ServiceNow Shares Plunge Following Margin Miss and Geopolitical Headwinds

ServiceNow (NOW) shares plummeted 18.3% on Thursday, marking the steepest single-day loss in the company's history as a public entity. The sell-off exerted significant downward pressure on the broader market, contributing to declines in the S&P 500 and the Nasdaq Composite. While the company's first-quarter financial results were largely in line with analyst expectations, the market reacted sharply to a softer-than-anticipated outlook. Investors are increasingly sensitive to the potential for artificial intelligence to disrupt the software-as-a-service (SaaS) landscape, making this report a critical litmus test for the sector. For the first quarter, ServiceNow reported non-GAAP earnings per share of $0.97 and revenue of $3.77 billion, exceeding consensus estimates by $20 million. The company maintained a year-over-year revenue growth rate of 22%. The volatility was driven primarily by guidance for gross margins, which the company projected at 81.5%, falling short of the 82.1% anticipated by Wall Street. Additionally, management cited deal delays stemming from the conflict in Iran. Subscription revenue growth for the year is expected to land between 21% and 21.5% on a currency-adjusted basis.