ServiceNow Reports Strong Q4 Results but Lowers Growth Outlook

ServiceNow posted solid fourth-quarter earnings, reporting a 21% increase in revenue to $2.96 billion, though this came in slightly below analyst expectations. The cloud-based software company also reported a profit of $384 million ($1.83 per share), up from $295 million ($1.43 per share) a year earlier. Adjusted earnings stood at $3.67 per share, slightly beating FactSet’s forecast of $3.65 per share.

Despite the strong quarterly performance, ServiceNow provided a more cautious outlook for the year ahead, projecting subscription revenue growth of 18.5% to 19%, reaching between $12.64 billion and $12.68 billion. This fell short of analyst estimates of $12.86 billion. For Q1, the company expects subscription revenue of around $3 billion, reflecting a growth rate of up to 19%, slightly below the market’s expectations of $3.03 billion.

AI-Driven Expansion and Strategic Partnerships

CEO Bill McDermott emphasized that ServiceNow is still in the early stages of leveraging AI to transform enterprise technology. “AI is fueling a top-to-bottom reordering of the enterprise technology landscape,” he said, adding that customers are increasingly using ServiceNow’s platform to enhance productivity and drive broader business transformation. “We are still in the early days of a massive opportunity.”

The company also reported a surge in AI-driven deals, with a 150% quarter-over-quarter increase in sales for its Now Assist service desk solution. Additionally, ServiceNow closed 19 large deals worth over $5 million in net new annual contract value (ACV) during the quarter.

To further strengthen its platform, ServiceNow introduced Workflow Data Fabric and RaptorDB, enhancing data integration and management capabilities. The company also expanded strategic partnerships with AWS, Google Cloud, Visa, and Microsoft, aiming to accelerate AI-driven business transformations.

Share Buyback Plan And Market Reaction

Meanwhile, the company announced that its board authorized an additional $3 billion share repurchase program, signaling confidence in its long-term growth potential.

Despite ServiceNow’s continued expansion and optimism about AI-driven enterprise transformation, its weaker-than-expected guidance weighed on investor sentiment. The market had already priced in its strong revenue growth, and concerns over its slower projected growth further pressured the stock. Additionally, the impressive performance of China’s AI firm DeepSeek cast a shadow over AI-related stocks, contributing to ServiceNow’s 9.32% premarket decline.