ServiceNow (NOW - Free Report) has announced that its recently launched COVID-19 emergency response apps are gaining traction across all industries, and government agencies.
Notably, the apps, which enable self-reporting and exposure management, have been selected by the city of San Francisco to ensure smooth functioning of critical areas like law enforcement and healthcare.
Moreover, the company’s partners, which include the likes of Accenture (ACN - Free Report) , Deloitte and DXC Technology (DXC - Free Report) , are helping their clients deploy ServiceNow’s apps and also build other emergency apps on the Now platform.
The solid traction of ServiceNow’s free apps bodes well for the company in the long run as it is helping generate awareness about the Now platform. Moreover, it is expected to help the company retain its customers in these difficult times.
ServiceNow’s efforts to combat the global COVID-19 pandemic will also aid in generating goodwill around its brand and boost investor confidence. Notably, shares of ServiceNow have returned 21.2% in the past year, compared to the industry which declined 7.5%
ServiceNow, Inc. Price and Consensus
Solid Demand for Now Platform to Drive Growth
Apart from the free emergency response apps, ServiceNow has also witnessed robust demand for its platform in the past few quarters. Notably, in fourth-quarter 2019, the company completed 76 transactions that generated net new annualized contract value (ACV) exceeding $1 million.
Further, total number of customers contributing more than $1 million to business reached 892 in the fourth quarter, growing 32% on a year-over-year basis.
The company’s growth trend is expected to continue in the coming quarters driven by the ongoing digital transformation of organizations taking place across several industries and also its expanding global footprint.
Moreover, the fact that Now platform is a single integrated platform makes it convenient and easy to use for analysts and developers, thereby increasing its appeal for potential customers.
The company is also investing in strengthening the platform by integrating additional capabilities, which further boost its appeal. Notably, it recently launched the Now Intelligence update for its platform, which added AI and analytics capabilities to it.
However, anticipated decline in IT spending, resulting from the coronavirus-related disruption and uncertainty in the market, is likely to dampen the company’s growth prospects at least in the near term. Increasing expenses on product development and growth of international presence are also expected to weigh on profitability.
Zacks Rank & A Key Pick
ServiceNow currently carries a Zacks Rank #3 (Hold).
A better-ranked stock in the broader technology sector is SAP SE (SAP - Free Report) , which sports a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The long-term earnings growth rate for SAP is currently pegged at 9.5%.
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