ServiceNow Plummets 18% After Q1 Revenue Miss, Middle East Deal Delays
ServiceNow’s Q1 subscription revenue rose 22% to $3.67B but delayed large Middle East closings and softer-than-expected sales triggered an 18% share plunge—the largest one-day drop on record. The company lifted its AI contract value target to $1.5B, guided Q2 subscription growth to 23% ($3.82B) and closed its $7.75B Armis deal.
1. Q1 Financial Performance
ServiceNow’s subscription revenue rose 22% year-over-year to $3.67B in Q1, roughly in line with analyst estimates, but delays in several large on-premise transactions in the Middle East and softer sales commentary triggered an 18% share drop—the largest one-day decline in company history. Shares have fallen 45% this year.
2. AI Contract Value and Guidance
Management increased the AI annual contract value target from $1B to $1.5B for the year and reported 630 customers with ACV above $5M, up from 603 last quarter. For Q2, ServiceNow forecasts subscription revenue growth of approximately 23% to $3.82B, exceeding analyst projections of $3.75B.
3. Armis Acquisition Impact
ServiceNow closed its $7.75B acquisition of cybersecurity firm Armis in Q1, projecting that the deal will add about 1.25 percentage points to subscription revenue growth this year while reducing operating margins by roughly 0.75 percentage points.