Here's Why ServiceNow, Inc. Shares Plunged Today

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of ServiceNow, Inc. (NYSE: NOW  ) sank more than 15% early Thursday, then settled down around 6% despite solid first-quarter results from the IT infrastructure specialist.

So what: Quarterly revenue rose 62% year-over-year to $139.1 million, which translated to an adjusted net loss of $0.08 per share. Analysts, on average, expected the same $0.08-per-share loss but on lower sales of $134.64 million.

Better yet, ServiceNow projects second-quarter revenue between $160 million and $162 million, compared to analysts' expectations for Q2 sales of just $156.69 million. For the full year, ServiceNow sees 2014 revenue in the range of $652 million to $657 million, or year-over-year growth between 54% and 55%. Once again, that's well above analysts' estimates calling for 2014 sales of $644.24 million.

Now what: ServiceNow CEO Frank Slootman added, "We are off to a great start in 2014. We exceeded our previously stated financial outlook on revenue, added 134 net new customers and had nine new deals with an annual contract value in excess of $1 million, a record for ServiceNow."

Frankly, today's drop makes little sense considering ServiceNow did everything expected of it and more. The stock obviously doesn't look "cheap" trading around 18 times last year's sales and above 200 times next year's expected earnings, but that's not entirely uncommon for businesses focusing on massive top-line growth to achieve sustained profitability down the road. In the end, assuming ServiceNow's revenue continues increasing as expected, I think today's pullback could serve as a great buying opportunity for patient, long-term investors.

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