ServiceNow Q4 Earnings Beat, Stock Drops on Guidance & AI Investments

ServiceNow reported fourth-quarter earnings that exceeded Wall Street expectations, though the company’s stock price declined by over 6% following the release. The results, announced after market close on Wednesday, reflect continued growth for the enterprise software company as it invests heavily in artificial intelligence and cybersecurity.

Key Financial Results

ServiceNow’s adjusted earnings per share reached 92 cents, surpassing the expected 88 cents. Revenue for the quarter totaled $3.57 billion, slightly above the anticipated $3.53 billion. This represents a 20.5% increase in revenue compared to $2.96 billion in the same period last year. Net income rose to $401 million, or 38 cents per share, up from $384 million, or 37 cents per share, a year prior.

Strategic Investments and Acquisitions

The company is actively pursuing acquisitions to enhance its AI and security capabilities, aiming to position itself as an “AI control tower” for businesses. Recent acquisitions include Moveworks, for nearly $3 billion, and Armis for $7.75 billion. Finance chief Gina Mastantuono stated that these acquisitions are intended to “accelerate” organic growth, not replace it.

Did You Know? ServiceNow’s board approved a $5 billion share buyback program.

ServiceNow has also forged partnerships with both Anthropic and OpenAI to integrate their respective AI models, Claude and OpenAI’s model, into its platform. Subscription revenues, which comprise a significant portion of sales, increased by 21% year-over-year to approximately $3.47 billion, exceeding expectations of $3.42 billion. Fiscal year 2025 subscription revenues grew 21% to $12.88 billion.

Looking Ahead

ServiceNow forecasts subscription revenues between $3.65 billion and $3.66 billion for the first quarter of the next fiscal year. For the full 2026 fiscal year, the company anticipates subscription revenues between $15.53 billion and $15.57 billion. The acquisition of Moveworks is expected to contribute 100 basis points to both full-year and first-quarter subscription revenue growth.

Expert Insight: ServiceNow’s substantial investments in AI and cybersecurity suggest a strategic bet on the increasing importance of these areas for businesses. The company’s ability to successfully integrate these acquisitions and partnerships will likely be a key factor in its future performance.

The company’s current remaining performance obligations—a measure of backlog—increased by 25% year-over-year to $12.85 billion.

Frequently Asked Questions

What was ServiceNow’s revenue for the fourth quarter?

ServiceNow’s revenue for the fourth quarter was $3.57 billion, a 20.5% increase from $2.96 billion in the year-ago period.

What acquisitions has ServiceNow recently made?

ServiceNow recently acquired Moveworks for nearly $3 billion and Armis for $7.75 billion.

What is ServiceNow forecasting for subscription revenue in the first quarter?

ServiceNow is forecasting subscription revenues between $3.65 billion and $3.66 billion in the first quarter.

As ServiceNow continues to invest in AI and cybersecurity, will these strategic moves translate into sustained growth and market leadership?