ServiceNow shares plunge 32% despite stronger third-quarter growth and raised guidance

ServiceNow results outpace concerns about slower growth

ServiceNow reported third-quarter revenue growth of 20.5% to $4.11 billion and raised its full-year subscription revenue and cash-flow margin guidance. Despite those results, the company’s shares plunged 32% after the company issued a slower-than-expected forecast for fourth-quarter current remaining performance obligations. Investors were also concerned that organic growth was slowing and that artificial-intelligence contracts might not restore earlier growth rates or support the company’s valuation.

The stock sell-off followed renewed investor concern that ServiceNow’s business could be disrupted by artificial intelligence. Earlier coverage characterized the decline as 27% and noted that the stock was down 31% for the year, while the more recent report put the drop at 32%; the reviewed sources do not reconcile the difference.

Current RPO forecast drove the sell-off

The fourth-quarter current remaining performance obligation forecast was a key focus of investor reaction and was described as slower than expected. The prior-day report also identified the outlook for current RPO as less robust than investors had anticipated, helping explain why the stock fell despite revenue growth above 20% and higher guidance.

ServiceNow’s third-quarter overall revenue grew 20.5% to $4.11 billion. Subscription revenue rose 21%, or 20.5% on a constant-currency basis, to $3.99 billion, while professional services revenue increased 10% to $118 million. Adjusted earnings per share rose 5% to $1, compared with an analyst estimate of $1.02 on $4.1 billion of revenue, as compiled by LSEG.

ServiceNow raised its full-year outlook

ServiceNow raised full-year subscription revenue guidance to a range of $15.78 billion to $15.79 billion, representing growth of 22.5%, or 21% on a constant-currency basis. The prior guidance was $15.76 billion to $15.78 billion. The latest report confirmed that the company also raised its full-year cash-flow margin guidance.

For the fourth quarter, the company forecast subscription revenue growth of 22.5% to 23%, or 21.5% on a constant-currency basis, with subscription revenue of $4.245 billion to $4.255 billion. ServiceNow expected current RPO to increase 18.5%.

AI metrics expanded alongside partnership work

The prior-day report said ServiceNow’s AI annual contract value increased 65% year over year, and the company raised its year-end target to $1.7 billion from $1.5 billion. Agentic AI consumption rose 13 times year over year, while the company’s Superintelligence Control Tower recorded a 500% month-to-month increase in activated AI actions.

ServiceNow also announced an expanded partnership with OpenAI. The report said OpenAI would incorporate more of its models and AI agents into ServiceNow products and connect ServiceNow workflows with ChatGPT, with plans to develop security and risk solutions powered by OpenAI cyber models. These disclosures concern announced activity and company-reported metrics; the reviewed material does not establish realized revenue from the expanded relationship.

Follow-up signals

The next verifiable focus is ServiceNow’s delivery against its fourth-quarter current RPO forecast and its ability to sustain the newly raised full-year subscription revenue and cash-flow margin guidance. Whether AI annual contract value reaches the raised $1.7 billion target would provide a further test of the company’s growth outlook.