ServiceNow Stock Falls on Organic Growth, M&A Worries
By Kelly Cloonan
Shares of ServiceNow declined after the company's organic growth guide disappointed investor expectations, contributing to worries over its recent slew of big deals.
The stock slid 9.2% to $117.65 in premarket trading on Thursday. Through Wednesday's market close, shares have fallen about 43% in the past 12 months.
The cloud-based software company's guidance for about 21% subscription revenue growth this year came in better than expected, but its implied organic growth of about 19% was likely below what investors were looking for, D.A. Davidson analysts said in a note.
The forecast comes amid worries over ServiceNow's recent streak of big acquisitions, including plans to buy cybersecurity startup Armis for $7.75 billion in its biggest deal to date.
The moves have triggered some concerns over whether ServiceNow's organic growth is slowing as it moves into more areas outside of its core business, and whether the acquisition activity will continue.
ServiceNow's management addressed the worries during the company's earnings call.
Chief Executive Bill McDermott said the company is fully capable of achieving its previously stated targets without deals, and has no large-scale M&A in the works.
"The speculation out there is that M&A is the new playbook out of necessity," McDermott said.
"Here are the facts. ServiceNow has the fastest organic growth in the history of enterprise software," he said.
McDermott said that the company uses deals to expand into a larger total available market, not to fuel growth alone. He added that he noticed the company lost about $10 billion in market cap over worries regarding its Armis and Veza acquisitions.
"Now, the worry is gone. You can give us back the market cap," McDermott said.
William Blair analysts said that while such worries will likely remain, the acquisitions of Armis and Veza will help ServiceNow address critical layers for its customers to operate securely in the world of agentic AI.
"While we expect investors will remain somewhat cautious on the ramp-up in M&A at ServiceNow, we ultimately believe it is a good strategic asset for the company," they say.
Write to Kelly Cloonan at kelly.cloonan@wsj.com
(END) Dow Jones Newswires
January 29, 2026 09:06 ET (14:06 GMT)
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