ServiceNow beat its own guidance on Wednesday night.
On Thursday, the stock fell 27%, from $150.13 to $109.67. That's its worst day since going public in 2012.
So what did the market see that it didn't like?
š The number that spooked everyone
The quarter itself was strong. Subscription revenue grew 21% to about $4 billion, above the top of management's own range, and the AI contract target went up again, to $1.7 billion for the year.
The problem was one line in the outlook. Current remaining performance obligations, or cRPO, is the contracted revenue due over the next 12 months. It's the best early read on future growth, and management guided it to slow from 21% to 18.5% next quarter, excluding currency moves.
In a market already worried that AI agents will eat software, that was enough. š¬
š Why I think it's partly timing
On the call, the CFO explained that strong early renewals delivered about half of this quarter's backlog beat. Those deals were pulled forward from Q4, so Q4 looks weaker by comparison.
Meanwhile, Q4 subscription revenue is guided to grow 21.5% in constant currency, a touch faster than this quarter. Revenue isn't slowing. The leading indicator is wobbling.
I'm ...