ServiceNow CEO Bill McDermott on Wednesday downplayed concerns that the Iran war is causing significant disruption to the software provider’s business, even as the software provider’s first-quarter results were depressed by delays in the Middle East situation.
“Everything is fine. The Middle East is opening up to negotiations again,” McDermott told CNBC’s “Mad Money” on Jim Cramer on Wednesday.
ServiceNow’s subscription revenue for the quarter increased 19% on a constant currency basis, including a 75 basis point headwind from delays in completing on-premises transactions in the Middle East. But Mr McDermott said the impact was largely due to timing, rather than a worsening of demand due to the war.
“You’re dealing with a sovereign cloud in the Middle East,” he said. “Whenever there is a delay, the impact is immediate.”
McDermott’s comments were aired Wednesday night as ServiceNow stock fell 13% in after-hours trading even though the company beat Wall Street expectations for both total sales and profits.
Beyond geopolitical concerns, ServiceNow’s stock has been under pressure for months, dropping about 30% this year as investors grew concerned that artificial intelligence would disrupt its business and reduce its value in the future.
McDermott pushed back on that skepticism, arguing that AI is ultimately a “tailwind” for the company rather than a threat. ServiceNow’s software is commonly used by IT and human resources departments to automate workflows and handle tasks such as ordering devices for new employees.
“The more AI we have, the more everything runs through ServiceNow,” he said. “I think about it, but the workflow works. That’s where we come in.”
He added that demand trends remain strong, noting that the company’s user base continues to grow and AI-related adoption accelerates. “Our business is good,” McDermott said. “And it’s all about AI.”
