ServiceNow Earnings: Strong Quarter With In-Line Guidance and Increasingly Attractive Valuation

Wide-moat ServiceNow delivered good first-quarter results, including strong profitability, coupled with in-line guidance for the second quarter. As a consequence, we are modestly raising our fair value estimate to $790 per share from $770 previously, and we see shares as slightly undervalued. Trends from last quarter continued into 2024 as strong artificial intelligence, or AI, adoption was once again the key story, with the Pro Plus version seeing very strong uptake. Remaining performance obligation, or RPO, growth was impressive and supports our midterm growth estimates. Results serve to reinforce our thesis that ServiceNow is leading the charge to automate and simplify processes for enterprise customers throughout their businesses.