Should ServiceNow Stock Be in Your Portfolio Pre-Q4 Earnings?

Core Viewpoint - ServiceNow is expected to report strong fourth-quarter 2024 results, with significant growth in both revenues and earnings compared to the previous year [2][4][23] Financial Performance - The Zacks Consensus Estimate for fourth-quarter revenues is $2.95 billion, reflecting a year-over-year growth of 21.21% [2] - The consensus estimate for earnings is $3.58 per share, indicating a growth of 15.11% year-over-year [2] - ServiceNow anticipates fourth-quarter subscription revenues between $2.875 billion and $2.88 billion, suggesting a year-over-year improvement of 21.5-22% on a GAAP basis [4] Customer Growth and Deal Activity - As of the end of Q3 2024, ServiceNow had 2,020 customers with over $1 million in annual contract value (ACV) [5] - The company closed 96 deals greater than $1 million in net new ACV during Q3 2024, including 15 deals over $5 million and six deals over $10 million [5] Generative AI Developments - ServiceNow's generative AI offerings are gaining traction, with 44 new Now Assist customers spending over $1 million in ACV in Q3 2024 [6] - The company has successfully increased prices for its Gen AI offerings by approximately 30% [6] - The total addressable market for ServiceNow's Gen AI capabilities is projected to reach $275 billion by 2026 [15] Stock Performance - ServiceNow shares have returned 47.9% over the past 12 months, outperforming the Zacks Computer & Technology sector's 28.6% and the Computers – IT Services industry's 12.1% [7] Strategic Partnerships - ServiceNow has established significant partnerships with major companies such as Amazon, Microsoft, and NVIDIA, which are expected to enhance its market position [19] - The expanded collaboration with Amazon Web Services aims to accelerate AI-driven business transformation [20] - The partnership with Microsoft focuses on modernizing front-office business processes through AI integration [21] Innovation and Product Development - The latest update, Xanadu, introduces AI-powered solutions across various industries, enhancing customer agility and productivity [15][16] - ServiceNow plans to integrate Agentic AI into its platform to improve productivity and issue resolution [17] - The company is adding over 150 GenAI innovations to its portfolio, including AI governance features for secure practices [18]