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ServiceNow (NYSE:NOW) shares rose more than 4% on Wednesday after the company said at its investor day it would launch its first-ever share buyback program to the tune of $1.5B.
“Given the current macro environment and our strong cash flow generation, we believe that using a portion of our free cash flow to manage dilution is a strategic use of capital,” ServiceNow CFO Gina Mastantuono said in a statement. “This program reflects our conviction in the trajectory of our business and our commitment to driving exceptional shareholder value.”
Baird analyst Rob Oliver expressed optimism after attending the investor event, citing a hike to operating margin guidance in 2024 and the company’s prospects in artificial intelligence.
“Although Generative AI remains in the early stages, management is confident this will be a positive catalyst across their platform with the opportunity to see a pricing uplift, driven by increased value,” Oliver wrote in an investor note.
Last month, ServiceNow (NOW) reported stronger-than-expected quarterly results and raised its full-year guidance for subscription revenues.
Separately on Wednesday, ServiceNow (NOW) said it would invest $1B in its venture arm by 2026 to back AI and automation startups.
