ServiceNow's CFO says the forecast for subscription revenue is prudent. And one analyst cheers the company's momentum with large deals.

ServiceNow Inc.'s stock had been hot, but it lost steam in Wednesday's after-hours trading as the company came up a bit shy on subscription revenue, a closely watched metric. ServiceNow shares slumped 7% in overnight trading.

The software company also missed expectations with its subscription-revenue guidance, as its chief financial officer said she expects deals to be more weighted toward the second half of the year.

ServiceNow (NOW) expects $2.995 billion to $3 billion in subscription revenue for the first quarter, while analysts were projecting $3.031 billion. For the first quarter, revenue in that category amounted to $2.866 billion, up 21% but slightly below the $2.879 billion consensus view.

"At our scale to be driving this level of growth is pretty incredible," Chief Financial Officer Gina Mastantuono told MarketWatch.

Looking at the full year, ServiceNow forecasts $12.635 billion to $12.675 billion in revenue. The FactSet consensus was for $12.849 billion.

Mastantuono called out three factors impacting the outlook. For one, ServiceNow has a sizable federal business, and the company says it's typical for agencies to take some time to finalize their priorities in a new administration.

Additionally, ServiceNow is experimenting with some consumption-based pricing, though it still has its seat-based model. The consumption side of things stands to benefit more in the second half of the year and into next year as more customers make use of the company's artificial-intelligence agents.

Finally, like other big technology companies, ServiceNow is feeling the sting of a stronger dollar. Foreign exchange has been a $175 million headwind to the company's subscription-revenue line since the election.

"As always, we begin the year with a thoughtful initial guide that sets a really strong foundation for success throughout the year," Mastantuono said. "In addition, we prudently factored in a couple of dynamics that I think are important."

ServiceNow shares fell 8.4% in Wednesday's extended session after rising 20% over the past three months.

Piper Sandler's Rob Owens saw "conservatism" in the forecast, and he found positives in the latest quarter's numbers. "While guidance for 2025 came in lower than we expected, we continue to favor shares given the continued large deal momentum and AI traction," he wrote.

Owens was impressed by factors like a sequential doubling in the number of customers who opted for at least two generative AI products, as well as the company's disclosure of 170 deals with annual contract values above $1 million. Fifteen of those were from new "logos."

"New logos are the future growth of the enterprise," Mastantuono said.

She saw the DeepSeek advancements as positive for ServiceNow and other companies that make software applications.

"It absolutely points to models being commoditized at a fast rate, which means adoption will be faster," she told MarketWatch. "And by the way, it means that costs will come down, which means margins for companies like ServiceNow will continue to go up."

ServiceNow is agnostic to which large-language models succeed as the company offers a variety of choices. "Differentiation is going to happen at the application level, at our level, and not the LLM level."