ServiceNow Raises 2026 Outlook After 19% Subscription Growth as AI Demand Fears Pressure Shares
Updated
Updated · The Motley Fool · May 14
ServiceNow Raises 2026 Outlook After 19% Subscription Growth as AI Demand Fears Pressure Shares
4 articles · Updated · The Motley Fool · May 14
ServiceNow beat its own first-quarter revenue and profit outlook and lifted full-year guidance, even as the stock fell after earnings on worries AI could curb future enterprise software demand.
19% subscription-revenue growth and 25% remaining-performance-obligation growth pointed to solid organic demand, with backlog reaching $27.7 billion and $12.6 billion set to convert within 12 months.
Management said acquisitions helped but did not drive the guidance increase: MoveWorks contributed through the quarter, while Veza and Pyramid had limited March impact and Armis closed earlier than expected in April.
At its analyst day, ServiceNow mapped a path to $15.7 billion in 2026 subscription revenue and $30 billion longer term, with Now Assist expected to rise to 30% of annual contract value from about 10% now.
The debate around the shares centers on whether AI will shrink user counts over time, even as ServiceNow targets a Rule of 40 above 60, lower stock compensation and faster EPS growth.
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