Investing.com -- ServiceNow (NYSE:NOW) was boosted by improved demand in the third quarter compared to the first half of the year in its commercial and public-sector segments, according to analysts at Stifel.
In a note to clients, the analysts said that recent checks also pointed to strength in the US-based workflow manager's international operations, particularly in Canada, Latin America and the Middle East.
As a result, they expect ServiceNow to post growth in current remaining performance obligation (cRPO), a key gauge of anticipated revenue, of at least 23.5% in the just-closed third quarter. The figure would top its guidance of 22%.
The analysts said their research suggests that pipelines are "healthy," and should result in a "strong" fourth-quarter cRPO outlook likely roughly 100 basis points above consensus of 21.5% year-on-year at constant currencies.
"Net/net, we expect that ServiceNow's expanding platform, growing pipeline, large deal momentum, and emerging [generative artificial intelligence] opportunity should enable the company to maintain 20%+ revenue/[free cash flow] growth and margin expansion in coming years," the Stifel analysts said.
In July, ServiceNow raised its annual subscription guidance as results for its second quarter came in ahead of expectations.
ServiceNow reported adjusted earnings of $3.13 per share on revenue of $2.63 billion, beating Wall Street estimates for income per share of $2.82 on revenue of $2.60 billion.
Subscription revenues rose 23% from a year earlier to $2.54 billion amid new business wins.
The company reported 88 transactions over $1 million in net new annual contract revenue, up 26% year-over-year, boosting the firm's backlog.
Remaining performance obligations were $18.6 billion as of the second quarter, representing 31% year-over-year growth.
The company subsequently lifted its subscription revenue guidance to a range of $2.66 billion to $2.67 billion, from a prior range of $2.525 billion to $2.530 billion.