ServiceNow CEO: Brexit, macro headwinds aren't stopping businesses from spending on digitization

Key Points
  • Businesses in Europe "aren't focusing on macroeconomics. They aren't focusing on Brexit," ServiceNow CEO John Donahoe tells CNBC.
  • "Cross-functional workflow is the wave of the future. That's what digitization enables," he says in a "Mad Money" interview.
  • The outgoing CEO says slowing global economic growth has not stopped businesses from investing in the digital transformation.
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ServiceNow CEO: Brexit, macro headwinds aren't stopping digital spending

ServiceNow CEO John Donahoe told CNBC on Wednesday that the company is not seeing a decline in customer interest in digitization.

The outgoing chief, who is departing the software-as-a-service firm to become Nike CEO in January, said he completed a business trip in Europe where he discovered that enterprises aren't letting macroeconomic headwinds get in the way of investing in automating their operations.

"They aren't focusing on macroeconomics. They aren't focusing on Brexit," he said in an interview with "Mad Money's" Jim Cramer. "They're focusing on how can they deliver better experiences to their customers, better experiences for their employees and drive real productivity growth and service now is one of their core platforms that enable all three."

ServiceNow, which helps businesses automate their IT processes and office workflows, on Wednesday reported earnings of 99 cents per share on $885.8 million in revenue. Analysts had expected earnings of 88 cents on $885 million in revenue, according to Refinitiv consensus estimates.

"Cross-functional workflow is the wave of the future. That's what digitization enables," Donahoe said.

Cloud stocks have run into rough trading in the past three months after running a hot streak in the first half of 2019. The cohort has usually served as a safe sector to invest when markets are troubled by macro uncertainty.

ServiceNow's stock price has fallen more than $80 from its $302.31 closing high in July. The stock is still up more than 23% year to date.

Mike Wilson, chief U.S. equity strategist and chief investment officer at Morgan Stanley, has warned that software companies are not immune from declining corporate spending. Workday CEO Aneel Bhusri said at his software company's analyst day that management has seen some order delays.

Later in the interview, Donahoe reiterated that the companies he has spoken are still committed to the digital transformation. ServiceNow offers cloud services across information technology, customer service, human resources and security operations.

"The macroeconomics may go up and down over time. That's just a fact of life over time," Donahoe said. "What we're focused on and the real opportunity is technology is being used ... [to] drive unparalleled levels of productivity and efficiency. And as long as there is a return on investment, companies will keep making those investments and that's been the focus of Service Now."

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ServiceNow CEO: Brexit, macro headwinds aren't stopping digital spending

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