• ServiceNow shares are up sharply after the cloud giant posted stronger-than-expected results.
  • CEO Bill McDermott said the cloud platform is playing a critical role for businesses who were forced to pivot sharply to remote work due to the COVID-19 crisis.
  • "It's very interesting to see that the customer relationships without the heavy travel and the plane rides can be just as effective in a virtual world," he told Business Insider.
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ServiceNow just posted a blowout quarter that underscored the potential growth cloud software makers could see in the era of remote work.

ServiceNow's stock rallied 7% on Thursday after reporting results that beat Wall Street estimates, affirming the view that cloud companies are poised to do well despite the disruption caused by COVID-19.

In fact, CEO Bill McDermott said the cloud platform, which offers tools to automate a business' workflow and operations, became even more relevant to businesses forced to make the sudden pivot to remote work.

"The big surprise, if there was any, was that this business could seamlessly serve our customers at an even higher level of productivity than we did before," he told Business Insider.

McDermott said that, despite the jarring transition to remote work, many businesses have actually managed to operate productively and with great success.

"It's very interesting to see that the customer relationships without the heavy travel and the plane rides can be just as effective in a virtual world," he said.

ServiceNow posted a first-quarter profit of $48.2 million, or 24 cents a share, compared with a loss of $1.6 million, on a penny a share. Revenue jumped 33% to $1.05 billion. Adjusted profit was $1.05 a share.

Analysts were expecting a profit of 96 cents a share on revenue of $1.02 billion.

The company said it closed 37 transactions worth more than $1 million in annual contracts in the quarter, up 48% from the year-ago period.

UBS analyst Jennifer Swanson Lowe told clients in a note that the demand ServiceNow saw showed "that businesses will still invest in technology projects seen as core to their long-term success"

Cloud software makers, such as ServiceNow and Salesforce, had been expected to fare better because they offer web-based services that businesses could access anywhere, including from home, unlike rivals with products that need to be installed and maintained in physical offices.

"Despite investor concerns around a slowdown in March due to COVID-19 and a deeper cut to guidance, ServiceNow delivered," Macquarie analyst Sarah Hindlian-Bowler told clients in a note.

Morgan Stanley analyst Keith Wise also said in a note that ServiceNow "is proving more resilient than we anticipated, highlighting the power and flexibility of the ServiceNow platform."

Got a tip about ServiceNow or another tech company? Contact this reporter via email at bpimentel@businessinsider.com, message him on Twitter @benpimentel or send him a secure message through Signal at (510) 731-8429. You can also contact Business Insider securely via SecureDrop.

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