ServiceNow shares fell over 6% during trading on June 2, 2026. An analyst issued a Sell rating citing concerns over revenue quality and capital allocation.
Weakening customer renewal and retention rates indicate declining pricing power. First-quarter gross margins dropped to 75%. This represents a decline from the 78.9% margin reported a year earlier. Management expects further margin compression from rising cloud and AI costs.
The company used cash reserves to fund share buybacks. These repurchases primarily offset dilution from stock-based compensation.