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ServiceNow Tops Q1 2026 Earnings Estimates and Lifts Guidance, But Shares Fall 12%
ServiceNow reported first-quarter 2026 earnings that exceeded consensus estimates on revenue and profit, prompting the company to raise its full-year guidance. Despite the positive results, shares fell 12% following the announcement. CEO Bill McDermott highlighted AI-driven productivity and stable headcount plans in an interview.
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ServiceNow posted first-quarter 2026 earnings on Wednesday after the bell, beating consensus expectations on the top and bottom lines. The enterprise software maker also raised its guidance following the results. However, the company's stock sank 12% after the announcement.
CNBC reported that ServiceNow CEO Bill McDermott spoke to the outlet on Wednesday. McDermott stated that using artificial intelligence to boost worker productivity is key to cost discipline. ' McDermott expects ServiceNow to have the same headcount to begin 2027 as it did to start 2026.
AI has been cited in recent layoff announcements from Block and Atlassian. ServiceNow's stock has largely surged higher for two years until the beginning of 2025, when AI fears gripped the software market. McDermott has pointed to ServiceNow's continued AI-fueled growth as evidence that investors shouldn't lump the stock in with the bulk of software names.
' ServiceNow's current remaining performance obligations are up 21% year-over-year in constant currency. ' ServiceNow's active seats are up 25%. Additionally, 50% of ServiceNow's net new business is coming from non-seat-based pricing, including tokens, infrastructure, hardware, and connectors to all the various systems.
' He added, 'It looks now like the Middle East is starting to get a little bit more normal than it was. ' ServiceNow customers in the region of the war in Iran have made adjustments.
