ServiceNow CEO Bill McDermott speaks to CNBC on May 5, 2026.
CNBC
ServiceNow Shares fell 25% on Thursday, their worst day on record, after the enterprise software company’s third-quarter earnings fell short of expectations and reignited concerns about disruption in artificial intelligence.
“This was a little bit uncharacteristic by ServiceNow standards, but just in terms of the lack of upside,” Citi’s Tyler Radke told CNBC on Thursday.
Revenue for the period rose more than 20% to $4.11 billion, roughly in line with the $4.1 billion expected by analysts polled by LSEG. Adjusted earnings were $1.00 per share, missing expectations of $1.02.
The results did little to dispel recent “SaaSpocalypse” concerns and fears that new AI capabilities will upend traditional software business models.
The drop in shares comes even as the company slightly raised its full-year 2026 subscription revenue outlook from $15.78 billion to $15.79 billion. AI net new average contract value increased by 65%.
One factor scaring investors, Radke said, is that the company’s investment in a newly created forward-deployed engineering team, which is built into the enterprise to build AI solutions, won’t see an immediate return.
“It’s going to be a bit more of a waiting game, so I think the market wanted to see something a little sooner,” he said. “I think we’ll have to wait until next year to really see that change.”
WATCH: ServiceNow stock plummets in after-hours trading after mixed third-quarter results
