ServiceNow Inc. (NOW) proved once again that beating Wall Street expectations doesn't always mean your stock goes up. Shares tumbled Thursday morning even though the enterprise software company delivered better-than-expected earnings just hours earlier.

What Actually Happened

The numbers looked pretty good on paper. ServiceNow reported fourth-quarter revenue of approximately $3.57 billion, topping the $3.53 billion consensus estimate. Adjusted earnings hit 92 cents per share, sailing past analyst expectations of 88 cents per share. Total revenue climbed 20.5% year-over-year, while subscription revenue grew 21%. The company's remaining performance obligations reached $28.2 billion at quarter's end, up a robust 26.5% year-over-year.

Looking Ahead

ServiceNow's forward guidance painted a picture of continued growth. The company expects first-quarter subscription revenue between $3.65 billion and $3.655 billion. For the full year 2026, management projects subscription revenue of $15.53 billion to $15.57 billion, representing about 21% year-over-year growth.

On the capital allocation front, ServiceNow bought back roughly 3.6 million shares for $597 million during the quarter. The board sweetened the deal by authorizing an additional $5 billion for future share repurchases. The company also announced a collaboration with Anthropic to integrate Claude models into its core workflows.

What Analysts Think

Wall Street analysts maintain a Buy rating on the stock with an average price target of $784.30. Recent analyst activity includes Jefferies with a Buy rating and $175 target (lowered January 23), Citigroup with a Buy rating and $235 target (lowered January 22), and BTIG maintaining a Buy rating with a $200 target.

Here's the interesting part: while the stock trades at a premium valuation with an 11% expected earnings decline, analysts still see 76% upside to their price targets. That suggests they believe the growth story justifies the rich multiple.

The Scorecard

Looking at ServiceNow's fundamental rankings reveals some contrasts. The company scores an 82.28 on growth potential, indicating strong expansion prospects. Quality ranks at 53.04, suggesting a healthy balance sheet. But the value rank sits at just 11.43, reflecting that steep premium valuation. Most concerning might be the momentum rank of 3.82, showing the stock badly trailing the broader market.

NOW Price Action: ServiceNow shares were down 8.32% at $118.84 during premarket trading on Thursday.