ServiceNow reported third-quarter revenue of $4.11 billion, which was in line with analyst expectations of $4.10 billion, but adjusted earnings of $1.00 per share fell short of the $1.02 forecast.
Despite a 20% year-over-year revenue growth and a slight increase in the full-year 2026 subscription revenue outlook to between $15.78 billion and $15.79 billion, investor sentiment soured due to ongoing fears of a 'SaaSpocalypse'—the potential disruption of traditional software models by AI advancements.
Citi analyst Tyler Radke noted that the lack of immediate results from ServiceNow's investments in AI solutions contributed to the stock's decline, suggesting that the market was expecting quicker returns.
The company's net new AI average contract value did increase by 65%, but the overall market reaction indicates a cautious outlook as investors may need to wait until next year for a clearer impact from these initiatives