ServiceNow is betting heavily on GenAI functionalities in its tools, but it may be some time before investors start reaping the financial results. The company’s leadership gave this warning during an analyst meeting recently. However, revenue could eventually increase by 1 billion dollars (about 928 million euros).
With this announcement, ServiceNow wanted to temper high expectations regarding AI applications. Chief Financial Officer Gina Mastantuono did promise satisfactory results as existing users upgrade their packages to the more expensive variant with generative AI tools. But the company suggests that Rome was not built in a day either.
After the company presented its quarterly figures two weeks ago, its stock market value dropped despite showing good results so far. During the recent meeting, investors and analysts alike were again eagerly awaiting insights into customer adoption rates for AI tools like those in Now Assist, ServiceNow’s platform that bets heavily on this kind of application. Analysts had hoped for more detailed information than ServiceNow provided in its recent quarterly report, Bloomberg reports.
Satisfying quarterly figures
ServiceNow showed healthy figures then, including revenue north of 2.6 billion dollars, or about 2.4 billion euros. Last year, this number was nearly 2.1 billion dollars, so the company saw its revenue increase 24 percent year-on-year, thanks mostly to subscriptions. ServiceNow saw profits go up as well: 347 million dollars (322 million euros), which was more than twice that of the year before.
Tip: ServiceNow provides Now Assist with more GenAI features
ServiceNow reiterated its earlier revenue forecast of 15 billion dollars in subscription revenue by 2026, which fell slightly short of analysts’ estimates of just half a billion above that. Its stock value did not change significantly after the meeting.
More visibility in the near future
ServiceNow specializes in cloud-based software for automating business processes such as HR portals and customer service solutions. Although invisible to most people, the company provides many organisations with applications that improve daily workflow. The portals built using ServiceNow are usually not recognizable as such, making the company somewhat of a ‘silent force’.
That may change as ServiceNow is developing solutions for specific industries, such as telecom and the public sector. By doing so, they are going more in-depth, and thus, the platform touches even more on the various parts of an organization.
Proprietary LLM model StarCoder
ServiceNow is also working with HuggingFace on the LLM StarCoder, an open-governance platform featuring 15 billion parameters and trained with a trillion tokens of permissively licensed source code for more than 80 programming languages from BigCode’s The Stack v1.2 dataset.
While many software companies praise the revenue potential of AI tools, few have disclosed specific financial data. Amazon recently reported that AI was a billion-dollar contributor to its cloud division’s annual revenue. For IBM, the technology has accounted for a billion dollars in both tech and consulting business since mid-2013, the company said.
Also read: Knowledge23: Do people now know what ServiceNow is and does?