ServiceNow Shares Fall as Order Growth Slows Despite Revenue Beat

ServiceNow shares fell sharply in after-hours trading after the company posted third-quarter revenue above expectations but forecast slower growth in remaining orders for the next quarter.

Revenue rose 20.5% year over year to $4.106 billion, slightly above the $4.09 billion expectation. Adjusted earnings were $1 per share, below the $1.02 forecast. The company also raised its full-year subscription revenue and free cash flow margin outlook, lifting the midpoint of its subscription revenue range by $15 million to $15.785 billion.

For the fourth quarter, current remaining performance obligations (cRPO) — contracted revenue expected to be recognized over the next 12 months — are projected to grow 18.5% at constant currency, compared with 21% in the third quarter. The lower rate put attention on future order growth even as reported revenue exceeded expectations.

On the earnings call, management cited renewals brought forward from the fourth quarter into the third, a higher share of on-premises orders and deployment services attached to large AI projects as factors affecting short-term measures. Deployment services are expected to trim fourth-quarter subscription revenue growth by about 0.5 percentage points. Analysts also pressed management on when AI business would materially lift overall revenue and orders.