ServiceNow (NYSE:NOW) stock plunged over 12% intra-day today despite the IT management software firm delivering better-than-expected fourth-quarter earnings and revenue. The sharp decline came as investors reacted to weaker-than-anticipated guidance for subscription revenue in the coming quarters.
The company reported adjusted earnings per share of $3.67 for the fourth quarter, slightly surpassing analysts’ expectations of $3.65. Revenue for the period reached $2.96 billion, in line with consensus forecasts. However, the earnings beat was marginal, marking the narrowest constant currency outperformance since the pandemic at just 0.4% above company guidance.
ServiceNow’s subscription business remained a key growth driver, with revenue from subscriptions climbing 21% year-over-year to $2.87 billion. The company also saw strong momentum in its AI-driven automation tools, which help customers streamline operations.
However, concerns mounted over its outlook. Remaining performance obligations—a crucial measure of future revenue commitments—stood at $10.27 billion at the end of the quarter, reflecting a 19% annual increase. Yet, ServiceNow’s first-quarter subscription revenue guidance of $2.995 billion to $3.00 billion fell short of the $3.04 billion analysts had projected.
For full-year 2025, the company forecasts subscription revenue between $12.64 billion and $12.68 billion, missing the Wall Street consensus of $12.83 billion. The weaker-than-expected projections overshadowed its strong Q4 performance, prompting investors to reassess the stock’s near-term growth potential.