Why Is ServiceNow Stock Falling 18.7% in Premarket Trading?
ServiceNow (NOW) shares fell 18.7% to $122 in premarket trading after reporting Q3 2026 adjusted earnings of $1.00, missing estimates of $1.02. The company also guided Q4 revenue of $4.25B-$4.26B, below expectations of $4.36B. GAAP operating margin declined to 9.5% from 17% YoY, while non-GAAP margin exceeded guidance. ServiceNow raised its AI annual contract value target to $1.7B and announced an expanded partnership with OpenAI.
How this was made
The 30-second read
Why it matters
The market reaction is anchored to the guidance shortfall and contracted-revenue deceleration, partially offset by an increased AI contract value target and an expanded OpenAI partnership.
Market read
This is a same-cycle earnings and guidance reset for NOW, with investors focusing on revenue trajectory, operating margin, and contracted revenue (cRPO) growth.
What to watch
The article notes an accounting reclassification of some AI-related revenue from subscriptions to professional services, which may affect comparability and how investors interpret the revenue mix and guidance.
Background
ServiceNow reported Q3 2026 adjusted EPS of $1.00 (vs $1.02 consensus) and guided Q4 revenue to $4.25B-$4.26B (vs $4.36B consensus), alongside margin pressure and a cRPO growth slowdown.
Ticker impact
ServiceNow shares fell 18.7% premarket after Q3 adjusted EPS missed consensus and Q4 revenue guidance came in below forecasts.
Likely further pressure as the market digests the guidance shortfall and slower cRPO growth outlook.
The article cites a first adjusted EPS miss in six quarters, Q4 revenue guidance below consensus, and a cRPO growth slowdown, which are direct valuation drivers for NOW.
Market effects
Signals heightened scrutiny on enterprise software growth and contracted-revenue visibility, especially for AI-related monetization.
Contributes to weakness in US tech sentiment during a broader Nasdaq dip.
Limited direct global spillover beyond enterprise software risk appetite and AI software expectations.
Counterpoint
The company raised its full-year AI annual contract value target to $1.7B, which could indicate improving AI pipeline even if near-term revenue timing disappoints.
Key entities
- companyServiceNow
Enterprise software provider whose Q3 results and Q4 guidance drove an 18.7% premarket drop.
- partnerOpenAI
Partner in an expanded collaboration on security and risk management solutions within enterprise workflows.
