ServiceNow (NOW) Stock Drops Despite Revenue Beat and Strong AI Forecast

TLDR

• ServiceNow stock dropped over 2% after earnings despite beating Q4 expectations with revenue of $3.57 billion and 92 cents per share profit.
• The company forecast 2026 subscription revenue of $15.53-$15.57 billion, above Wall Street’s $15.21 billion estimate.
• ServiceNow announced partnerships with Anthropic and OpenAI to integrate AI chatbots deeper into its platform products.
• The board authorized $5 billion for share buybacks with a $2 billion accelerated repurchase planned immediately.
• The company completed its largest acquisition ever, buying cybersecurity startup Armis for $7.75 billion.

ServiceNow shares fell more than 2% in after-hours trading Wednesday. The drop came even after the company posted fourth-quarter results that topped Wall Street expectations.

#ServiceNow$NOW, Q4-25.

Results:
Adj. EPS: $0.92
Revenue: $3.5B
Net Income: $401M
ServiceNow significantly beat Q4 expectations, accelerated net new business, and issued exceptional guidance for 2026. pic.twitter.com/5jHJwnJcv7

— EarningsTime (@Earnings_Time) January 28, 2026

The company reported Q4 revenue of $3.57 billion, up 20.5% from a year ago. Analysts had expected $3.53 billion.

ServiceNow’s adjusted earnings hit 92 cents per share. That beat the consensus estimate of 88 cents per share.

ServiceNow, Inc., NOW

The stock has struggled recently. Shares lost 28% in 2025 and are down 15.39% year-to-date.

Analysts pointed to the company’s stretched valuation as a reason for the weakness. Weak technical signals and high options-market volatility also tempered investor enthusiasm.

AI Partnerships Drive Revenue Outlook

The company forecast 2026 subscription revenue between $15.53 billion and $15.57 billion. Wall Street had expected $15.21 billion.

ServiceNow announced expanded partnerships with both Anthropic and OpenAI. The company will integrate Claude models more deeply into its products under the Anthropic deal.

The Moveworks acquisition contributed about 100 basis points to the annual subscription revenue growth forecast. ServiceNow also bought security firm Veza and sales automation platform Logik.ai.

“With investments in industry workflows and customer relationship management, and security and risk, ServiceNow is growing both organically and by acquisition to expand its market opportunity,” said Rebecca Wettemann, CEO of Valoir.

Massive Share Buyback and Armis Deal

ServiceNow’s board authorized an additional $5 billion for share repurchases. The company plans an immediate $2 billion accelerated share buyback.

The company agreed to buy cybersecurity startup Armis for $7.75 billion. This marks ServiceNow’s largest acquisition ever.

The heavy spending on mergers and acquisitions has pressured the stock. Analysts are reassessing price targets given the company’s rich valuation.

For the first quarter, ServiceNow expects subscription revenue of $3.65 billion to $3.66 billion. Analysts had estimated $3.57 billion.

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