ServiceNow Shares Fall About 18% After Hours on Earnings Miss

what happened

Shares of ServiceNow (NOW) fell 18% after hours on Wednesday. According to Stocktwits, the quarterly report came in below Wall Street forecasts, mainly because of the company's recent acquisition of cybersecurity firm Armis. Revenue still topped expectations, and management raised its artificial intelligence goals.

Adjusted earnings were $1.00 per share against analysts' expectations of $1.17, according to Fiscal AI. Revenue reached $4.106 billion, up 20.5% year over year, versus a forecast of $4.13 billion. Subscription revenue rose 21% to $3.988 billion.

CFO Gina Mastantuono said the slower near-term contracted revenue growth was partly due to some renewals closing early in the third quarter. The company is also temporarily providing extra deployment help on certain large AI deals, which is booked as professional services revenue and creates a drag of roughly 50 basis points on fourth-quarter subscription growth. The full-year 2026 AI product annual contract value target was raised to $1.7 billion from $1 billion.

why it matters

For markets, the earnings miss is not the only issue; the outlook matters too. Fourth-quarter current remaining performance obligations growth is guided at 18.5%, below a Bloomberg estimate of 19%. Investors worried about AI's impact on software companies will now watch for when AI products start to accelerate revenue, which CEO Bill McDermott said will come as deployments mature in 2027.

market impact

NOW shares: EPS miss and cautious guidance pressure the stock

• ▼NOW shares pressure down — earnings miss and weaker subscription growth outlook after hours

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