ServiceNow Shares Drop Following Disappointing Fourth-Quarter Backlog Forecast
ServiceNow (NOW) shares experienced a significant decline following its third-quarter financial results, primarily driven by a softer-than-expected forecast for fourth-quarter current backlog growth. Although the company reported strong year-over-year revenue growth of 20.5% and highlighted substantial momentum in AI product adoption, investors reacted negatively to guidance suggesting that backlog expansion would be slower than previously anticipated. Despite the sell-off, management defended the metrics, noting that certain subscription backlog growth is excluded from current remaining performance obligations (cRPO). With a high trailing P/E ratio compared to peers like Salesforce and Workday, the market is closely monitoring whether ServiceNow can maintain its premium valuation through sustained AI-driven subscription revenue and stabilized long-term growth.
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Topics: artificial intelligence backlog guidance earnings miss revenue growth stock price volatility