On July 14, ServiceNow fell 7.33% in regular trading, trading at $103.09/share, with turnover of $504 million. The decline was primarily triggered by industry peer IBM releasing preliminary Q2 results that significantly missed expectations, sparking a broad sell-off across the enterprise software sector.
IBM reported preliminary Q2 revenue of $17.2 billion, approximately 4% below the Wall Street consensus estimate of $17.86 billion. Adjusted EPS came in at $2.93, also missing the FactSet estimate of $3.01. IBM's infrastructure revenue declined 7% year-over-year, with the z17 mainframe cycle underperforming expectations. IBM CEO Krishna noted that customers shifted capital expenditure toward servers, storage, and memory purchases in late June to secure supply ahead of anticipated price increases, diverting budgets away from software spending. HSBC downgraded IBM to underweight on the same day, cutting its target to $191.
The shockwave spread across the software sector, with IBM plunging over 22%, Accenture falling over 7%, Salesforce dropping approximately 5%, and Microsoft declining over 2%. ServiceNow, as a core enterprise SaaS name, was sold off in tandem. Notably, ServiceNow is scheduled to report Q2 earnings on July 22 after market close, with consensus EPS estimate at $0.40.
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