ServiceNow Shares Drop 24% Following Third-Quarter Earnings Miss
ServiceNow (NOW) experienced its worst trading day on record after reporting third-quarter results that failed to meet investor expectations. While revenue grew over 20% to $4.11 billion, meeting analyst estimates, adjusted earnings per share of $1.00 fell short of the projected $1.02. The decline was driven by renewed fears regarding 'AI disruption' and the potential for artificial intelligence to upend traditional software-as-a-service (SaaS) business models. Despite a 65% jump in net new AI average contract value, investors expressed concern over the delayed return on investment for the company's specialized engineering teams tasked with building enterprise AI solutions. Market analysts suggest that while ServiceNow has slightly raised its full-year 2026 subscription revenue outlook, the market is seeking more immediate evidence of financial payoffs from massive AI capital expenditures.
Topics: AI disruption earnings report revenue growth software industry stock price drop