ServiceNow CFO says AI disruption to enterprise software narrative is false

ServiceNow (NOW) Chief Financial Officer and President Gina Mastantuono understands the importance of guardrails when an enterprise wants to deploy AI solutions.

"Every business and industry needs a harness for AI," she said in an interview with Seeking Alpha. "Enterprise is very different from consumer. One mistake becomes disastrous in minutes. Ninety percent of organizations worldwide have already had an agentic security incident in the past year. Having the security in place is simply not optional."

"We build safeguards into how we innovate," she added. "ServiceNow does that incredibly well. Our AI Control Tower gives customers the confidence and security to use AI without worry."

ServiceNow reported its third-quarter financial results and outlook on Wednesday night. Despite posting solid results, featuring another quarter of 20% plus year-over-year revenue growth, shares cratered 27% by the time the markets closed on Thursday, erasing three months of share gains in one session.

However, most financial firms remain positive on the stock and the trajectory of the company.

"Key positives are centered around the strong AI activity, with nnACV up 65% YoY, which prompted higher 2026 ACV guidance," said Bank of America analyst Tal Liani. "However, the focal points were the 120bp and 40bp shortfall in 4Q in cRPO and subscription growth guidance, partially explained by accounting and timing. We don't fully subscribe to management's explanation on the quarter's weakness, yet remain constructive on the stock, as we see clear evidence of AI growth and view these fluctuations as growing hiccups."

"With the company guiding to a deceleration in cRPO growth into F4Q and an incremental headwind into FY27, we believe the implied low-20% y/y revenue growth rate for F4Q and preliminary estimate for around 19% growth for FY27 (prior to embedding the acceleration in AI adoption into our estimates) still outlines a robust underlying business with room for upside led by performance, despite the concerns investors might express on a slowdown in the cRPO metric, which is largely on account of revenue drivers moving out of scope of cRPO to a modest extent on a temporary basis," said J.P. Morgan analyst Samik Chatterjee.

Despite the noise around the latest earnings and outlook, ServiceNow remains positive on its AI strategy. It remains model-agnostic, allowing customers to use the closed or open model of their choice. It also formed a new partnership with OpenAI (OPENAI). The partnership expansion includes a new ServiceNow plugin for ChatGPT, enabled by Action Fabric. The companies aim to develop security and risk solutions powered by OpenAI cyber models, a Codex integration in AI Workflow Factory, and voice-driven governance and risk assessment for ServiceNow's Super Intelligence Control Tower.

"Enterprises are deploying at scale, and our momentum continues to accelerate and be strong, but at the same time demand for our core workloads remains strong," Mastantuono said. "AI is pulling our core in a strong way. ServiceNow is able to develop and deploy AI without significant infrastructure investments that a lot of companies are having to spend."