ServiceNow Shares Plunge 14% as Middle East Conflict Delays Major Deals

ServiceNow reported first-quarter results that surpassed Wall Street estimates, yet the company's stock plummeted 14% following disclosures that regional conflict in the Middle East has delayed several large on-premise contracts. This geopolitical friction resulted in an approximately 75 basis point headwind for subscription revenue during the quarter. Despite the immediate price action, the software giant continues to scale its artificial intelligence capabilities. The company is positioning itself as an 'AI control tower,' with its AI product portfolio currently on track to exceed a $1 billion target for 2026. Additionally, ServiceNow expanded its strategic partnership with Google Cloud to further integrate these offerings. Financial performance remained robust on a baseline level. Revenue grew 22% year-over-year, with net income reaching $469 million, or 45 cents per share. Quarterly subscription revenues totaled $3.67 billion, slightly beating the $3.65 billion expectation. The company also reported $12.64 billion in current remaining performance obligations, exceeding estimates of $12.56 billion. To support shareholders amid a difficult start to 2026—where the stock has fallen roughly 30% year-to-date—ServiceNow repurchased 20 million shares in the first quarter. This volume is more than double the total repurchased in all of 2025, supported by board approval for an additional $5 billion in share buybacks. Looking ahead, CFO Gina Mastantuono raised the fiscal 2026 subscription revenue forecast to a range of $15.74 billion to $15.78 billion. However, she emphasized a 'prudent assessment' and 'incremental conservatism' regarding the timing of deals given the ongoing volatility in the Middle East. The company also recently finalized its $7.75 billion acquisition of cybersecurity firm Armis.