Cloud automation software company ServiceNow Inc. delivered strong revenue growth as it beat expectations with its first quarter financial results today, but its stock fell after-hours when it said it added fewer big contracts than in previous quarters.

The company reported earnings before certain costs such as stock compensation of $1.52 per share on revenue of $1.36 billion, up 30% from a year ago. That was better than expected, with Wall Street modeling earnings of just $1.34 per share on revenue of $1.34 billion.

ServiceNow Chief Executive Bill McDermott (pictured) told analysts that the company had doubled the features and functionality of its platform over the previous 18 months. “Our outstanding start to 2021 is rooted in our relentless focus to make the world of work, work better for people,” he said.

ServiceNow sells software that’s used by enterprise’s information technology departments to track and manage the services they provide. Its platform also enables company employees to access administrative and workflow tools. It has also expanded from that core business to provide human resources, customer service management and IT security tools.

The company reported strong growth with its subscription revenue, which rose by 30% compared to the year ago quarter, to $1.29 billion. That just beat Wall Street’s guidance of $1.28 billion in subscription revenue.

However, investors may have been disappointed to learn that ServiceNow added just 53 new customers with a net annual contract value of more than $1 million in the quarter. In the previous quarter, the company added 89 contracts with big-spending customers, and that might explain why its stock fell more than 6% in the after-hours trading session.

In total, the company now has more than 1,146 customers with an annual contract value of more than $1 million, up 23% from a year ago.

Analyst Holger Mueller of Constellation Research Inc. said that despite the investor’s reaction, ServiceNow is still growing strong and is on track to pass the $5 billion revenue mark for the first time this year.

“The pandemic and the uncertainty it has caused over how to re-open businesses and operate them has helped ServiceNow,” Mueller said. “It has become one of the most preferred platforms for companies to model business best practices. Now, ServiceNow has to show it can do just as well once the economy re-opens.”

In March, ServiceNow announced a major new release of its Now Platform, the Quebec release, which added new low-code tools that can be used by workers with limited coding ability to build software applications.

That month, the company also announced a partnership with the experience management software provider Qualtrics International Inc. to bring more sentiment data from customers into its customer and information technology workflows. In April, ServiceNow made a key acquisition with robotic process automation startup Intellibot.

Photo: World Economic Forum/Flickr