ServiceNow beats, stock tumbles

ServiceNow beat Wall Street’s forecasts and raised its 2026 subscription outlook, but its stock still fell 17.75% on April 23. (seekingalpha.com) (finance.yahoo.com) The company reported first-quarter revenue of $3.77 billion, up 22% from a year earlier, and adjusted earnings of 97 cents a share, ahead of LSEG estimates for $3.74 billion in revenue and 96 cents in earnings. (cnbc.com) Subscription revenue, the sales figure investors watch most closely at software companies, came in at $3.671 billion, up 22%, and ServiceNow lifted its full-year subscription-revenue forecast to $15.74 billion to $15.78 billion from $15.53 billion to $15.57 billion. (seekingalpha.com) (cnbc.com) The selloff turned on what investors heard about the next few quarters, not the quarter that had already closed. ServiceNow said delayed closings on several large on-premise deals in the Middle East cut first-quarter subscription growth by about 75 basis points because of the ongoing Iran conflict. (cnbc.com) That landed in a market already looking for signs that artificial intelligence could weaken traditional software vendors’ pricing power and growth. Reuters reported that ServiceNow and International Business Machines results reignited those fears across the sector, pulling down Adobe, CrowdStrike, Intuit and Datadog on April 23. (money.usnews.com) ServiceNow’s own numbers were not weak across the board. Current remaining performance obligations, a measure of contracted revenue expected within 12 months, rose 22.5% to $12.64 billion, above analyst estimates cited by CNBC. (seekingalpha.com) (cnbc.com) The company also pointed to continued demand for its artificial-intelligence products. Chief Financial Officer Gina Mastantuono told CNBC the AI portfolio remained on track to top ServiceNow’s $1 billion target for 2026, and the company said customers spending more than $1 million annually on Now Assist grew more than 130% from a year earlier. (cnbc.com) (seekingalpha.com) Management also tied part of the story to deal timing rather than demand destruction. Mastantuono said the full-year guidance included “incremental conservatism” because of the geopolitical backdrop, even after the company raised that forecast. (cnbc.com) The drop was severe enough to stand out beyond ServiceNow. Reuters said the S&P 500 Software & Services index fell more than 4% on April 23, while the iShares Expanded Tech-Software ETF was down about 16% for 2026 even as semiconductor stocks kept climbing. (money.usnews.com) For ServiceNow, the immediate problem was not whether it beat estimates on April 22. It was that a company still growing above 20% showed how quickly war risk, delayed deals and AI anxiety can override a clean earnings beat. (cnbc.com) (money.usnews.com)