ServiceNow shares fell 26.9% after earnings, despite beating its stated Q3 guidance. The transcript does not identify a specific cause for the selloff; it does highlight a modest Q4 subscription-revenue growth outlook of 19.5%–20.0% in constant currency, below Q3’s 20.5%, which may have weighed on investors.
- Q3 subscription revenue grew 20.5% in constant currency, 50 basis points above the high end of guidance; cRPO grew 21%, 100 basis points above guidance.
- Operating margin was 32.5%, 150 basis points above guidance; free cash flow margin was 20%.
- AI net new ACV grew 65% year over year, while the company raised its year-end AI target from $1.5 billion to more than $1.7 billion.
- Q4 guidance calls for subscription-revenue growth of 19.5%–20.0% in constant currency, compared with Q3’s 20.5%.
- Management cited 19 deals above $5 million in net new ACV, up 135% year over year, and RPO of $30 billion, up 23%.
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