Tech & AI
ServiceNow tumbles after hours on mixed quarterly results
ServiceNow shares tumbled 18.1% after hours as third-quarter adjusted profit missed forecasts. Revenue still came in just above estimates, and the company raised its AI sales outlook.
Quick Read
- ServiceNow shares tumbled 18.1% after hours when third-quarter adjusted earnings per share missed analyst forecasts.
- Revenue came in just above estimates, and subscription revenue and the contract backlog both grew from a year earlier.
- The company raised its forecast for AI contract value and announced deals with OpenAI, HPE and Stagwell.
- After-hours moves can shrink or reverse once regular trading opens at 9:30 a.m. ET on Thursday.
What did ServiceNow report?
ServiceNow shares tumbled 18.1% in after-hours trading on Wednesday, Oct. 28, after the software company released third-quarter results. After-hours trading happens after the regular close, with far fewer buyers and sellers. The stock last traded at $122.95.
Why it matters: Revenue landed just above the consensus, which is the average analyst forecast. Adjusted earnings per share, a measure of profit divided by the number of shares, fell short of that bar.
Subscription revenue, the company's main business, grew from a year earlier. ServiceNow also reported a larger backlog of signed contracts it has yet to count as revenue.
Why did the shares fall?
Reports described the quarter as mixed: a narrow revenue beat alongside an earnings miss. The company did not tie the share move to any single item.
The selling began before the numbers came out. During normal trading hours, the stock fell 3.0% to close at $150.13, down from $154.78 a day earlier. The company lost $4.8 billion of market value in that session. The technology sector fund rose 0.8% the same day.
The shares were already under pressure. They closed 20.0% below their 52-week high of $187.58. A $1,000 stake bought a year earlier was worth $800 at Wednesday's close.
What did management say, and what comes next?
What’s next: Chief executive Bill McDermott described the period as more than a routine strong quarter. He called it "the inflection point for ServiceNow."
The company issued forecasts for fourth-quarter and full-year 2026 subscription revenue. It also raised its forecast for annual contract value from its AI products this year. Alongside the results, it announced an expanded partnership with OpenAI, an agreement with HPE and an AI deal with Stagwell.
After-hours prices rest on fewer trades, so they can shrink or reverse once the full market opens. Regular trading on Thursday, Oct. 29, opens at 9:30 a.m. ET, giving a broader read on the reaction.
For readers
What it could mean for you: People who own ServiceNow shares directly feel the full effect of this report, with no other holdings to soften the earnings miss. The after-hours price may not hold once regular trading resumes, and the stock could move further in either direction. Holders of broad index funds feel the drop only in proportion to ServiceNow's weight in the fund. From here, shareholders may judge the company against its own forecasts for subscription revenue and AI contract value when it next reports.
Questions and answers
Why did ServiceNow stock drop after earnings?
Adjusted earnings per share for the third quarter fell short of analyst forecasts. Revenue only just beat them. The shares tumbled 18.1% in after-hours trading on Wednesday.
Did ServiceNow beat revenue estimates?
Yes, narrowly. Third-quarter revenue came in just above the average analyst forecast, and subscription revenue grew from a year earlier.
What did ServiceNow say about AI?
The company raised its forecast for annual contract value from its AI products for 2026. It also announced an expanded partnership with OpenAI, an agreement with HPE and an AI deal with Stagwell.
The numbers
| SERVICENOW (NOW) price | $150.13 |
|---|---|
| SERVICENOW (NOW) change | −3.00% |
| SERVICENOW (NOW) market value | $160 billion |
| SERVICENOW (NOW) 52-week high | $187.58 |
| S&P 500 change | +0.28% |
| 10-year Treasury yield | 5.05% |
Wednesday’s close
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