ServiceNow reported strong first-quarter results, revised its forecast upwards, and highlighted continued demand for its software despite questions swirling about how AI will impact the industry.
The company posted subscription revenue of $3.67 billion in the quarter, up 22% year over year. ServiceNow announced that it beat the high end of guidance on all revenue growth and profitability metrics for the quarter and raised its full-year subscription revenue outlook.
ServiceNow currently expects subscription revenue to be between $15.7 billion and $15.8 billion in 2026, representing approximately 22% to 22.5% growth. This exceeded Cowen analysts’ expectations at press time.
CEO Bill McDermott emphasized the company’s momentum in an interview Tuesday and once again dismissed the threat of AI.
“Results speak louder than words. We’re now in an even more exciting quarter, with even more heartbeats,” he told Business Insider.
McDermott highlighted ServiceNow’s accelerated adoption of AI products as a key driver of growth. The company previously expected AI software sales to be $1 billion in 2026, but McDermott now expects them to be at least $1.5 billion.
“The acceptance of our AI solutions has been really amazing, so we’ll probably get through that too,” he added.
The company’s remaining performance obligations, a key forward-looking indicator, increased 25% to $27.7 billion, and current RPO increased 22.5% to $12.64 billion.
Software stocks, including ServiceNow, have been hammered over the past six months over concerns that generative AI models and related products from Anthropic and OpenAI could displace established software services.
McDermott dismissed those concerns Tuesday, arguing instead that ServiceNow is benefiting from the change.
He said customers considering leveraging AI models more directly are aware that the costs of these new approaches can be much higher than expected due to unpredictable usage-based pricing.
McDermott said a CIO at a large customer recently evaluated a more direct AI modeling approach to running IT operations. McDermott argued that it would cost 10 times more than focusing solely on ServiceNow’s more accurate and predictive AI services.
He called the provision of AI models for enterprise software customers a “parlor trick.”
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