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ServiceNow (NOW) to Report Q4 Earnings: What's in the Cards?

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ServiceNow (NOW - Free Report) is set to report fourth-quarter 2019 results on Jan 29.

The Zacks Consensus Estimate for fourth-quarter earnings has been steady at 88 cents over the past 30 days, indicating growth of 14.3% from the year-ago quarter’s reported figure.

The consensus mark for revenues is currently pegged at $942.3 million, which implies growth of 31.7% from the figure reported in the year-ago quarter.

Notably, the company beat the Zacks Consensus Estimate in the trailing four quarters, with positive surprise of 16.6%, on average.

Let’s see how things have shaped up prior to this announcement.

ServiceNow, Inc. Price and EPS Surprise

ServiceNow, Inc. Price and EPS Surprise

ServiceNow, Inc. price-eps-surprise | ServiceNow, Inc. Quote

Factors to Consider

Seasonality of its business is expected to positively impact ServiceNow’s fourth-quarter results. Customers tend to sign larger deals in the last quarter as they are confident of funding them.

Notably, ServiceNow expects fourth-quarter 2019 subscription revenues to be between $897 million and $902 million, indicating growth of 35% from the year-ago quarter.

Additionally, robust adoption of Now Platform’s digital workflow solutions, driven by strong demand for digital transformation and cloud-based solutions among large companies is expected to have driven top-line growth.

Moreover, the Now Platform’s intelligent cognitive capabilities, and its simple and easy-to-use nature is expected to have contributed to its adoption among the developer community and customers.

Further, government’s increased demand for cloud-based solutions is expected to have benefited ServiceNow. The company’s platform has been gaining traction among U.S. federal agencies.

ServiceNow also witnessed increased demand for its solutions in public sectors globally as well. The company has been acquiring large deals and public sector customers in the U.K., Germany and Australia, among others.

Moreover, the company’s efforts to grow and develop its go-to-market team in Europe during the first half of the year are likely to have driven its top line.

However, expenses pertaining to the company’s acquisition of Attivio’s search engine and Fairchild Resiliency Systems are expected to be reflected in the fourth-quarter results.

What Our Model Says

Our proven model predicts an earnings beat for ServiceNow this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat.

ServiceNow has a Zacks Rank #3 and an Earnings ESP of +0.57. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Other Stocks to Consider

Here are some companies, which, per our model, also have the right combination of elements to post an earnings beat this quarter:

Advanced Energy Industries (AEIS - Free Report) has an Earnings ESP of +10.8% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Perion Network Ltd (PERI - Free Report) has an Earnings ESP of +22.58% and a Zacks Rank #1.

Apple (AAPL - Free Report) has an Earnings ESP of +4.08%% and a Zacks Rank #2.

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