ServiceNow raises annual subscription revenue forecast as AI demand surges

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(Reuters) -ServiceNow raised its annual subscription revenue forecast on Wednesday, driven by growing demand for its artificial intelligence powered software solutions.

Enterprise clients turn to AI-powered software offered by companies such as ServiceNow and Salesforce to manage their IT services and automate certain business operations in a bid to save resources.

Santa Clara, California-based ServiceNow’s shares rose 3.4% in extended trading.

ServiceNow expects full-year subscription revenue to be between $12.84 billion and $12.85 billion, compared with its prior projection range of $12.78 billion to 12.80 billion.

Analysts on average were estimating $12.79 billion, according to data compiled by LSEG.

ServiceNow’s Now Assist offers generative AI features like case summarization, AI-powered search, and virtual agent interactions to streamline workflows and enhance productivity.

The firm, which counts telecom giant AT&T and ride-hailing company Uber Technologies among its customers, reported third-quarter subscription revenue of $3.30 billion, above analysts’ estimate of $3.26 billion.

The company reported third-quarter revenue of $3.41 billion, beating estimates of $3.35 billion.

On an adjusted basis, the company earned $4.82 per share for the quarter ended September 30, compared with estimates of $4.27.

The digital workflow firm also approved a five-for-one split of the its common stock on Wednesday.

The company said in March that it would buy AI firm Moveworks for $2.85 billion in cash and stock, marking its largest-ever acquisition.

The company’s planned Moveworks acquisition is under regulatory review by the U.S. Justice Department.

(Reporting by Jaspreet Singh and Nithyashree R B in Bengaluru; Editing by Maju Samuel)