(Bloomberg) -- ServiceNow Inc. provided a revenue outlook for the current quarter that topped Wall Street estimates while giving a conservative projection for future business growth.

Subscription sales, which account for the bulk of the company’s revenue, will increase about 24% to $2.51 billion in the period ending in March, ServiceNow said Wednesday in a statement. Analysts, on average, estimated $2.46 billion. For the full year, subscription revenue will grow about 22%, slightly above the average projection. 

ServiceNow makes software applications that help companies organize and automate their personnel and information technology operations. Breaking into adjacent markets beyond its traditional IT services, such as resource planning and customer tracking, has helped maintain high sales growth, Chief Executive Officer Bill McDermott said in an interview.

Current remaining performance obligations, a measure of contracted sales, will increase about 20% from a year ago, ServiceNow said. That was in line with analysts’ estimates. Still, some investors may interpret that forecast as a bit conservative given ServiceNow’s history of beating expectations in the metric, wrote Anurag Rana, a senior analyst at Bloomberg Intelligence.

The company said its deals with public sector clients include a higher mix of 12-month contracts that “are not fully represented as cRPO growth” in the first two quarters of the year, but “we expect that these contracts will renew” in the third quarter. 

Shares slipped about 1% in extended trading after closing at $763.42 in New York. The stock has gained about 8% this month after an 82% jump last year amid a rally in tech and other high-growth companies. 

The share move may also reflect the optimism from investors that was already baked into ServiceNow’s share price before the earnings, wrote Kirk Materne, an analyst at Evercore ISI.

Late last year, the Santa Clara, California-based company released a higher priced tier for its platform, which includes artificial intelligence capabilities that generate text, images or data in response to a user’s command. AI demand provided “new fuel” for ServiceNow’s performance, McDermott said in the statement.

In the fourth quarter, ServiceNow reported subscription revenue increased 27% to $2.37 billion, compared with the average estimate of $2.32 billion. Profit, excluding some items, was $3.11 a share. Analysts, on average, projected $2.79 a share.

Current remaining performance obligations in the fourth quarter jumped 24%, beating analysts’ estimates of about 21%. ServiceNow said it had 1,897 customers with more than $1 million in annual contract value at the end of the quarter, an increase of 15% over the period a year earlier. 

ServiceNow was one of the largest tech companies to avoid significant job cuts during a tumultuous 2023. McDermott again committed to avoid layoffs in 2024. “I’m not cautious, because we believe so much in the growth,” he said of the company’s current pace of hiring, adding that roles are being added in engineering, sales and customer service.

(Updates with comments from analyst in the fourth paragraph.)

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