ServiceNow (NOW) shares fell 27 percent after third-quarter earnings, pushing the stock down 31 percent for the year. The selloff appears disconnected from the underlying business momentum.
The company reported 20.5 percent revenue growth to $4.11 billion and adjusted EPS of $1.00, missing consensus expectations of $1.02 EPS on $4.1 billion revenue by a fraction. Subscription revenue—the core SaaS metric—grew 21 percent to $3.99 billion, beating the company's prior 20 percent guidance. Professional services revenue rose 10 percent to $118 million.
Investor panic centered on a smaller-than-typical earnings beat and cautious forward guidance. That reaction misses the critical story: AI is accelerating, not decelerating, ServiceNow's growth trajectory.
ServiceNow's AI annual contract value surged 65 percent year over year. The company raised its year-end AI ACV target to $1.7 billion from $1.5 billion—a direct signal of demand acceleration. Agentic AI consumption jumped 13 times year over year. The Superintelligence Control Tower, the company's AI orchestration platform, saw activated AI actions increase 500 percent month over month. This is not disruption; this is adoption at scale.
The expanded OpenAI partnership deepens integration into ServiceNow's core products, embedding ChatGPT and AI agents directly into workflows. New cybersecurity solutions powered by OpenAI models position ServiceNow in a high-margin adjacency. Management identified cybersecurity as a major growth vector and claimed ServiceNow as the fastest-growing cybersecurity company at scale.
Internal AI deployment delivered over $1 billion in annual efficiency—a tangible proof point for customers evaluating ServiceNow's AI roadmap.
Remaining performance obligations, the forward-revenue indicator for SaaS, climbed 22.5 percent to $29.7 billion. Current RPO—the 12-month billings pocket—jumped 21 percent to $13.65 billion. These metrics point to durable demand and sustained pricing power.
The market has punished ServiceNow for missing consensus EPS by $0.02 while the company expanded full-year AI ACV guidance by $200 million. That trade-off favors the buyer.
