Sierra Adds $150M ARR, Outpacing ServiceNow's Growth
Sierra's quarterly revenue surpasses expectations, while ServiceNow's growth slows, according to SaaStr. This shift may indicate a change in B2B spending habits.
Original reporting · saastr.com
Original: “SaaS Isn’t Dead. Old SaaS Is Dead: Sierra Adds $150M ARR in One Quarter While ServiceNow Drops 27% in a Day”
Read “SaaS Isn’t Dead. Old SaaS Is Dead: Sierra Adds $150M ARR in One Quarter While ServiceNow…” at SaaStr →
How this was written. Awesome B2B wrote this article with a language model from SaaStr’s reporting (model: @cf/meta/llama-3.3-70b-instruct-fp8-fast); it describes that reporting rather than adding to it. The original, linked above, is the full story.
Key points from SaaStr’s report
- Sierra added over $150M in ARR in Q3, surpassing $400M in total ARR, according to SaaStr.
- ServiceNow's growth slowed, with shares falling 26.9% despite 21% year-over-year growth in subscription revenues.
- The B2B industry may be undergoing a significant shift, with companies increasingly allocating budget to innovative, outcome-based solutions.
- Agentic AI spending is expected to grow 141% in 2026, driving the expansion of companies like Sierra.
- The pricing models of Sierra and ServiceNow reflect this change, with Sierra charging customers for outcomes rather than seats.
A significant shift in the B2B industry may be underway, as evidenced by the recent performances of Sierra and ServiceNow. SaaStr reported that within a 24-hour period, ServiceNow's shares fell 26.9%, while Sierra announced it had added over $150M in annual recurring revenue (ARR) in the quarter, surpassing $400M in total ARR.
ServiceNow's Q3 report showed 21% year-over-year growth in subscription revenues, with 19 transactions over $5 million in net new ACV. However, the company's shares still plummeted, with the market seemingly unimpressed by its growth. In contrast, Sierra's rapid expansion, with almost 50% of the Fortune 50 as customers, may indicate a new direction for B2B spending.
The difference in growth rates between the two companies is striking, with Sierra doubling its ARR from $200M to $400M in just five months. In comparison, ServiceNow, with 20.5% growth, would take roughly 3.7 years to achieve the same feat. This disparity may be due to the changing nature of B2B budgets, with companies increasingly allocating funds to newer, more innovative solutions.
According to SaaStr, the total software budget is growing at a normal pace, with Gartner forecasting 15.1% growth in 2026. However, the agentic slice of that budget is expanding rapidly, with agentic AI spending expected to grow 141% in 2026. This shift may be driving the growth of companies like Sierra, which offer agent-native solutions priced per outcome rather than per seat.
The pricing models of Sierra and ServiceNow reflect this change, with Sierra charging customers for outcomes, such as a loan refinanced or a sale closed, rather than for tokens or seats. In contrast, ServiceNow's hybrid model, which combines seat-based pricing with consumption-based layers, may be less appealing to customers seeking more flexible and results-driven solutions.
The market's reaction to the two companies' performances suggests that investors are recognizing this shift in B2B spending habits. While ServiceNow's growth may be slowing, Sierra's rapid expansion indicates that companies are increasingly willing to allocate budget to innovative, outcome-based solutions. As the B2B landscape continues to evolve, it will be interesting to see how these trends play out.
SaaStr reported that the same B2B budget is being reallocated from old SaaS models to new, agent-native solutions. This change may be driven by the growing demand for more efficient and effective solutions, with companies seeking to achieve specific outcomes rather than simply purchasing software. As this trend continues, it may have significant implications for the B2B industry as a whole.
Questions and answers
What is driving the growth of companies like Sierra?
The growing demand for innovative, outcome-based solutions, as well as the increasing allocation of B2B budget to agentic AI spending, may be driving the growth of companies like Sierra.
How do the pricing models of Sierra and ServiceNow differ?
Sierra prices its solutions per outcome, such as a loan refinanced or a sale closed, while ServiceNow's hybrid model combines seat-based pricing with consumption-based layers.
What are the implications of this shift in B2B spending habits?
The shift may have significant implications for the B2B industry, with companies increasingly seeking innovative, outcome-based solutions and allocating budget accordingly.
