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Great quarter, awkward reaction
ServiceNow did the thing companies love to brag about: it beat Q1 revenue at about $3.77 billion and nudged adjusted EPS to 97 cents, both ahead of estimates. But the market response was basically, “Cool story — still expensive.” Shares fell 12.4% in pre-market trading, which is a pretty loud way of saying expectations were doing most of the heavy lifting here.
The guidance was good, not magical
The company said second-quarter subscription revenue should land between $3.815 billion and $3.82 billion, implying roughly 21% to 21.5% growth. For the full year, ServiceNow guided to $15.74 billion to $15.78 billion in subscription revenue. Solid? Absolutely. Enough to keep the stock in the penalty box? Also apparently yes.
Analysts reached for the scissors
A bunch of analysts trimmed their price targets after the report, even while keeping their bullish-ish ratings intact:
- Piper Sandler cut its target from $200 to $140
- BTIG lowered its view from $185 to $150
- Baird trimmed from $125 to $118
- Needham cut from $155 to $115
- BMO slid from $120 to $115
That’s the market version of saying, “We still like the car, but maybe not at luxury-jet pricing.”
Big picture
ServiceNow is still growing nicely and still looks like one of the cleaner AI/software stories on the board. But when a stock already has a sky-high reputation, even a good quarter can feel like a meet-cute with reality. Investors now get to decide whether this is a buying opportunity or just the market finally taking the valuation calculator out of the drawer.