morgan Stanley (MS) lifted its target to $950, citing strong current remaining performance obligations and a healthy enterprise pipeline.
For investors looking for resilience amid economic uncertainty, ServiceNow's combination of AI leadership, federal tailwinds, and strategic partnerships could position it as a rare safe harbor in a volatile tech landscape.
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