ServiceNow reported first-quarter revenue of $3.77 billion on 22 April, up 22% year-on-year and ahead of analyst estimates. Adjusted earnings per share came in at 97 cents, beating the 96-cent consensus by a narrow margin.
Why it matters: The sell-off shows how the Iran conflict is creating real commercial damage beyond oil prices, disrupting enterprise software deals worth hundreds of millions of dollars across the Middle East.
The Middle East headwind
Management disclosed that several large on-premise deals in the Middle East were delayed due to the ongoing conflict, creating an approximately 75-basis-point headwind to subscription revenue growth. The company did not specify the total value of the delayed contracts but said they remained in the pipeline.
Acquisition weighs on margins
ServiceNow’s recent acquisition of cybersecurity firm Armis added a second concern for investors. The company warned the deal will pressure subscription gross margin, operating margin, and free cash flow margin through the remainder of 2026 as integration costs work through the financials.
Guidance raised, but cRPO missed
Current remaining performance obligations, a closely watched forward-looking metric, came in below analyst expectations. However, ServiceNow raised its full-year subscription revenue guidance to $15.74–$15.78 billion, up from $15.53–$15.57 billion in the prior forecast.
What happens next
The 15% stock decline wiped approximately $20 billion from ServiceNow’s market capitalisation. Investors will watch whether the delayed Middle East deals close in the second quarter as the Iran ceasefire talks continue. The Armis integration timeline and its margin impact will also be scrutinised in the next earnings call.