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4h ago

ServiceNow Lifts Outlook After Q1 Beat as Shares Sink on Middle East Deal Delays

Investors see timing risk from on‑premise contracts in the Middle East.

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ServiceNow’s growth is increasingly driven by large enterprises expanding into multiple workflows, with $5M+ customers up ~20% and driving higher spend, retention, and lifetime value.

Overview

  • ServiceNow, which reported results Wednesday, beat estimates and raised its full‑year subscription revenue outlook on 22% growth in subscription sales.
  • Shares fell about 12% to 14% after hours after the company said several large on‑premise deals in the Middle East were delayed, creating a roughly 75‑basis‑point hit to subscription growth.
  • Management said AI demand is strengthening, citing more $1 million‑plus Now Assist contracts, and it increased its 2026 AI software sales goal to at least $1.5 billion.
  • Forward demand stayed firm, with remaining performance obligations up about 25% year over year and current RPO also higher, pointing to revenue visibility.
  • The delay effect is sharper for these customers because on‑premise deals book revenue up front, so later closings shift recognized sales into future quarters.