ServiceNow, an enterprise software company valued at $136 billion, reported third-quarter subscription revenues of $3.3 billion, a 20% year-over-year increase. The company's remaining performance obligations climbed to approximately $24.3 billion, representing 23% growth. Adjusted net income rose to $4.82 per share.
During the quarter, ServiceNow closed 103 deals worth more than $1 million in net new annual contract value, including three exceeding $20 million. The number of customers generating over $50 million in ACV grew by more than 20% year-over-year.
Management stated that AI solutions are on track to achieve $500 million in ACV in 2025. Now Assist transactions included 12 above $1 million, with one exceeding $10 million. Transportation and logistics led industry growth with over 90% year-over-year increase in net new ACV, followed by retail, hospitality, and education sectors, all growing more than 50%.
ServiceNow ended the quarter with $9.7 billion in cash and investments. The company repurchased around 644,000 shares during Q3, nearly 70% more than the prior quarter. A five-for-one stock split was approved by the board.
The company will report Q4 results on January 28, anticipating subscription sales of $3.42 billion to $3.43 billion and an operating margin of 30%. Management noted potential government shutdown-related timing concerns may affect U.S. federal deal closings.
Wall Street analysts give NOW stock a "Strong Buy" consensus rating. Out of 43 analysts covering the stock, 34 recommend "Strong Buy," three suggest "Moderate Buy," five recommend "Hold," and one has a "Strong Sell." The mean target price is $219.69, implying 72% potential upside from current levels.
Arista Networks, valued at $164.5 billion, generated $2.31 billion in third-quarter revenue, representing 28% year-over-year growth. Software and services accounted for 18.7% of total sales. Adjusted gross margin reached 65.2%, and diluted EPS rose 25% year-over-year to $0.75.
Deferred revenue increased to $4.7 billion. The Americas generated roughly 80% of revenue, with international markets accounting for around 20%. Management stated that AI-driven networking demand is unlike anything previously seen.
Arista's EtherLink portfolio is driving demand for networks designed to maximize AI accelerator efficiency. The company ended the quarter with $10.1 billion in cash, cash equivalents, and investments. Management reaffirmed its target of at least $1.5 billion in AI-related revenue by 2025.
Fiscal 2026 goals include $2.75 billion in AI data center revenue as part of a larger $10.65 billion total revenue target. Management expects the total addressable market for networking to exceed $100 billion in coming years.
Wall Street rates ANET stock as a consensus "Strong Buy." Out of 24 analysts covering shares, 17 have a "Strong Buy" recommendation, two rate Arista as a "Moderate Buy," and five suggest a "Hold" rating. The average price target of $167.22 implies 29% potential upside from current levels.