Why ServiceNow Stock Is Skyrocketing Today

ServiceNow (NYSE: NOW) stock is surging Thursday after the company reported better-than-expected first-quarter results. The software company's share price had risen 15.2% as of 11:45 a.m. ET. Meanwhile, the S&P 500 was up 1.2%, and the Nasdaq Composite was up 1.7%.

ServiceNow published its Q1 results after market close yesterday and delivered a substantial earnings beat. Making the report even better, the company increased its full-year performance targets.

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ServiceNow stock soars on strong Q1 profit

ServiceNow posted non-GAAP (adjusted) earnings per share of $4.04 on revenue of $3.09 billion. The sales performance was in line with the average Wall Street estimate, but beat the company's own guidance, and earnings for the period came in significantly ahead of the per-share profit of $3.83 called for by the average analyst target. The software specialist's revenue increased roughly 19% year over year in the period. The performance was driven by 19% growth for subscription revenue, which accounted for $3 billion of the overall sales total.

What's next for ServiceNow?

For the full year, ServiceNow increased its subscription revenue target to between $12.64 billion and $12.68 billion -- up from its previous guidance for sales between $12.635 billion and $12.675 billion. At the midpoint of the guidance range, that would mean growth of 18.75% annually. While the upward guidance revision for subscription sales was hardly massive, it's a positive development that looks better on the heels of better-than-expected margins in Q1.

Crucially, management's commentary and performance guidance was quite strong given recent market volatility and economic uncertainty. The guidance indicates that ServiceNow expects minimal adverse impacts from the trade war and potential shifts in the overall macroeconomic climate. CEO William McDermott also said that the company was treating the tariff situation and other conditions as opportunities and seeing demand for its task automation technologies. Amid recent volatility, there's a lot to like in ServiceNow's very solid outlook.

Should you invest $1,000 in ServiceNow right now?

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