ServiceNow Raises Revenue Forecast Amid AI Adoption Surge

ServiceNow announced an increase in its full-year subscription revenue forecast on Wednesday, driven by the growing adoption of artificial intelligence-enabled cloud software among its enterprise customers. Following the announcement, the company's shares rose over 7% in after-hours trading, although they have only gained 3.5% year-to-date, lagging behind the S&P 500 index. The demand for workflow automation and advancements in generative AI have been pivotal in propelling ServiceNow's growth, with analysts optimistic about strong federal business and AI software adoption mitigating potential economic uncertainties. In a strategic move to enhance its offerings, ServiceNow revealed the acquisition of Raytion, a search and retrieval platform, although the financial details of the deal were not disclosed. Additionally, the company announced a strategic investment in Prodapt, which specializes in digital and network services for the telecom and technology sectors. These initiatives reflect ServiceNow's commitment to expanding its capabilities in the rapidly evolving tech landscape. However, the company is also navigating internal challenges, as an investigation revealed policy violations related to the hiring of the former chief information officer of the U.S. Army. As a result, the individual has left the company, and Chief Operating Officer CJ Desai has mutually agreed to resign from all positions effective immediately. ServiceNow now projects its full-year subscription revenue to be between $10.575 billion and $10.585 billion, surpassing analysts' expectations of $10.565 billion. The company reported an adjusted earnings per share of $3.13 for the quarter, exceeding estimates of $2.84 per share.