ServiceNow Plunges 25% on AI Payoff Concerns — SkimNews
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- ServiceNow shares sank 25% on Thursday and headed for the company’s worst day ever after third-quarter results underwhelmed and revived concerns that new AI capabilities could upend traditional software business models.
- ServiceNow posted third-quarter revenue of $4.11 billion, up more than 20% and roughly in line with LSEG’s $4.10 billion analyst estimate, but adjusted earnings fell short at $1.00 per share versus $1.02 expected.
- ServiceNow slightly raised its full-year 2026 subscription revenue outlook to $15.78 billion-$15.79 billion, even as its shares fell 25%.
- ServiceNow reported a 65% jump in net new AI average contract value, even as the market continued to focus on the lack of an immediate payoff from its AI investments.
- Tyler Radke of Citi said investors were spooked by the lack of immediate payoff from ServiceNow’s newly formed forward-deployed engineering team, describing a longer waiting game and saying the inflection would become visible next year.
Why it matters: Investors delivered a punishing 25% verdict on ServiceNow’s Q3: adjusted EPS was $1 versus $1.02 expected, despite revenue roughly matching estimates, a slightly higher 2026 subscription outlook and 65% growth in net new AI ACV. Radke said the missing near-term payoff from forward-deployed AI engineering left investors waiting until next year for a visible inflection.
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