ServiceNow (NYSE:NOW) Releases Earnings Results, Meets Expectations

Key Points

• ServiceNow reported $0.97 non‑GAAP EPS (in line with estimates) and revenue of $3.77 billion, up 22.1% year‑over‑year, beating guidance on key metrics and prompting an upgraded annual subscription‑revenue outlook.
• Management highlighted accelerating AI momentum—Now Assist is tracking well above initial targets with the company's $1B goal revised to roughly a $1.5B run rate, driven by large AI‑inclusive deals and growing >$1M customer spend.
• Near‑term headwinds include the Armis acquisition (which expands security TAM but will weigh on margins by tens to ~75–125 bps) and Middle East geopolitical deal delays (≈75 bps Q1 revenue headwind), factors that helped trigger a sharp stock selloff and analyst cuts.

ServiceNow (NYSE:NOW - Get Free Report) issued its quarterly earnings results on Wednesday. The information technology services provider reported $0.97 earnings per share for the quarter, meeting analysts' consensus estimates of $0.97, FiscalAI reports. ServiceNow had a net margin of 13.16% and a return on equity of 18.54%. The business had revenue of $3.77 billion during the quarter, compared to analyst estimates of $3.75 billion. During the same quarter last year, the business posted $0.81 earnings per share. ServiceNow's revenue for the quarter was up 22.1% compared to the same quarter last year.

Here are the key takeaways from ServiceNow's conference call:

• ServiceNow beat the high end of Q1 guidance across key metrics — subscription revenue $3.671B (+19% CC), CRPO +21% CC, non‑GAAP operating margin 32%, and free cash flow margin 44%, with 16 deals over $5M (5 over $10M).
• Management says AI momentum is accelerating — Now Assist is tracking well above initial targets (management moved a $1B target to roughly $1.5B run rate), with large AI-inclusive deals and customers spending >$1M growing materially year‑over‑year.
• The early close of the Armis acquisition expands ServiceNow’s security TAM and contributed ~125 bps to 2026 subscription revenue guidance (midpoint uplift ~$205M), but management flagged near‑term margin headwinds (tens of basis points) that it expects to normalize by 2027.
• Management emphasized differentiation from competitors via an AI‑native platform stack — the Context Engine, Autonomous Workforce, EmployeeWorks (Moveworks integration), and Workflow Data Fabric provide bundled AI, data, security and governance rather than “sidecar” add‑ons.
• Geopolitical disruption in the Middle East caused timing delays on several on‑prem deals (about a ~75 bps headwind to Q1 subscription revenue), which pressured near‑term quarter timing and Q2 guidance despite the company maintaining full‑year targets.

ServiceNow Stock Performance

ServiceNow stock traded down $18.22 during trading hours on Thursday, hitting $84.85. The company had a trading volume of 83,595,000 shares, compared to its average volume of 20,902,301. The firm has a market cap of $87.92 billion, a PE ratio of 50.87, a PEG ratio of 1.68 and a beta of 1.01. The company has a debt-to-equity ratio of 0.12, a current ratio of 1.00 and a quick ratio of 1.00. ServiceNow has a one year low of $81.24 and a one year high of $211.48. The firm has a 50-day moving average of $105.55 and a 200 day moving average of $138.83.

Wall Street Analyst Weigh In

A number of analysts have commented on the stock. Raymond James Financial reduced their price target on shares of ServiceNow from $160.00 to $130.00 and set an "outperform" rating on the stock in a research report on Thursday. Royal Bank Of Canada reduced their price target on shares of ServiceNow from $150.00 to $121.00 and set an "outperform" rating on the stock in a research report on Monday, April 13th. Stifel Nicolaus reduced their price target on shares of ServiceNow from $135.00 to $120.00 and set a "buy" rating on the stock in a research report on Thursday. BNP Paribas Exane raised shares of ServiceNow from a "neutral" rating to an "outperform" rating and set a $140.00 price target on the stock in a research report on Monday, March 16th. Finally, BTIG Research reissued a "buy" rating and set a $185.00 price target on shares of ServiceNow in a research report on Monday. Three equities research analysts have rated the stock with a Strong Buy rating, thirty-four have issued a Buy rating, six have assigned a Hold rating and one has issued a Sell rating to the company's stock. Based on data from MarketBeat, the stock presently has an average rating of "Moderate Buy" and a consensus price target of $149.53.

Insiders Place Their Bets

In related news, insider Paul Fipps sold 9,641 shares of ServiceNow stock in a transaction that occurred on Wednesday, February 18th. The shares were sold at an average price of $105.93, for a total value of $1,021,271.13. Following the transaction, the insider directly owned 11,757 shares of the company's stock, valued at $1,245,419.01. This trade represents a 45.06% decrease in their ownership of the stock. The sale was disclosed in a legal filing with the SEC, which is available through this link. Also, insider Kevin Thomas Mcbride sold 1,400 shares of ServiceNow stock in a transaction that occurred on Friday, February 13th. The shares were sold at an average price of $105.71, for a total transaction of $147,994.00. Following the completion of the transaction, the insider directly owned 26,314 shares in the company, valued at $2,781,652.94. This trade represents a 5.05% decrease in their ownership of the stock. The SEC filing for this sale provides additional information. Insiders have sold a total of 16,237 shares of company stock worth $1,697,162 in the last quarter. Corporate insiders own 0.34% of the company's stock.

Institutional Inflows and Outflows

Hedge funds have recently added to or reduced their stakes in the company. Price T Rowe Associates Inc. MD boosted its position in ServiceNow by 371.0% in the fourth quarter. Price T Rowe Associates Inc. MD now owns 32,395,663 shares of the information technology services provider's stock valued at $4,962,692,000 after buying an additional 25,517,218 shares in the last quarter. Morgan Stanley boosted its position in ServiceNow by 335.6% in the fourth quarter. Morgan Stanley now owns 22,733,483 shares of the information technology services provider's stock valued at $3,482,543,000 after buying an additional 17,514,679 shares in the last quarter. Northern Trust Corp boosted its position in ServiceNow by 400.3% in the fourth quarter. Northern Trust Corp now owns 11,002,778 shares of the information technology services provider's stock valued at $1,685,516,000 after buying an additional 8,803,704 shares in the last quarter. Wellington Management Group LLP boosted its position in ServiceNow by 259.8% in the fourth quarter. Wellington Management Group LLP now owns 8,229,232 shares of the information technology services provider's stock valued at $1,260,636,000 after buying an additional 5,941,932 shares in the last quarter. Finally, Charles Schwab Investment Management Inc. boosted its position in ServiceNow by 409.3% in the fourth quarter. Charles Schwab Investment Management Inc. now owns 7,323,616 shares of the information technology services provider's stock valued at $1,121,905,000 after buying an additional 5,885,639 shares in the last quarter. 87.18% of the stock is owned by institutional investors.

Trending Headlines about ServiceNow

Here are the key news stories impacting ServiceNow this week:

• Positive Sentiment: Q1 revenue and outlook: ServiceNow beat revenue expectations and raised its annual subscription‑revenue outlook, citing strong demand for AI‑powered workflows — a clear fundamental positive for long‑term growth. ServiceNow boosts annual subscription revenue outlook (Reuters)
• Positive Sentiment: AI partnerships & customer wins: ServiceNow highlighted product momentum (new Google Cloud AI agent integrations and customer case studies like TridentCare), underscoring its positioning in enterprise AI workflows. ServiceNow and Google Cloud unite AI (Yahoo/BusinessWire)
• Positive Sentiment: Some bulls remain: Several firms reiterated buy/overweight ratings (and at least one raised its target), signaling that many analysts view recent weakness as a valuation reset rather than a structural hit. Bernstein raises price target (MarketScreener)
• Neutral Sentiment: Beat but EPS inline: ServiceNow reported $0.97 non‑GAAP EPS (in line) and revenue slightly above views — good execution, but not the clear upside surprise many wanted. Q1 earnings summary (Zacks)
• Neutral Sentiment: Corporate events: Management set an Analyst Day for May 4 and signaled buyback activity; these are near‑term catalysts that could provide more clarity on margins and AI monetization. Analyst Day set (Yahoo Finance)
• Negative Sentiment: Margin headwinds: Management flagged that the Armis acquisition will pressure margins (~75 bps for the year; ~125 bps in Q2), which directly hurts near‑term profitability expectations. Armis deal will weigh on margins (WSJ)
• Negative Sentiment: Geopolitical deal delays: ServiceNow said Middle East deal closures were delayed by the Iran conflict, creating roughly a 75‑bp subscription revenue headwind in Q1 — a key reason investors sold into the print. Iran war delays deals (Yahoo Finance)
• Negative Sentiment: Analyst cuts & sentiment shift: Multiple firms cut price targets and several trimmed forecasts after the call — fueling forced selling and adding to the downward momentum. Analyst cuts after Q1 (Benzinga)
• Negative Sentiment: Sector spillover & AI fears: The print rekindled broader market worries about AI disruption in software, dragging peers lower and amplifying NOW’s selloff. Software sector selloff (CNBC)

ServiceNow Company Profile

ServiceNow NYSE: NOW is a cloud computing company that builds enterprise software to manage digital workflows and automate business processes. Its offerings are designed to replace manual work and legacy systems with cloud-based, service-oriented applications that support IT operations, customer service, human resources, security response and other enterprise functions.

The company's flagship product family is the Now Platform, a suite of subscription software and platform services that includes IT Service Management (ITSM), IT Operations Management (ITOM), IT Business Management (ITBM), Customer Service Management (CSM), HR Service Delivery, Security Operations and Asset Management.