New York, January 28, 2026, 16:20 (EST)
- ServiceNow projected 2026 subscription revenue between $15.53 billion and $15.57 billion, and announced plans for a $2 billion accelerated buyback.
- Revenue for the fourth quarter climbed 20.5% to $3.57 billion, with adjusted earnings hitting 92 cents per share.
- The stock had dropped ahead of the earnings, with pre-release reports highlighting valuation concerns and a crucial checkpoint for AI-driven growth.
ServiceNow on Wednesday forecasted annual subscription revenue surpassing Wall Street expectations following better-than-expected fourth-quarter results. The enterprise software company is pushing to reassure investors it can sustain growth despite heavy investments in AI and acquisitions. The board also approved an extra $5 billion for share buybacks, with a $2 billion accelerated repurchase set to kick off soon—an approach that swiftly retires shares via a bank. 1
Timing is crucial. This month, investors have zeroed in on pricey software stocks as a key stress indicator, with ServiceNow emerging as a test case for whether corporate clients continue to buy into the “AI everywhere” narrative.
The company is deep into a buying spree. If its guidance for this quarter proves accurate, it might weaken the case that acquisitions and new AI features are watering down the core business.
ServiceNow’s subscription revenue—the backbone of its business—jumped 21% to $3.466 billion this quarter. Total revenue followed, up 20.5% to $3.568 billion. Contracted backlog, measured by current remaining performance obligations expected to convert to revenue within 12 months, stood at $12.85 billion. CEO Bill McDermott said the company “significantly beat Q4 expectations” and delivered “exceptional guidance for 2026.” CFO Gina Mastantuono described the quarter as “another strong” close to a year focused on AI product development. 2
Shares had already taken a hit before the earnings dropped, sliding 3.3% Tuesday to roughly $131.80. They remained far under important moving averages. MarketBeat data points to an average analyst price target around $204 and a “Moderate Buy” rating, even though some price targets have been cut. 3
A Zacks preview ahead of the release estimated fourth-quarter revenue at roughly $3.52 billion and earnings of 87 cents per share. It pointed out that ServiceNow had surpassed consensus estimates in each of the last four quarters. The note also highlighted concerns about valuation pressures and macroeconomic challenges as the company approached its earnings report. 4
Some pre-earnings talk focused on technicals rather than fundamentals. Benzinga reported that an AI price-prediction tool pegged ServiceNow’s average price around $128.50 over the next 60 days, relying on momentum indicators like MACD and RSI favored by short-term traders. 5
Risks remain clear. ServiceNow is piecing together several major acquisitions, and any slip in integration could hit margins or drag out sales cycles. With IT budgets possibly tightening and customers delaying new projects, the company’s lofty valuation offers little cushion for mistakes.
For now, all eyes turn to what executives reveal next about demand for AI-driven workflow tools, and if buybacks can counter dilution to maintain shareholder patience.
