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ServiceNow Stock Dives on Weak Q4 Outlook
29 Oct
Summary
- ServiceNow shares dropped significantly after Q4 revenue forecast missed expectations.
- Third-quarter earnings per share were $1.00, slightly below the $1.02 estimate.
- Expanded partnership with OpenAI integrates AI models into enterprise workflows.
ServiceNow Inc. saw its stock price plummet more than 14% in after-hours trading on Wednesday, reacting to a fourth-quarter revenue forecast that did not meet analyst expectations. This financial outlook overshadowed the company's third-quarter performance, which included earnings per share of $1.00 against an expected $1.02, and revenue of $4.11 billion, just above the consensus.
Despite the revenue guidance shortfall, ServiceNow highlighted its strategic importance as an 'AI Super Intelligence Control Tower.' The company significantly raised its AI annual contract value target for 2026 to $1.7 billion, marking a substantial 70% increase from the beginning of the year. This forward-looking AI ambition was further bolstered by the announcement of new strategic partnerships.
Key among these is an expanded collaboration with OpenAI, which will integrate OpenAI's AI models into ServiceNow's enterprise workflows, including a new ServiceNow plugin for ChatGPT available in the OpenAI marketplace. Furthermore, Hewlett Packard Enterprise selected ServiceNow as its foundation for support services across its Cloud & AI business under a five-year agreement. The company also launched the Control Tower Alliance, a partner ecosystem with prominent founding members.
