ServiceNow Inc. (NYSE: NOW) is facing a steep decline in its stock price, which dropped over 12% today, closing at $1001.74.
This downturn follows the company’s disappointing earnings report and a lackluster forecast for subscription revenue growth in the upcoming fiscal year.
Disappointing Earnings Report
The drop in stock value was triggered by ServiceNow’s announcement that its subscription revenue for 2025 is projected to be between $12.64 billion and $12.68 billion, falling short of Wall Street’s expectations of approximately $12.86 billion.
This news has raised concerns among investors about the company’s growth trajectory, especially as subscription revenue constitutes a significant portion of its overall sales.
In its fourth-quarter earnings report, ServiceNow revealed that it achieved $2.87 billion in subscription revenue, marking a 21% increase year-over-year but still below the forecast range of 21.5% to 22% growth previously anticipated.
The total revenue for the quarter was reported at $2.96 billion, aligning with analyst estimates but highlighting a mixed performance overall.
Market Reaction
Following the earnings announcement, ServiceNow shares experienced a significant sell-off, dropping about 11.5% in after-hours trading.
This decline reflects investor disappointment with the company’s guidance and signals broader concerns regarding its ability to maintain momentum in a competitive technology landscape.
Despite the current slump, ServiceNow’s stock had surged nearly 50% over the past year prior to this announcement, indicating that investors had previously held strong confidence in the company’s future prospects.
CEO’s Optimism Amid Challenges
ServiceNow’s CEO Bill McDermott emphasized the potential of its artificial intelligence (AI) initiatives, stating that generative AI is expected to play a pivotal role in transforming enterprise technology landscapes.
He noted that there has been substantial growth in their AI product offerings, particularly with the Now Assist service desk solution, which saw an impressive 150% increase in new deals.
Conclusion
As ServiceNow navigates this challenging period marked by investor skepticism and mixed financial results, stakeholders will be keenly observing how the company adapts its strategies to enhance revenue growth and regain market confidence.
The upcoming months will be critical for ServiceNow as it seeks to leverage its AI capabilities while addressing investor concerns regarding its growth outlook.
 is facing a steep decline in its stock price, which dropped over 12% today, closing at $1001.74.){kind=link}