Why have ServiceNow (NYSE: NOW) shares declined despite strong Q3 2025 results?

ServiceNow's Q3 2025 revenue grew 21.8% and adjusted EPS surged nearly 30%, but the company's shares have declined 5% since the earnings release. However, analysts remain bullish on the stock, citing the company's expanding margins and AI-powered cost savings as key drivers of future growth.

How is AI helping to improve ServiceNow's operations?

ServiceNow is using artificial intelligence (AI) to drive operational expense efficiency and lower costs, which is helping to significantly expand the company's margins. In Q3 2025, ServiceNow's operating margin increased by 180 basis points to 16.8%, and its adjusted operating margin rose 230 basis points to 33.5%, exceeding the company's own guidance.

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ServiceNow Shares Slide 5% Despite Robust Q3 Earnings

Q: What are analysts' expectations for ServiceNow's future performance?

Despite the recent stock decline, sell-side Wall Street analysts remain optimistic about ServiceNow's prospects. They are forecasting significant upside for the company's shares going forward, citing its strong financial performance and the positive impact of AI on its business.

13 Nov

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Summary

ServiceNow's Q3 2025 revenue grew 21.8%, beating estimates
Adjusted EPS grew nearly 30%, exceeding forecasts by 13%
Margins expanded significantly, aided by AI-driven cost savings

ServiceNow Shares Slide 5% Despite Robust Q3 Earnings

As of November 13, 2025, tech giant ServiceNow (NYSE: NOW) has seen its shares decline 5% since reporting better-than-expected Q3 2025 earnings on October 29. The company's revenue grew 21.8% (20.5% in constant currency) to around $3.41 billion, slightly exceeding analyst forecasts of 19.8% growth. Adjusted earnings per share (EPS) surged nearly 30%, beating estimates by 61 cents or 13%.

Notably, ServiceNow's margins expanded significantly during the quarter. Operating margin increased by 180 basis points to 16.8%, while adjusted operating margin rose 230 basis points to 33.5%, exceeding the company's own guidance by 300 basis points. Additionally, free cash flow (FCF) grew 26%, outpacing revenue growth, with a 50-basis-point expansion in adjusted FCF margin to 17.5%.

Driving this margin improvement is ServiceNow's use of artificial intelligence (AI) to drive operational expense efficiency and lower costs. The company says it is leveraging AI to improve its operations and boost profitability, a key factor behind its bullish outlook.

Despite the stock's decline, sell-side Wall Street analysts remain optimistic about ServiceNow's prospects. They are forecasting significant upside for the company's shares going forward, citing its strong financial performance and the positive impact of AI on its business.

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