ServiceNow Inc.’s stock initially dipped 9% in extended trading Wednesday after the software company reported fiscal second-quarter revenue that fell short of Wall Street analysts’ forecasts.
reported earnings of $20 million, or 10 cents a share, compared with earnings of $59 million, or 30 cents a share, in the year-ago quarter. Adjusted earnings were $1.62 a share.
Revenue increased 30% to $1.75 billion from $1.4 billion a year ago.
Analysts surveyed by FactSet had expected, on average, earnings of $1.55 a share on revenue of $1.76 billion.
“We remain very confident our customers need us more than ever, given the macro [-economic climate],” ServiceNow Chief Executive Bill McDermott told MarketWatch, reiterating that the company expects to hit $11 billion in revenue in 2024. “We continue to hire and double-down on our talent brand and in hiring.”
Shares of ServiceNow have tumbled 31% this year. The broader S&P 500 index
has declined 15.5%.
“After Bill McDermott fired a bit of a warning shot that generated long-term concerns about the company’s prospects, ServiceNow delivered a largely positive quarter which saw the company beat on the bottom line,” Daniel Newman, principal analyst at Futurum, told MarketWatch.
Earlier this month, the company’s stock plunged 12% following an interview in which McDermott, warned of serious macro headwinds.
“You’re at 41-year-high inflation. The dollar right now is the highest it’s been in over two decades. We have interest rates rising. People worried about security. You’ve got a war in Europe. So, the mood is not great,” McDermott said in a “Mad Money” segment on CNBC that aired after markets closed July 11. “You’re going to see the headwind of the dollar right now against well-known technology brands. No one’s going to outrun the currency right now.”
McDermott’s comments were made on the state of the tech sector, and not specifically about ServiceNow, the company said.
“No company is in a better position to help customers innovate through the current macro environment than ServiceNow,” a company spokesperson said in a statement to MarketWatch. “Overall, demand for digital technology remains robust. Our customers recognize economic challenges but continue to indicate sizable growth in IT spend.”