ServiceNow (NOW) Stock Falls Despite Earnings Beat and Raised Guidance

TLDR

• ServiceNow shares declined over 2% after hours despite fourth-quarter earnings that surpassed analyst expectations across revenue and profit metrics.
• The company guided 2026 subscription revenue to $15.53-$15.57 billion, beating the $15.21 billion Wall Street consensus estimate.
• ServiceNow expanded AI partnerships with Anthropic and OpenAI to integrate chatbot technology across its platform.
• A $5 billion share repurchase authorization was announced with an immediate $2 billion accelerated buyback planned.
• The company closed its biggest acquisition, purchasing cybersecurity firm Armis for $7.75 billion.

ServiceNow stock dropped more than 2% in extended trading Wednesday. The decline came despite the company posting better-than-expected fourth-quarter results.

The enterprise software company reported Q4 revenue of $3.57 billion. That represented a 20.5% increase from the prior year and beat the $3.53 billion analyst estimate.

Adjusted earnings reached 92 cents per share. Wall Street had projected 88 cents per share.

ServiceNow, Inc., NOW

The stock has faced headwinds recently. Shares tumbled 28% in 2025 and are down over 15% year-to-date.

Market observers cited stretched valuation metrics as a drag on the stock. Technical indicators and elevated options volatility also weighed on investor sentiment.

Strong Subscription Revenue Outlook Powered by AI

ServiceNow projects 2026 subscription revenue between $15.53 billion and $15.57 billion. The forecast topped the Street’s $15.21 billion expectation.

The company unveiled deeper integration plans with Anthropic and OpenAI. Claude models from Anthropic will be embedded more extensively into ServiceNow products.

Recent acquisitions are boosting growth projections. The Moveworks deal added roughly 100 basis points to the annual subscription revenue forecast.

ServiceNow also acquired security company Veza and sales platform Logik.ai. The acquisition spree aims to expand the company’s addressable market across industry workflows and security solutions.

First-quarter subscription revenue is expected between $3.65 billion and $3.66 billion. That exceeds the $3.57 billion analyst consensus.

Armis Acquisition and Buyback Program

The company completed its largest deal ever, acquiring Armis for $7.75 billion. The cybersecurity startup purchase marks a major bet on the security market.

ServiceNow’s board approved an additional $5 billion for share repurchases. Management plans to execute a $2 billion accelerated buyback immediately.

The aggressive M&A strategy has created pressure on the stock price. Analysts are recalibrating price targets given the current valuation multiples.

Despite the strong financial performance, investors remain cautious about the company’s premium trading levels. The combination of acquisition spending and high valuation has kept buyers on the sidelines.

ServiceNow’s remaining performance obligations increased during the quarter. Customer adoption of AI-powered products continues to accelerate across the platform.

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