ServiceNow stock tumbled on Thursday after the software maker reported fourth-quarter earnings that topped Wall Street estimates while revenue met views. ServiceNow forecast lower-than-expected subscription revenue growth in 2025.
Reported after the market close on Wednesday, ServiceNow said earnings for the quarter ending Dec. 31 were $3.72 per share, up 18%.
Revenue rose 21% to $2.957 billion, the Santa Clara, Calif-based enterprise software maker said.
Further, ServiceNow stock analysts had expected the company to report earnings of $3.64 a share on revenue of $2.96 billion.
In addition, ServiceNow said subscription revenue rose 21% to $2.87 billion, slightly missing the consensus estimate of $2.88 billion.
"ServiceNow reported solid Q4 results, but short of investors' high expectations," said Oppenheimer analyst Brian Schwartz in a report.
"Negatively, management guided the 2025 growth targets below consensus estimates, driven by negative currency exchange rates, slower revenue recognition by offering a consumption pricing model for Agentic AI, and a back-end loaded federal business. Bottom Line: The bar was already high and a lack of upward momentum to estimates will weigh on multiples."
ServiceNow Stock: Subscription Revenue Outlook
ServiceNow's current remaining performance obligations, or CRPO, rose 19% to $10.27 billion. Analysts had projected CRPO of $10.43 billion.
CRPO bookings are an aggregate of deferred revenue and order backlog and serve as a sales growth metric.
For full-year 2025, ServiceNow predicted subscription revenue growth in a range of 19.5% to 20% vs. estimates of 20.8% growth. Also, ServiceNow predicted CRPO growth of 20.5% versus estimates of 20.4%.
Currency exchange rates amid a strong U.S. dollar impacted guidance, said RBC Capital analyst Matthew Hedberg in a report.
"Initial 2025 subscription revenue midpoint guidance came in at $12.655 billion vs. consensus at $12.857 billon," he said. "This faces a $175 million currency headwind."
On the stock market today, ServiceNow stock tumbled 11.4% to close at 1,012.
In a recent interview, Chief Executive Bill McDermott talked about ServiceNow's artificial intelligence strategy and ramp-up of AI products.
"We believe the softer-than-expected guidance is related to the company's prudent expectations for the ramp in AI monetization and conservatism around the federal vertical and the company's go-to-market changes," said Arjun Bhatia, analyst at William Blair in a report "In terms of the pricing shift, ServiceNow is shifting to a more consumption-based model to monetize AI usage versus creating a new agentic platform and charging a direct uplift for its new agentic workflows."
ServiceNow Stock: Technical Ratings
Heading into the ServiceNow earnings report, the software stock had gained 7% in 2025 and 47% over the past 52 weeks.
The company's software tracks and manages services provided by information-technology departments. Also, its self-service tech portal enables company employees to access administrative and workflow tools.
Further, ServiceNow has expanded from its core business into software for human resources, customer service management and security.
Coming into the ServiceNow earnings report, NOW stock had an IBD Composite Rating of 99 out of a best possible 99, according to IBD Stock Checkup. The score combines five separate proprietary ratings into one rating. The best growth stocks have a Composite Rating of 90 or better.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
