ServiceNow forecasts slower contract growth, clouding enterprise software demand

ServiceNow, which sells software that helps businesses manage workflows, forecasts fourth-quarter backlog growth of 18.5%, below its revenue growth forecast of 21.5%. Backlog is business customers have contracted for that the company has yet to recognize as revenue. In the third quarter, backlog grew 21%, slightly faster than revenue growth of 20.5%; these comparisons exclude currency movements. ^[1]

ServiceNow also raised its 2026 artificial intelligence contract target to $1.7 billion. The slower contract-growth forecast and higher AI target give investors a mixed picture of its outlook. ^[2][1]

Subscription software companies recognize revenue as they deliver services, so current sales can keep rising while the contracted business supporting future sales slows first. If that gap persists, ServiceNow would need more new contracts or customer expansions to sustain later revenue growth. The 18.5% forecast still represents growth, but signals weaker momentum in committed future business. ^[1]

That signal also gives investors reason to reassess growth expectations for other enterprise software providers. Coverage reported ServiceNow down 19%, alongside declines of 6% for Salesforce and 5% for Workday, showing concern spreading to peers; those share moves alone do not establish that peers’ contract growth has slowed. ^[3]

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