(Reuters) -ServiceNow forecast annual subscription revenue below Wall Street estimates on Wednesday, affected by a strong U.S. dollar and a planned shift in its monetization model, sending its shares down 8% in extended trading.
The Santa Clara, California-based company also expects its U.S. federal business to be slower in the first half of the year “due to seasonality from the change in presidential administration.”
ServiceNow said it would expand its consumption-based monetization model, where clients pay based on their actual usage of a product or service, across its artificial intelligence and data products this year.
Enterprise clients turn to AI-powered software offered by companies such as ServiceNow to manage their IT services and automate certain business operations.
ServiceNow on Wednesday also unveiled its AI Agent Orchestrator, a tool designed to coordinate a fleet of AI agents — software programs designed to automate tasks and work without constant human intervention.
Rival Salesforce and software giant Microsoft are also betting on AI agents to drive revenue growth.
ServiceNow expects its annual subscription revenue for 2025 to be in the range of $12.64 billion to $12.68 billion, compared with analysts’ average estimate of $12.83 billion, according to data compiled by LSEG.
The company said that the strength in the U.S. dollar would impact its subscription revenue by about $175 million this year.
ServiceNow also expects first-quarter subscription revenue to be between $2.995 billion and $3 billion, compared with estimates of $3.04 billion.
The revenue for the fourth quarter, ended Dec. 31, rose about 21% from a year earlier to $2.96 billion, which was in line with estimates.
The company said its profit per share rose about 28% to $1.83 in the fourth quarter.
(Reporting by Jaspreet Singh in Bengaluru; Editing by Mohammed Safi Shamsi and Alan Barona)
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