Over the past three months, ServiceNow’s share price has declined by approximately 37%, driven by investor concerns over slowing organic growth, increased competition from AI-driven offerings and an aggressive acquisition strategy. Despite delivering 21% year-over-year revenue growth in Q4, investors have marked down the stock to a forward P/E ratio near 33x, reflecting skepticism about the company’s ability to sustain its growth rate above 20%. This sell-off pushed the broader iShares Expanded Tech-Software Sector ETF into bear-market territory, as market participants question whether traditional workflow automation providers can fend off AI disruptors.

In the quarter ended December 31, ServiceNow reported revenue of $3.57 billion, topping consensus estimates and representing a 20.5% increase over the prior year’s $2.96 billion. Adjusted earnings per share of $0.92 also surpassed street forecasts by 5.8%. However, management acknowledged that organic subscription revenue growth—19% when excluding recent acquisitions—fell just below the long-term 20% target, stoking debate over whether the business can maintain double-digit growth as it scales beyond $13 billion in annual revenue.

ServiceNow invested heavily in strategic buyouts during 2025, closing on the $2.85 billion Moveworks transaction and the $7.75 billion Armis deal to bolster AI-powered automation and security capabilities. These transactions are expected to contribute roughly 100 basis points to subscription revenue growth in both Q1 and full-year fiscal 2026. Guidance for FY26 calls for subscription revenues between $15.53 billion and $15.57 billion, implying a mid-teens growth rate that falls short of previous double-digit targets and underscores management’s cautious outlook.

To reinforce its AI roadmap, ServiceNow expanded its strategic commitment with Fiserv, scaling deployment of Now Assist for Financial Services Operations and IT Service Management and announced consecutive multi-year partnerships with Anthropic and OpenAI to integrate Claude and GPT models into its platform. Chief Executive Officer Bill McDermott backed these initiatives with a $5 billion share repurchase authorization—of which $2 billion is earmarked for immediate execution—and restructured his compensation to align with stock performance through 2030, signaling strong insider conviction in the company’s long-term trajectory.