Jan 28 - ServiceNow projected annual subscription revenue for fiscal 2026 that exceeds analysts' consensus, underscoring continued demand for its AI-enhanced enterprise software. The Santa Clara, California-based firm said on Wednesday it is intensifying AI integrations across its platform through expanded partnerships with Anthropic - the maker of the Claude chatbot - and OpenAI, the company behind ChatGPT, as it looks to counter rising competition from autonomous AI agents.
Under the terms of its expanded agreement with Anthropic, ServiceNow will weave Claude models more deeply into its product set, matching a similar integration announced earlier with OpenAI. The company said these moves are part of a broader strategy to embed artificial intelligence capabilities across its workflow and IT automation offerings.
ServiceNow also disclosed a sizable increase in its share-repurchase authority: the board has approved an additional $5 billion for the program and the company plans an immediate $2 billion accelerated buyback. The announcement comes alongside results that showed the business continues to grow, even as heavy spending on mergers and acquisitions has exerted pressure on its stock performance.
The company, which helps enterprise clients automate complex workflows and IT operations, said its acquisition strategy includes recent purchases of security and AI assets. ServiceNow agreed to acquire cybersecurity startup Armis for $7.75 billion in its largest deal to date, and has completed purchases of security firm Veza, AI company Moveworks and sales automation platform Logik.ai (formerly Logik.io).
ServiceNow provided detailed guidance and quarterly expectations. It now anticipates fiscal 2026 subscription revenue in a range of $15.53 billion to $15.57 billion, above the analysts' average estimate of $15.21 billion compiled by LSEG. The company said the Moveworks acquisition added roughly 100 basis points to its annual subscription revenue growth forecast. For the first quarter, ServiceNow forecast subscription revenue between $3.65 billion and $3.66 billion, versus estimates of $3.57 billion.
On a reported basis, fourth-quarter revenue grew 20.5% year-over-year to $3.57 billion, topping estimates of $3.53 billion. Adjusted earnings per share for the quarter were 92 cents, ahead of the 88 cents analysts had expected.
Despite the upbeat guidance and recent operational gains, the company acknowledged that aggressive M&A and investment in AI have coincided with stock weakness - shares declined by about 28% last year. Management framed its capital deployment and partnerships as necessary steps to strengthen its AI capabilities and competitive positioning in enterprise automation.
Summary
ServiceNow raised its fiscal 2026 subscription revenue outlook above street estimates and emphasized deeper AI integrations with Anthropic and OpenAI. The company also expanded its buyback authorization by $5 billion and announced a $2 billion accelerated repurchase, while continuing a string of acquisitions including Armis, Veza, Moveworks and Logik.ai. Fourth-quarter results beat revenue and adjusted EPS estimates, and Moveworks contributed about 100 basis points to the subscription revenue growth outlook.
Key points
- Fiscal 2026 subscription revenue guidance of $15.53 billion to $15.57 billion, above analysts' average estimate of $15.21 billion (LSEG).
- Expanded AI integrations with Anthropic (Claude) and OpenAI to embed models across the platform; Moveworks acquisition added ~100 basis points to the subscription revenue growth forecast.
- Board authorized an additional $5 billion for share repurchases and plans an imminent $2 billion accelerated buyback; continuing heavy M&A including the $7.75 billion Armis deal.
Risks and uncertainties
- Heavy spending on mergers and acquisitions has pressured the stock, as reflected in a roughly 28% decline in the share price last year - a risk to investor sentiment in the software and technology sectors.
- Growing competition from autonomous AI agents poses uncertainty for ServiceNow's market positioning and product differentiation in enterprise AI and workflow automation.
- Reliance on acquisitions and external AI partnerships to drive revenue and product enhancements introduces integration and execution risks as the company scales these technologies across its platform.