ServiceNow Inc (NYSE:NOW) reported strong third-quarter results and indicated it could exceed $500 million in AI annual contract value (ACV) by year-end, according to Goldman Sachs.
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The ServiceNow Analyst: Analyst Kash Rangan reiterated a Buy rating, while raising the price target from $1,200 to $1,250.
The ServiceNow Thesis: ServiceNow's subscription revenue growth of 21.5% outperformed guidance of 19.5%, helping the company record the highest growth since the third quarter of 2023, Rangan said in the note.
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Despite uncertainties, ServiceNow reported 30% growth in Fed NNACV (net new annual contract value) in the third quarter, he added.
ServiceNow's fourth-quarter cRPO (current remaining performance obligations) guidance seems conservative, as its large renewal cohort adds upsell potential, the analyst stated.
ServiceNow's AI-driven expansion is "cementing the Now Platform as a foundational enterprise AI layer, with strong execution, widening product breadth, accelerating AI monetization and internal AI efficiency gains supporting a durable Rule of 50+ profile," he wrote.
The Now platform is likely to gain "an increasing share of the customer wallet in the coming years," Rangan further said.
NOW Price Action: Shares of ServiceNow had risen by 4.47% to $952.48 at the time of publication on Thursday.
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