ServiceNow Shares Tumble Despite Robust Quarterly Performance

ServiceNow US81762P1021

In a surprising market reaction, ServiceNow's stock experienced a sharp decline of nearly 10% on January 29, 2026, even after the company posted fourth-quarter 2025 results that exceeded analyst forecasts. The sell-off, which drove the share price down to $116.73, appears to reflect broader investor concerns about artificial intelligence's disruptive potential in the SaaS sector, overshadowing the firm's strong operational metrics. Over the preceding twelve months, the equity has lost approximately 49% of its value.

The workflow software specialist reported quarterly revenue of $3.57 billion, surpassing the consensus estimate of $3.53 billion. This figure represents a year-over-year increase of 20.5%. Subscription sales, a critical revenue stream, grew by 21% to reach $3.47 billion.

Profitability metrics also came in strong. The company's non-GAAP earnings per share were $0.92, beating expectations of $0.88. On a GAAP basis, net income rose to $401 million, or $0.38 per diluted share, compared to $384 million in the same period the previous year.

Key Q4 2025 Financial Metrics:

• Total Revenue: $3.57 billion (+20.5% year-over-year)
• Subscription Revenue: $3.47 billion (+21% year-over-year)
• Non-GAAP EPS: $0.92 (+26% year-over-year)
• Current Remaining Performance Obligations (cRPO): $12.85 billion (+25% GAAP / +21% constant currency)
• Total Remaining Performance Obligations: $28.2 billion (+26.5% GAAP / +22.5% constant currency)
• Non-GAAP Operating Margin: 31% (+1.5 percentage points)

The cRPO metric, a key forward-looking indicator for future revenue, showed robust growth of 25%, signaling sustained customer demand.

Capital Return and Strategic Moves

Alongside its earnings, ServiceNow's board authorized a new $5 billion share repurchase program. The company plans to immediately execute an accelerated buyback of $2 billion. This follows the repurchase of approximately 3.6 million shares for $597 million in the fourth quarter.

The acquisition of Moveworks is projected to contribute 100 basis points to subscription revenue growth in both the first quarter and the full year 2026.

AI Product Momentum and Large Deals

The company highlighted significant traction for its AI-powered offerings. The annual contract value (ACV) for its Now Assist AI platform doubled year-over-year in Q4, surpassing a total of $600 million.

ServiceNow also closed 244 deals with net new annual contract value exceeding $1 million each, a rise of nearly 40% from the prior year. Its customer base generating over $5 million in ACV expanded by roughly 20% to 603 clients.

Forward-Looking Guidance

Management provided an outlook for the coming year, anticipating subscription revenue between $3.65 billion and $3.66 billion for the first quarter of 2026. For the full fiscal year 2026, the company forecasts subscription revenue in the range of $15.53 billion to $15.57 billion, which translates to constant-currency growth of 19.5% to 20%.

The next quarterly report is scheduled for release on April 22, 2026. Whether the equity can recover ground with convincing growth figures and demonstrated progress in its AI business will largely depend on evolving market confidence in traditional SaaS business models amid a shifting technological landscape.

@ boerse-global.de | US81762P1021 SERVICENOW