ServiceNow shares fell 24% on Thursday, heading for their worst day ever, after third-quarter results revived fears that AI could disrupt traditional software business models. Revenue rose more than 20% to $4.11 billion, roughly in line with the $4.10 billion estimate, while adjusted EPS of $1.00 fell short of the $1.02 forecast. The company slightly lifted its 2026 subscription revenue outlook to between $15.78 billion and $15.79 billion, and net new AI average contract value jumped 65%. Citi's Tyler Radke said investors wanted quicker payoffs from the newly formed forward-deployed engineering team and that the inflection may not come until next year.
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softwareartificial intelligenceearningsServiceNowMSFT
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Related tickers and likely impact
MSFT
▼ Likely negativeMicrosoft
Relevance: low
| Market | US stocks |
|---|---|
| Sector | Information Technology |
| Industry | Systems Software |
| Market cap | $3.9T |
| Close on 10/28/2026 | 530.83 |
| Change that session | -0.09% |
Impact is scored by AI from the headline and may be wrong. It is not investment advice.
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ServiceNow shares fell 19% in morning trading after Q3 revenue of $4.11 billion beat estimates, but Q4 revenue guidance of $4.25–4.26 billion came in below the $4.36 billion expected and contracted revenue growth (cRPO) is guided to 18.5% from 21%. The company raised its 2026 AI annual contract value target to $1.7 billion from $1.5 billion and its full-year free cash flow margin target to 36%, though adjusted EPS of $1.00 missed the $1.02 expected. Peers fell as well, with Salesforce down 6%, Workday down 5% and Adobe down 3%, as investors applied the contract slowdown to enterprise software demand broadly. The iShares software ETF (IGV) fell 5% while the SPDR S&P 500 ETF (SPY) was down 0.5%, showing the selling was concentrated in software. Year to date, ServiceNow is down 21%, Salesforce 13%, Workday 10% and Adobe 31%.
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ServiceNow trades at $149.85, below the $157.12 average analyst target that implies 4.9% upside, while Bernstein's $266 target implies 77.5% upside. Q3 revenue of $4.11B grew 20.5% and beat estimates, but non-GAAP EPS of $1.00 missed the $1.02 consensus and GAAP operating margin fell to 9.5% from 17%. Management guided Q4 cRPO growth to 18.5%, and shares fell 3.18% in the regular session. Bernstein's target assumes AI revenue is already being recognized, while management raised its 2026 AI net new ACV target to $1.7 billion plus and expects Q4 subscription growth of 21.5% in constant currency. The stock is down 20.11% over one year.
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ServiceNow (NOW) fell 19.6% in premarket trading to about $121 after reporting adjusted EPS of $1.00, below the $1.02 consensus, even though revenue of $4.11 billion, up 20.5%, beat the $4.095 billion consensus. The bigger concern, according to the article, is fourth-quarter cRPO growth guided to 18.5%, below the roughly 19.8% analysts expected. Interest expense rose to $81 million from $6 million a year earlier because of borrowing for the Armis deal, which held EPS growth to 5%. After the stock rose about 43% in three months, its forward P/E, which went from 20x in April to 33x at Wednesday's close, would fall to about 27x in premarket trading, below its 53x five-year average. The article says the late-January fourth-quarter report will be the next test of the company's outlook.
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ServiceNow (NOW) shares fell 19% in premarket trading on October 29, 2026, after third-quarter results on October 28 and an expanded partnership with OpenAI. MarketWatch reported the drop was on track to be the largest on record. Revenue rose 20.5% to $4.11 billion, $20 million above consensus, while adjusted EPS of $1 came in below the $1.02 analyst consensus. The main pressure came from fourth-quarter revenue guidance of $4.25–$4.26 billion, below the $4.36 billion consensus. Net new AI annual contract value grew 65%, and the full-year AI ACV target was raised to $1.7 billion. The author does not see ServiceNow as an AI loser, but notes the OpenAI partnership is not exclusive and current RPO is forecast to grow only 18.5% in Q4.
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