ServiceNow Stock Tumbles 50% in a Year: Good Earnings Don’t Stop ‘Death of SaaS’

ServiceNow has just announced its better-than-expected Q4 and FY25 earnings results, yet its stock has experienced an 11% decline on the day of the announcement and a 50% decline over the past year. 

This follows a year of extensive artificial intelligence developments from the ITSM giant, and a similar pattern to the stock results of its competitors, including Salesforce, with a 40% decline, and Adobe, with a 35% decline in the last year. 

The Latest Results 

For ServiceNow, this latest earnings call was a largely positive one. The company reported that it had exceeded guidance across all Q4 2025 topline growth and profitability metrics, with growth staying within double digits and encompassing an increase in “licensed users, workflows, and transactions”. 

Subscription revenue hit $3.4B in Q4 2025, representing 21% year-over-year (YoY) growth, and Now Assist’s net new ACV in Q4 2025 more than doubled year-over-year. 

However, ServiceNow’s stock (NOW) has dropped by 21.69% year to date and 49.52% over the past year, with a 10.92% decline within the last day.

Why the Drop?

Last year was a significant year of ambitious acquisitions for ServiceNow. In the last twelve months, ServiceNow has announced its three most expensive acquisitions to date, purchasing Moveworks ($2.85B), Armis ($7.75B), and Veeza, ($1-2B rumored). 

ServiceNow CEO Bill McDermott. addressed this particular subject in the company’s latest investors’ earnings call, reassuring investors that the acquisitions were because of the need for “innovation and the expanded growth opportunity”, rather than because they needed the revenue.

McDermott also confirmed that the company is not planning any further large acquisitions in the near future. 

However, according to Matt Rooke, journalist at NowBen, other non-mentioned factors are also likely at play. 

“A number of other structural factors that could be playing into the stock’s downward trajectory, that weren’t mentioned by McDermott,” he told SF Ben. 

He pointed towards the stock’s stretched valuation, with investor analysis suggesting there’s limited “upside” in the latest guidance figures. Not only that, but weak technical signals and elevated options-market volatility likely also influence the stock’s turbulence. 

“Investors are worried about the company’s high price/earnings ratio,” he said. “This is often considered an indication that a stock is overvalued. We [NowBen] also noted this a couple of quarters back, so it’s clearly an ongoing concern.”

Does This Mean SaaS Is Really ‘Dying’? 

ServiceNow is only one company in the vast SaaS landscape, but it sits among some other significant market players, such as Salesforce and Adobe, which have also seen stock prices fall recently. 

At the time of writing, Salesforce stock is down 40% over the last year, and Adobe stock is down 35%. Microsoft stock is also down 4% despite a period of healthy growth in the second and third quarters last year. 

The only major SaaS stock that is on the up is Oracle, with a 4% increase in stock price over the last year. 

Last year, we concluded that SaaS was indeed on the decline as artificial intelligence became a larger focus, with business leaders needing to rapidly rethink their strategies, shifting focus to mission-critical use cases, AI-first integrations, and streamlined tech stacks.

The health of these stocks only further proves this analysis. Traditional SaaS companies need to prove their place in the market perhaps more than they have ever had to before, and customers expect more from these solutions. 

This also highlights that although AI efforts across the board have been significant, it has still not been enough to convince investors that the current offerings are sustainable enough to bet on long-term. The industry is still searching for something more – whatever it is, whoever finds it first will crack the code. 

Final Thoughts 

As ServiceNow celebrates its latest round of healthy results, the emphasis on stock performance becomes larger than ever. 

What this year looks like for the relationship between ServiceNow and its investors is very much still up in the air, but across the board, it definitely seems like more work needs to be done.