FILE PHOTO: OpenAI logo is seen in this illustration taken May 20, 2024. REUTERS/Dado Ruvic/File Photo
Jan 28 (Reuters) - ServiceNow forecast annual subscription revenue above Wall Street estimates on Wednesday, signaling strong demand for its artificial intelligence-powered software products.
The Santa Clara, California-based company is doubling down on AI integration across its platform through partnerships with Claude chatbot-maker Anthropic and ChatGPT parent OpenAI, aiming to fend off growing competition from autonomous AI agents.
The company, under its expanded deal with Anthropic, will integrate Claude models more deeply into its products, it said on Wednesday, after signing a similar deal with OpenAI.
"With investments in industry workflows and customer relationship management (CRM), and security and risk, ServiceNow is growing both organically and by acquisition to expand its market opportunity," said Rebecca Wettemann, CEO of industry analyst firm Valoir.
ServiceNow's results come as the company focuses on spending heavily on mergers and acquisitions, which has pressured its stock. Its shares were down over 2% after the bell on Wednesday. The stock lost 28% last year.
The company agreed to buy cybersecurity startup Armis for $7.75 billion, marking its biggest-ever deal. It has bought security firm Veza, AI company Moveworks and sales automation platform Logik.ai, formerly known as Logik.io.
ServiceNow, which helps enterprise clients automate complex workflows and IT operations, said its board had authorized an additional $5 billion for its share repurchase program, with plans for an imminent $2 billion accelerated share buyback.
The company expects fiscal 2026 subscription revenue to be between $15.53 billion and $15.57 billion, above analysts' average estimate of $15.21 billion, according to data compiled by LSEG.
ServiceNow said its Moveworks acquisition contributed to its annual subscription revenue growth forecast by about 100 basis points.
It forecast first-quarter subscription revenue of $3.65 billion to $3.66 billion, above estimates of $3.57 billion.
ServiceNow's fourth-quarter revenue rose 20.5% to $3.57 billion from a year ago, beating estimates of $3.53 billion.
Its adjusted profit of 92 cents per share also surpassed estimates of 88 cents apiece.
(Reporting by Jaspreet Singh in Bengaluru and Juby Babu in Mexico City; Editing by Shreya Biswas and Alan Barona)
