ServiceNow Inc (NYSE: NOW) stock rose over 1.7% on 25th October, 2018 (As of 10:45 AM GMT-4; Source: Google finance) though the company posted better than expected results for the third quarter of 2018. ServiceNow, Forbes’ No. 1 World’s Most Innovative Company in 2018, is now serving more than 5,000 enterprise customers. During the third quarter, ServiceNow closed 25 transactions with more than $1 million in net new annual contract value. The company now has 614 total customers with more than $1 million in annual contract value, representing 37% year-over-year growth. The U.S. federal government represented the biggest deals in the third quarter, accounting for a fifth of our total net-new ACV. This was the largest federal quarter ever. For example, the U.S. State Department is now the largest platform customer. NOW is becoming a critical strategic partner to the U.S. federal government as it modernizes its IT infrastructure and moves to cloud-based services and platforms.
Further, NOW is strengthening the public sector capabilities, and has just announced an alliance with Microsoft to deliver digital workflows through the Azure Government Cloud. This alliance is designed to help federal agencies move faster and securely to cloud-based solutions.
NOW in the third quarter of FY 18 has reported the adjusted earnings per share of 68 cents, beating the analysts’ estimates for the adjusted earnings per share of 60 cents, as per analysts surveyed by Zacks Investment Research. The company had reported the adjusted revenue growth of 37 percent to $673.1 million in the third quarter of FY 18, beating the analysts’ estimates for revenue of $659.4 million. Subscription revenues of $627 million, representing 39% year-over-year growth and subscription billings were $674 million, representing year-over-year growth of 35% and constant currency and duration growth of 34%.
Product innovation is essential to the success and continues to be a top priority. The London release went live in the third quarter, delivering customers exciting new product capabilities such as Virtual Agent. The London release demonstrates the ongoing commitment to delivering innovative, intelligent capabilities across the Now Platform and product portfolio. And looking ahead, the company is investing heavily in more intuitive consumer-like user experiences and building more mobile-friendly, mobile-first capabilities. NOW expect to be launching significant enhancements in the mobile capabilities and user experience over the coming year.
NOW is raising revenue billings and free cash flow guidance in 2018. The company now expect subscription revenues between $2.415 billion and $2.42 billion, representing 39% year-over-year growth and 37% constant-currency growth. The company expect subscription billings between $2.83 billion and $2.835 billion, representing 33% year-over-year growth and 31% to 32% constant currency and duration growth.