ServiceNow Inc (NYSE:NOW) stock rose 1.73% (As on January 25, 11:18:37 AM UTC-4, Source: Google Finance) after the company raised its annual subscription revenue forecast, as the software firm expects to attract new clients for its generative artificial intelligence (AI) products. In its first full quarter since the launch of Now Assist, an additional 67 customers adopted ServiceNow’s generative AI solutions. After the launch of OpenAI’s chatbot ChatGPT in November 2022, businesses are relying on products infused with AI technology to improve services in a highly competitive IT industry. ServiceNow also announced a five-year deal with Visa on Wednesday, as the payments processor looks to resolve disputes with cardholders. Besides, the company extended its partnership with professional services firm EY. The company’s focus on artificial intelligence (AI) and strategic partnerships, including a new alliance with Visa and an expanded relationship with Amazon Web Services (AWS), have positioned it strongly within the competitive enterprise software market.

Moreover, ServiceNow’s Q4 subscription revenue increased by 25.5% year-over-year, with total subscription revenues for 2023 reaching $8.68B. The company reported a 99% renewal rate and gained over 8,100 customers, including 1,897 with an annual contract value over $1M. A significant number of large deals were closed, with 168 deals over $1M in net new ACV, marking a 33% increase from the previous year. Non-GAAP operating margin exceeded 29%, and free cash flow margin reached an impressive 55%.

NOW in the fourth quarter of FY 23 has reported the adjusted earnings per share of $3.11, beating the analysts’ estimates for the adjusted earnings per share of $2.79. The company had reported the adjusted revenue of $2.44 billion in the fourth quarter of FY 23, beating the analysts’ estimates for revenue of $2.40 billion. Its subscription revenue for the fourth quarter was $2.37 billion, compared with analysts’ estimate of $2.32 billion.

ServiceNow expects its full-year 2024 subscription revenue to be between $10.56 billion and $10.58 billion, compared with its earlier projection of $10.4 billion. ServiceNow aims to surpass $10B in ACV and has set a target to achieve revenues of $15B or more by 2026. The company is investing in growth opportunities, with a focus on R&D and sales capacity to support expansion in 2024. ServiceNow expects increased adoption of generative AI in the public sector in the second half of 2024. It forecasts first-quarter subscription revenue in the range of $2.51 billion to $2.52 billion, above analysts’ average estimate of $2.46 billion, according to LSEG data.