ServiceNow soars after hours on Q3 beat and 5-for-1 split: what it means for NOW stock

ServiceNow (NOW) swung from a choppy regular session to a strong after-hours rally Wednesday after posting better-than-expected Q3 results and unveiling a 5-for-1 stock split. The split—effective in November—aims to broaden ownership among employees and retail investors while keeping momentum behind the company’s expanding AI portfolio. Shares of NOW stock had been under pressure intraday but rebounded sharply once numbers and guidance hit the tape.

What changed for ServiceNow stock today

• During the session: NOW fell as large-cap software lagged.

• After the bell: The company beat on revenue and earnings, topped key backlog metrics, raised its full-year subscription outlook, and announced a 5-for-1 split, sending ServiceNow stock higher in late trading.

The setup highlights a familiar 2025 theme: investors demanding proof that AI features translate into contracted revenue, backlog growth, and pricing power—not just demos.

The numbers investors cared about

• Revenue: ~$3.41B, up ~22% year over year, ahead of consensus.

• Subscription revenue: ~$3.30B, up ~21%.

• Adjusted EPS: ~$4.82, up ~29%.

• CRPO (backlog proxy): ~$11.35B, up ~21%, beating expectations.

• FY subscription revenue guide: lifted to roughly $12.84B at the midpoint.

Two tells stood out: (1) CRPO accelerating back to the low-20s shows healthy forward demand, and (2) the guide raise implies AI monetization and large-customer expansion are showing up in bookings, not just trials.

5-for-1 stock split: mechanics and motive

• Ratio: 5 new shares for each 1 old share.

• Rationale: Make the price per share more accessible for employees and smaller accounts, and improve index and options liquidity.

• Impact: No change to market value or fundamentals, but splits can broaden participation and sometimes catalyze incremental demand around the effective date.

For NOW stock, which trades at a premium to the software group, lowering the sticker price may reduce per-share psychology friction without altering valuation.

Where the growth is coming from: AI and workflow breadth

ServiceNow’s pitch centers on platform breadth—IT service management roots expanded into HR, customer service, operations, and supply chain—now supercharged by gen-AI assistants embedded across modules. The company’s Pro/Pro Plus tiers bundle AI features (including token access) into per-seat pricing, which appears to be lifting average contract value as customers standardize on the platform.

Key levers to watch:

• Seat expansion in core workflows as AI reduces handle time and lifts deflection rates.

• New logos in regulated industries adopting private or hybrid AI deployments.

• Platform attach of observability, security, and low-code automation.

Valuation check and risk dashboard

Even with tonight’s pop, ServiceNow stock remains priced for durable 20%-ish growth and high-30s free-cash-flow margins over the medium term. Bulls argue the company’s full-stack workflow moat and AI attach justify the multiple. Bears point to:

• Macro sensitivity for seat-based pricing during hiring slowdowns.

• Competition and custom AI at large enterprises that could compress pricing in certain workloads.

• Federal timing noise and elongated approvals that can whipsaw quarterly patterns.

• Sector rotation risk if investors pivot from AI infrastructure and platform names back to cyclicals.

Snapshot: NOW stock levels and events

• Today’s regular session: Volatile, finishing lower before results.

• After-hours move: Shares rebounded on the print and split news.

• Next catalysts: Split effective date details; management color on AI adoption rates, federal pipeline, and Pro Plus seat penetration.

What to watch on the conference call and beyond

1. AI monetization mix: How much of the guide raise stems from Pro/Pro Plus upgrades vs. new-logo wins?

2. CRPO sustainability: Are mid-20s backlog growth rates possible into 2026, or does it normalize back to ~20%?

3. Margins: Any puts/takes from data-center costs tied to AI inference and training partnerships.

4. Suite standardization: Evidence that enterprises are consolidating multiple tools onto ServiceNow’s platform, reducing churn and boosting lifetime value.

5. Split timing logistics: Record and distribution dates, and any inclusion effects for options trading or retail programs.

The combination of a clean top- and bottom-line beat, brisk backlog growth, a guide lift, and a 5-for-1 split reset sentiment on ServiceNow stock after a shaky start to the day. If management can keep translating AI enthusiasm into upsells, renewals, and multi-module deals, NOW remains one of the clearest large-cap software plays on enterprise automation in the AI era.