ServiceNow Inc. reported first-quarter 2026 financial results that exceeded Wall Street expectations on both the top and bottom lines, yet the company’s stock fell as much as 17.8% during trading on April 23 and 24. The decline followed management’s disclosure of geopolitical headwinds and an ongoing industry-wide debate regarding the long-term impact of generative artificial intelligence on enterprise software incumbents.
For the quarter ended March 31, 2026, ServiceNow posted total revenue of $3.77 billion, a 22% increase year-over-year, surpassing the consensus estimate of $3.75 billion. Subscription revenue reached $3.67 billion, also up 22% from the prior year. The company reported non-GAAP diluted earnings per share of $0.97, beating the Zacks Consensus Estimate of $0.95. These figures reflect the company’s first full quarter following a five-for-one stock split implemented in December 2025.
Despite the financial beat, ServiceNow Chairman and CEO Bill McDermott highlighted a 75-basis-point headwind to subscription revenue growth caused by delayed deal closings. McDermott specifically cited ongoing conflict in the Middle East, which led to the postponement of several large on-premise contracts in the region. While McDermott characterized these as delayed rather than canceled and noted that the pipeline remains at record levels, the disclosure heightened investor sensitivity toward macroeconomic and geopolitical disruptions in international markets.
The earnings call also addressed the SaaSpocalypse narrative—a market concern that generative AI might reduce the need for seat-based software licenses. To counter this, Chief Financial Officer Gina Mastantuono revealed that 50% of the company’s net new business now comes from non-seat-based pricing models. Furthermore, the company reported that the number of customers spending more than $1 million on its Now Assist AI product suite surged 130% year-over-year. McDermott dismissed competitive threats from smaller AI startups as parlor tricks, asserting that ServiceNow’s platform remains the primary orchestrator for enterprise automation.
ServiceNow also confirmed the early closure of its $7.75 billion acquisition of cybersecurity firm Armis on April 20, 2026. While the acquisition is expected to contribute approximately 125 basis points to 2026 subscription revenue, it will also create a near-term headwind of 75 basis points to operating margins as the business is integrated. Consequently, the company raised its full-year 2026 subscription revenue guidance to a range of $15.73 billion to $15.77 billion. The company ended the quarter with current remaining performance obligations of $12.64 billion, representing 22.5% year-over-year growth.