ServiceNow beats Q1, completes Armis

ServiceNow beat its own first-quarter targets on April 22, then raised its full-year subscription revenue outlook days after closing its Armis acquisition. (investor.servicenow.com) (newsroom.servicenow.com) The company said subscription revenue was $3.671 billion for the quarter ended March 31, up 22% from a year earlier, while total revenue reached $3.77 billion. Current remaining performance obligations, a measure of contracted revenue due within 12 months, rose to $12.64 billion. (investor.servicenow.com) ServiceNow also said customers spending more than $1 million a year on Now Assist grew more than 130% from a year earlier. It ended the quarter with 630 customers generating more than $5 million in annual contract value, up about 22%. (investor.servicenow.com) Armis is a cybersecurity company that tracks connected assets across information technology systems, factory equipment, medical devices, internet-of-things gear, code and cloud services. ServiceNow completed the deal on April 20 and said the purchase is expected to more than triple its market opportunity in security and risk. (newsroom.servicenow.com) Two days later, ServiceNow and Google Cloud said they were linking Google Gemini Enterprise with the ServiceNow AI Platform so software agents can work across 5G networks, retail operations and information technology systems. The companies said the setup uses open protocols including Model Context Protocol, or MCP, so agents can pass context and actions between platforms. (newsroom.servicenow.com) (googlecloudpresscorner.com) Investors focused on what did not show up cleanly in the quarter. ServiceNow said delayed closures of several large on-premises government deals in the Middle East created about a 75-basis-point headwind to subscription revenue growth. (reuters.com) (cnbc.com) The company said the early close of Armis should add roughly 125 basis points to second-quarter and full-year subscription revenue growth, but analysts also pointed to near-term margin pressure from the acquisition. ServiceNow shares fell sharply after the report, even with the higher full-year outlook. (reuters.com) (cnbc.com) That leaves ServiceNow trying to prove two things at once: that artificial intelligence can add new revenue fast enough to satisfy investors, and that buying Armis can turn its workflow software into a broader operating and security system. Bill McDermott said on the earnings release that the Armis close expands ServiceNow’s total addressable market and accelerates its subscription growth trajectory. (investor.servicenow.com) The next test is whether those new AI and security products turn into large contracts quickly enough to offset geopolitical delays and acquisition costs. For now, ServiceNow has the beat, the higher forecast and the bigger platform, but not yet the cleaner story investors wanted. (investor.servicenow.com) (reuters.com)