ServiceNow stock sinks as subscription revenue takes hit from Iran war
Bill McDermott, CEO of ServiceNow Inc., at Allen & Co. in Sun Valley, Idaho, on July 10, 2025. During the Media and Technology Conference.
David Paul Morris | Bloomberg | Getty Images
ServiceNow It reported first-quarter results on Wednesday that narrowly beat Wall Street’s forecasts as the software company said conflict in the Middle East lowered subscription revenue.
The company’s performance according to LSEG forecasts is as follows:
- earnings per share: 97 cents adjusted, vs. 96 cents expected
- Revenues: $3.77 billion, expected $3.74 billion
Revenue for the quarter was up 22% year over year. The company reported net income of $469 million, or 45 cents per share, up slightly from $460 million, or 44 cents per share, a year ago.
Subscription revenue growth during the quarter “saw a headwind of approximately 75 basis points due to the delayed closing of several large internal deals in the Middle East due to ongoing conflict in the region,” the company said in its statement.
The company reported quarterly subscription revenues of $3.67 billion, slightly above the $3.65 billion FactSet expected.
ServiceNow raised its forecast that fiscal 2026 subscription revenues will fall between $15.74 billion and $15.78 billion to $15.57 billion, from the $15.53 billion forecast it made last quarter.
“Our full-year guidance reflects a cautious assessment of the current geopolitical environment,” CFO Gina Mastantuono told CNBC. “I’ve certainly received some increased conservatism due to the ongoing conflict in the Middle East and its potential impact on deal timing.”
ServiceNow repurchased approximately 20 million shares in the first quarter; This was more than double the amount purchased in all of 2025. The company announced in its last earnings call that its board of directors approved an additional $5 billion in share repurchases.
The Santa Clara, California-based company reported $12.64 billion in remaining current performance liabilities for the quarter, above estimates of $12.56 billion. 16 transactions over $5 million in new annual contract value were reported in the first quarter; This was up almost 80% from the previous year.
ServiceNow is on a spending spree as it tries to position itself as an “AI control tower.” The stock is off to a rough start to 2026, down nearly 30% year to date.
Mastantuono told CNBC that the company’s AI product portfolio continues to outperform, and the company is on track to exceed its $1 billion goal for 2026.
The company also announced that it will expand its agreement. Google Cloudy.
Earlier this week, ServiceNow completed its $7.75 billion acquisition. Cybersecurity startup ArmisIt was expected to close in the second half of the year.
