ServiceNow is serving up some serious upgrades to its HR offerings, spicing up its repertoire with Generative AI (GenAI) features aiming to soup up employee communications. These fresh additions promise to make it a cakewalk for employees to seek support across various departments.
The Employee Center by NOW is crafted to offer employees a one-stop-shop for all their departmental needs. The Content Engagement for Employee Center spices up communication channels between employees and the company.
ServiceNow recently unveiled Guided Self-Service for Employee Center during the Now Platform Xanadu release, flaunting Large Language Model-based proactive prompts powered by Now Assist for HR Service Delivery. This move harnesses GenAI to smoothen work experiences for employees, managers, and HR teams.
Adding cherry-topped capabilities to the AI-powered skills intelligence solution, NOW’s Talent Development, is rolling out solutions like Leader Hub and Gigs & Projects, dwelling in the Opportunity Marketplace within Talent Development.
The facelift to Employee Journey Management’s Analytics Center can now empower HR leaders to map out where employees stand in their various career voyages. Guided Decision Tree now provides a simpler way for leaders and HR administrators to sketch out employee journeys.
ServiceNow’s Stock Skyrockets by 31% YTD: Is the Party Set to Continue?
The recent HR innovations are a testament to NOW’s staunch dedication to strengthening ties with its clientele. ServiceNow is reaping the rewards of a blooming clientele as corporates embracing digital metamorphosis increasingly latch onto its workflow solutions. The GenAI muscle and unwavering partner base are propelling NOW’s trajectory.
Year-to-date, ServiceNow stocks have shot up by 30.8%, dancing ahead of the Zacks Computer & Technology sector and the Computers – IT Services industry. While the sector made a 23.1% leap, the industry’s growth stood at 8.3% during the same time window.
NOW’s stocks are playing tag with the 50-day and 200-day moving averages, signaling a bullish momentum.
ServiceNow Surpasses 50-day and 200-day SMA Thresholds
Let’s scratch beneath the surface to unearth the driving forces fueling NOW’s future path.
Performance Year-to-Date
NOW paints a rosy picture, foreseeing third-quarter 2024 subscription revenues in the range of $2.66 billion to $2.67 billion, hinting at a 20-20.5% uptick year over year on a GAAP basis. The outlook projects a 20.5% growth trajectory for subscription revenues at constant currency rates.
The current quarter might see a non-GAAP operating margin of 29.5%, per ServiceNow’s forecasts.
Zooming out to 2024, NOW is betting on subscription revenues jitterbugging in the $10.575-$10.585 billion range, translating to a 22% surge from 2023, strutting in both GAAP and non-GAAP shades. ServiceNow is anticipating a non-GAAP subscription gross margin of 84.5% and a non-GAAP operating margin of 29.5% (up from a prior outlook of 29%).
Shining Light on NOW’s Upward-Clawing Earnings Estimates
The Zacks Consensus Estimate projects 2024 earnings at $13.75 per share, sitting still over the past 60 days and stamping a 27.55% year-over-year jive.
The third-quarter 2024 earnings forecast also sits at $3.46 per share, steady over the past 60 days and pointing to an 18.49% annual leap.
AI Strengthens NOW’s Offerings with a Robust Partner Ensemble
ServiceNow is riding high on AI and machine learning technologies to jazz up its solutions. NOW’s freshest update, Xanadu, brings forth AI-powered sector-specific solutions targeting domains like telecom, media, technology, financial services, and the public sector.
A robust partner battalion featuring key players like Microsoft, NVIDIA, IBM, Genesys, Fujitsu, Equinix, Boomi, and Infosys is fortifying NOW’s AI artillery. The much-awaited Now Assist integration with Microsoft Copilot for Microsoft 365 is finally out in the wild.
The Future Shines Bright, but Brightness Comes at a Price
The NOW stock isn’t exactly a clearance sale find with a Value Score of D, hinting at a full-priced ticket currently.
In terms of the forward 12-month Price/Sales ratio, NOW sits neat at 15.18X, eclipsing its median of 13.39X and the Zacks Computer & Technology sector’s 6.31X standard.
Diving Deeper into Price/Sales Ratios
While you might need to reach a little deeper into your pockets for NOW stock, the explosive growth potential justifies the premium. Now that’s what you call a profitable splurge!
ServiceNow’s robust GenAI suite and flourishing partner lineup are hailed as torchbearers, searing away the shadows to illuminate a path towards elevated subscription revenues. The Growth Style Score of A makes this stock the belle of the ball for growth-hungry investors.
ServiceNow is currently nodding with a Zacks Rank #3 (Hold), nudging us to potentially hold our horses for a more opportune entry to snag this stock. Now, wouldn’t that be a tantalizing opportunity worth the wait?
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