ServiceNow Slides 18% After Hours as In-Line Q4 Subscription Outlook Fails to Calm AI Fears
NOW sits 52% above its 52-week low of $81.24 on elevated volume (1.9× avg).
Summary
ServiceNow beat on the top line — revenue of $4.11 billion, up 20.5%, and subscription revenue of $3.988 billion, up 21% — but adjusted EPS of $1.00 came in below the $1.02 consensus. The bigger problem is guidance: fourth-quarter subscription revenue growth of 22% to 23% is only in line with expectations, and that was enough to knock shares down 18% in late trading to $122.99 after a 3% decline in the regular session to $150.13. The selloff is about AI anxiety, not the quarter itself — investors wanted an upside guide to justify the AI premium. Management pushed back with numbers: total remaining performance obligations of $29.7 billion (up 22%), current RPO of $13.65 billion (up 20.5%), and a raised 2026 AI annual contract value target of $1.7 billion, up 70% from the start of the year. CEO Bill McDermott called it "an inflection point," but the market is treating the in-line guide as a ceiling. Note the Q3 10-Q also showed operating income down 33% to $385 million on acquisition amortization and cloud costs, which compounds the margin worry behind the drop.
At the time of this announcement, NOW was trading at $123.70 on NYSE in the Technology sector, with a market capitalization of approximately $155.2B. The 52-week trading range was $81.24 to $192.97. This news item was assessed with negative market sentiment and an importance score of 7 out of 10. Source: Dow Jones Newswires.