Strong Quarter Across the Board

ServiceNow Inc. (NOW) delivered a solid fourth quarter Wednesday evening, showing that enterprise software demand remains healthy even as companies navigate the AI transition. The company posted revenue of approximately $3.57 billion, comfortably ahead of the $3.53 billion analysts were expecting. Adjusted earnings came in at 92 cents per share, beating the consensus estimate of 88 cents.

Total revenue climbed 20.5% year-over-year, while subscription revenue grew 21% compared to the same period last year. Perhaps more telling for future performance, ServiceNow's remaining performance obligations reached $28.2 billion at quarter's end, up 26.5% year-over-year. That's essentially contracted revenue the company hasn't recognized yet, which gives investors visibility into what's coming down the pipeline.

The customer base continues to grow more valuable too. ServiceNow noted that customers with more than $5 million in annual contract value increased approximately 20% year-over-year, suggesting the company is successfully landing and expanding larger enterprise deals.

The AI Control Tower Pitch

"We had substantial growth in licensed users, workflows, and transactions on our platform," said Bill McDermott, chairman and CEO of ServiceNow.

He continued with what's clearly becoming the company's core positioning: "With our consistent Rule of 55+ profile, there is no AI company in the enterprise better positioned for sustainable, profitable revenue growth than ServiceNow. We are building the AI control tower for business reinvention so enterprises can operate securely in an agentic AI world."

That "AI control tower" language is interesting. ServiceNow is positioning itself as the orchestration layer for enterprise AI, not just another AI product vendor.

Capital Allocation and Strategic Moves

ServiceNow put capital to work during the quarter, repurchasing approximately 3.6 million shares for $597 million. The company had $1.4 billion remaining on its existing authorization at quarter's end, and the board added fuel by approving an additional $5 billion share repurchase program.

On the partnership front, ServiceNow announced a collaboration with Anthropic to integrate Claude models into core workflows for application development. The company also expanded its strategic commitment with Fiserv and deepened its relationship with Panasonic Avionics Corporation.

Looking Forward

For the first quarter, ServiceNow expects subscription revenue between $3.65 billion and $3.655 billion. The full-year 2026 outlook calls for subscription revenue of $15.53 billion to $15.57 billion, representing about 21% year-over-year growth. That kind of consistent growth at scale is exactly what investors want to see from a company trading at premium multiples.

NOW Price Action: ServiceNow shares were down 4.33% in after-hours trading Wednesday, trading at $124.01 at the time of publication. The management team was scheduled to discuss results further on an earnings call with investors and analysts at 5 p.m. ET.