(Bloomberg) -- ServiceNow Inc. reported strong sales and bookings but failed to clear high investor expectations for AI to boost the software company’s results.

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Third-quarter subscription sales, which account for the bulk of ServiceNow’s revenue, increased 23% to $2.7 billion, ServiceNow said Wednesday in a statement. Current remaining performance obligation, a measure of booked sales, increased 26% in the period ending Sept. 30. Both exceeded analysts’ estimates.

The Santa Clara, California-based company makes applications that help companies organize and automate their personnel and information technology operations. Like its peers, ServiceNow is baking generative AI features into its products and offers a pricier tier with those tools.

The company’s main generative AI assist product, Now Assist, is the fastest growing in company history, Chief Executive Officer Bill McDermott said in an interview. The average contract premium for users of Now Assist is 30%, he added.

Still, investors have been anxious to see the financial impact from AI products and were underwhelmed by the results. The shares slipped about 1% in extended trading.

“Looks like a case of high expectations,” said Anurag Rana, an analyst at Bloomberg Intelligence, of the negative share reaction. The stock had increased 28% this year through Wednesday’s close. That’s more than twice the rally seen in the iShares Expanded Software ETF, which is often used as a sector benchmark.

In recent weeks, ServiceNow and software peers like Salesforce Inc. and Microsoft Corp. have begun emphasizing AI “agents” that can complete tasks without user supervision. Some customers are already trying ServiceNow’s agents, which will be released more broadly next month, McDermott said. Once the agents are fully rolled out, they’ll be priced differently from other products, McDermott added.

For the current quarter ending in December, ServiceNow projected subscription revenue of about $2.88 billion, just ahead of analyst estimates. The company expects near-term bookings to rise 21.5%.

ServiceNow also announced the hiring of a leader from Alphabet Inc.’s Google Cloud for a prominent role. Amit Zavery will fill titles vacated earlier this year by CJ Desai as president, chief product officer and chief operating officer. Zavery will focus on product and engineering, McDermott said.