By Angela Palumbo

ServiceNow reported a mixed fourth quarter, forecasting subscription revenue that was just shy of Wall Street estimates.

ServiceNow reported adjusted earnings of $3.67 a share after the stock market closed on Wednesday, while the consensus call among Wall Street analysts tracked by FactSet was $3.65 a share. Revenue for the quarter of $2.957 billion, compared with the consensus call for $2.963 billion.

Subscription revenues for the quarter of $2.866 billion were also slightly below estimates of $2.879 billion.

In the same period last year, the company reported earnings of $3.11 a share from revenue of $2.437 billion. Subscription revenue last year was $2.365 billion.

The company also said on Wednesday that its board of directors has authorized additional repurchases of up to $3 billion of common stock.

"AI is fueling a top to bottom re-ordering of the enterprise technology landscape," Chief Executive Bill McDermott said in the earnings release. The company said it saw 150% growth quarter over quarter in Now Assist service desk deals, ServiceNow's AI product.

ServiceNow also expects full-year subscription revenues to be between $12.64 billion and $12.68 billion, which is less than Wall Street estimates of $12.86 billion.

"The U.S. dollar has strengthened very significantly since the election, and so from an FX perspective, we saw some impact there," Chief Financial Officer Gina Mastantuono told Barron's on Wednesday. She added that in 2025, the company is expecting an approximate $175 million foreign-exchange headwind to subscription revenues.

ServiceNow stock has risen 50% over the last 12 months as investors buy up shares of enterprise software companies with exposure to generative artificial intelligence.

"AI is going to revolutionize how work gets done in the enterprise -- hard stop," Mastantuono said. "And so customers across industries are embracing these AI solutions at a rapid pace because it's driving incredible productivity."

Software stocks have also been top of mind in recent days after viral social-media posts said over the weekend that Chinese start-up DeepSeek had developed an AI model similar to OpenAI's ChatGPT for only $5.6 million. That number appears to leave out a lot of the costs, but Wall Street is still digesting the possibility that DeepSeek's success means AI models are becoming more efficient and less expensive.

"DeepSeek has positive implications for AI names in the application layer, like Microsoft's M365 Copilot, ServiceNow's Now Assist, Salesforce's Agentforce, HubSpot's Breeze AI and Intuit Assist for QuickBooks and TurboTax. A lower cost of compute could bring down AI computing costs of sales and drive better margin on AI enabled offerings, " BofA Securities analyst Brad Sills wrote in a note on Tuesday.

Mastantuono told Barron's that ServiceNow hasn't talked about whether or not it would use DeepSeek models specifically, but "we are absolutely not only building our own models, but we're open to using the other third party models as well."

Write to Angela Palumbo at angela.palumbo@dowjones.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

January 29, 2025 16:13 ET (21:13 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.