ServiceNow stock sinks 14% as subscription revenue takes hit from Iran war

ServiceNow has reported its first-quarter financial results, which narrowly surpassed Wall Street's expectations, despite facing challenges due to the ongoing conflict in the Middle East. The company's revenue grew by 22% year-over-year, totaling $469 million in net income, or 45 cents per share, compared to $460 million, or 44 cents per share, from the previous year. The software giant highlighted that subscription revenue growth was hindered by approximately 75 basis points due to delays in closing several significant on-premise deals in the region affected by the conflict. The quarterly subscription revenues reached $3.67 billion, slightly exceeding the FactSet forecast of $3.65 billion. In light of the geopolitical situation, ServiceNow has raised its forecast for fiscal 2026 subscription revenues to a range of $15.74 billion to $15.78 billion, up from the prior estimate of $15.53 billion to $15.57 billion. CFO Gina Mastantuono emphasized a cautious approach in their projections, attributing this to the potential effects of the Middle East conflict on deal timing. During the first quarter, the company repurchased approximately 20 million shares, more than doubling its purchases for the entire year of 2025. The board had previously approved an additional $5 billion for share buybacks. ServiceNow also reported $12.64 billion in current remaining performance obligations for the quarter, surpassing estimates of $12.56 billion. The company experienced significant growth, noting 16 transactions exceeding $5 million in new annual contract value, marking an almost 80% increase year-over-year. Despite a rocky start to 2026, with stock down about 30% year-to-date, ServiceNow is positioning itself as a leader in AI technology, aiming to surpass its $1 billion revenue target from AI products by 2026. Additionally, the firm has expanded its partnership with Google Cloud and recently completed a $7.75 billion acquisition of cybersecurity startup Armis, which was anticipated to finalize in the latter half of the year.