ServiceNow stock sinks 14% as subscription revenue takes hit from Iran war
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In this articleServiceNow reported first-quarter results on Wednesday that narrowly beat Wall Street's estimates as the company said the conflict in the Middle East dragged on subscription revenue.Here's how the company performed versus LSEG estimates:Revenue for the quarter grew 22% year-over-year. The company reported $469 million in net income, or 45 cents per share, a slight increase from $460 million, or 44 cents per share, a year ago.The software company said in its release that subscription revenue growth during the quarter "saw an approximately 75 basis point headwind from delayed closings of several large on-premise deals in the Middle East, due to the ongoing conflict in the region."The company reported quarterly subscription revenues of $3.67 billion, slightly above the $3.65 billion FactSet expectation.ServiceNow increased its forecast of fiscal 2026 subscription revenues to fall between $15.74 billion and $15.78 billion, up from the forecast it made last quarter of $15.53 billion to $15.57 billion."Our full year guidance reflects a prudent assessment right now of the geopolitical environment," CFO Gina Mastantuono told CNBC. "I definitely took a little bit of incremental conservatism because of the ongoing conflict in the Middle East and its potential impact on deal timing."In the first quarter, ServiceNow repurchased about 20 million shares, over double the amount purchased in all of 2025. On its last earnings call, the company announced board approval for an additional $5 billion in share buybacks.The Santa Clara, California-based company reported $12.64 billion in current remaining performance obligations for the quarter, beating estimates of $12.56 billion. It reported 16 transactions over $5 million in new annual contract value in the first-quarter, an increase of almost 80% year-over-year.ServiceNow has been in a spending spree as it tries to position itself as an "AI control tower." The stock has had a rough start to 2026, down about 30% year-to-date.Mastantuono told CNBC that the company's AI product portfolio has continued to outperform and is on track to exceed the company's $1 billion target for 2026.The company also announced it was expanding its deal with Google Cloud.Earlier this week, ServiceNow completed its $7.75 billion acquisition of cybersecurity startup Armis, which was expected to close in the second half of the year.Got a confidential news tip? We want to hear from you.Sign up for free newsletters and get more CNBC delivered to your inboxGet this delivered to your inbox, and more info about our products and services.© 2026 Versant Media, LLC.
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