ServiceNow (NOW) stock plummeted 11.4% on Thursday after the software maker reported its fourth-quarter earnings that met Wall Street estimates but fell short of expectations for subscription revenue growth in 2025.
The company reported earnings per share of $3.72, up 18%, and revenue rose 21% to $2.957 billion. However, it forecast lower-than-expected subscription revenue growth of 19.5% to 20% for 2025, down from estimates of 20.8%. The forecast also took into account a significant impact from negative currency exchange rates.
ServiceNow’s current remaining performance obligations (CRPO) rose 19% to $10.27 billion, but analysts had projected a higher figure. The company’s growth targets were also impacted by the adoption of a consumption pricing model for its Agentic AI products and a back-end loaded federal business.
“We believe the softer-than-expected guidance is related to the company’s prudent expectations for the ramp in AI monetization,” said Arjun Bhatia, analyst at William Blair. “The pricing shift to a more consumption-based model may also be affecting the forecast.”
ServiceNow stock had gained 7% in 2025 and 47% over the past 52 weeks, but the latest earnings report sent shares tumbling. The company’s software tracks and manages services provided by information-technology departments, while its self-service tech portal enables employees to access administrative and workflow tools.
The IBD Composite Rating for ServiceNow was 99 out of a best possible 99 heading into the earnings report, indicating strong growth potential. However, the latest results have raised concerns about the company’s ability to meet its growth targets in 2025.
Source: https://www.investors.com/news/technology/servicenow-stock-servicenow-earnings-q42024