ServiceNow's Headcount Puzzle: Costa Rica Reports, a Securities Probe, and the 18.5% Contract Hurdle

ServiceNow is shrinking its workforce in some places while hunting for AI talent in others — and the mixed signals are landing just as the software maker's contract pipeline comes under scrutiny from both investors and a plaintiffs' law firm.

A media report published yesterday points to possible layoffs in Costa Rica as part of a global restructuring, according to Semanario Universidad, which cited a former employee. The company had not confirmed the Costa Rica cuts as of the report's publication, leaving both the scale and the framing as part of a wider restructuring provisional. The report follows a separate round of cuts disclosed yesterday affecting the UK, the US and India — a number ServiceNow did not quantify, attributing the moves to structural changes and a parallel search for AI-oriented skills.

A Securities Firm Joins the Fray

Pomerantz said yesterday it is investigating possible securities fraud or other unlawful practices by ServiceNow and certain executives, acting on behalf of investors and pointing to the company's latest earnings release. The probe adds a legal dimension to a story that had been mostly about growth.

The numbers behind the disappointment: on October 28, ServiceNow reported third-quarter 2026 adjusted earnings of $1.00 per share, against a consensus of $1.02. Total revenue came in at $4.106 billion, of which $3.988 billion was subscription revenue.

What really rattled the market was the outlook for short-term remaining performance obligations. For the coming quarter, ServiceNow guided to 18.5% growth in that metric — below expectations. Management pointed to early contract renewals in the third quarter that pulled deals forward from the fourth.

That explanation describes a timing shift, and it holds up only if the pulled-forward renewals genuinely account for the softer growth guide. For investors, the durability of that reading rests on how the contract book develops from here.

The Guidance Bar Keeps Rising

On the subscription side, ServiceNow raised its full-year revenue forecast by $15 million to $15.785 billion. The higher target sets a demanding benchmark against which the restructuring will be judged: the personnel changes earn credibility only if the company protects delivery on customer projects and meets its own raised expectations.

The simultaneous hiring of specialized staff makes the exercise harder than a simple downsizing. ServiceNow has to reweight skills while keeping operations intact — a test better measured by the quality of subsequent business performance than by the announcement itself.

Partnerships Put Some Substance Behind the AI Pitch

Two partnership announcements on Wednesday give the restructuring a business anchor. ServiceNow and LTM unveiled an expanded alliance to build out agentic AI and joint sales efforts; LTM said it already runs 1,500 ServiceNow AI Agents in its own operations. That concrete deployment is the strongest operational evidence for the AI strategy so far, and it is where the workforce shift makes sense: AI skills gain value when they enable such applications and help spread them.

Separately on Wednesday, ServiceNow and the National Basketball Association extended their collaboration. The NBA plans to use ServiceNow EmployeeWorks for onboarding new staff and for workplace-service requests — another clearly defined use case whose value will show in day-to-day adoption.

The Headcount Question Won't Go Away

The Costa Rica report lands on top of an overhaul already underway. By July 2026, ServiceNow had cut hundreds of positions in the US, citing efficiency gains and investment in AI skills. The chief executive had also said he wanted to end the year with the same headcount as at the start — a goal that puts the focus on whether cuts in some areas are offset by hiring elsewhere.

Efficiency gains would speak in the company's favor, provided the investment in new capabilities strengthens the business at the same time. Until the scope and classification of the Costa Rica measures are clear, the reported cuts sharpen that question rather than settle it. Growth outlook and execution on the restructuring will together determine how convincingly ServiceNow can document its next round of progress.