ServiceNow (NYSE:NOW) announced first-quarter earnings with a significant increase in adjusted earnings per share (EPS) to $3.41, up from $2.37 a year earlier, beating the consensus of $3.16. Revenue also outpaced expectations, amounting to $2.60 billion compared to an anticipated $2.58 billion.

The company’s subscription revenue aligned with expectations at $2.52 billion. However, ServiceNow provided a softer forecast for the second quarter, expecting subscription revenue between $2.525 billion and $2.53 billion, slightly below the forecast of $2.54 billion. This guidance adjustment led to a 4% drop in ServiceNow’s stock in pre-market today.

For the full year, ServiceNow tightened its subscription revenue outlook to between $10.56 billion and $10.58 billion, marginally under the consensus estimate of $10.59 billion.

Notably, the company reported an adjusted gross margin of 83%, surpassing the expected 82.6%. The subscription gross margin was particularly strong at 86%, well above the forecasted 84.7%.

ServiceNow also highlighted a significant rise in free cash flow, which reached $1.23 billion, surpassing estimates of $961.1 million.

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