ServiceNow reported better-than-expected financial results for the fourth quarter, but investors were disappointed by its outlook, sending the company’s stock lower in after-hours trading.
The enterprise software company posted earnings of 92 cents per share, beating Wall Street’s estimate of 88 cents. Revenue rose 20% compared to last year, reaching $3.57 billion, slightly ahead of analyst expectations.
ServiceNow also reported net income of $401 million for the quarter, up from $384 million a year earlier.
Most of ServiceNow’s revenue comes from subscriptions, and that part of the business continued to grow strongly. Subscription revenue increased 21% to $3.47 billion, topping forecasts and showing continued demand for the company’s workflow and automation software.
Despite these strong results, investors focused on the company’s guidance for the current quarter. ServiceNow expects subscription revenue of between $3.65 billion and $3.66 billion, which came in just below what analysts were hoping for. This cautious outlook weighed on sentiment, and the stock fell more than 4% in extended trading.
ServiceNow Chairman and Chief Executive Bill McDermott said,
“We had substantial growth in licensed users, workflows, and transactions on our platform. With our consistent Rule of 55+ profile, there is no AI company in the enterprise better positioned for sustainable profitable revenue growth than ServiceNow.”
The full-year forecast was more positive. For fiscal 2026, ServiceNow expects subscription revenue between $15.53 billion and $15.57 billion, roughly in line with market expectations.
The company also said its recent acquisition of AI automation firm MoveWorks should add to revenue growth in both the current quarter and the full year.
ServiceNow has been busy on the acquisition front. Alongside the MoveWorks deal, it recently announced plans to buy cybersecurity company Armis and earlier acquired identity security firm Veza. These moves are aimed at expanding its AI security offerings.
The company ended the quarter with $12.85 billion in future contracted revenue, up 25% from last year, and its board approved an additional $5 billion for share buybacks.
In the end, while ServiceNow delivered strong quarterly results, the market reaction reflected concerns about near-term growth, bringing the focus back to the opening theme: solid performance, but cautious guidance that left investors wanting more.
