ServiceNow Stock Plunges 18% on Delayed Deals; Raises AI ACV Target to $1.5B
ServiceNow subscription revenue rose 22% to $3.67B in Q1, but its shares plunged 18%—the biggest drop since IPO—after the company cited delayed Middle East on-premise deals due to regional conflict. It forecasts $3.82B in Q2 subscription revenue and lifted its AI annual contract value target to $1.5B.
1. Q1 Revenue and Stock Reaction
ServiceNow reported Q1 subscription revenue of $3.67 billion, up 22% year-over-year. The shares plunged 18%—the largest single-day drop since its IPO—after management cited delayed closings of large on-premise deals in the Middle East related to regional conflict.
2. Q2 Outlook and AI Targets
The company issued Q2 subscription revenue guidance of $3.82 billion, a 23% increase that tops the $3.75 billion consensus. Management also raised its full-year AI annual contract value goal to $1.5 billion, up from $1.0 billion, and noted it has 630 customers with over $5 million in annual contract value.
3. Armis Acquisition Impact
ServiceNow completed its $7.75 billion acquisition of cybersecurity firm Armis, expecting the deal to boost subscription revenue growth by approximately 1.25 percentage points this year while compressing operating margins by about 0.75 percentage points.