ServiceNow reported 19% year-over-year subscription revenue growth and raised full-year guidance but saw shares decline on AI-driven growth concerns.
ServiceNow shares dropped after first-quarter results despite beating top- and bottom-line expectations. The company reported 19% year-over-year growth in subscription revenue and raised its full-year guidance, citing contributions from recent acquisitions like MoveWorks, Veza, and Pyramid.
Analysts expressed concerns about the sustainability of growth, particularly as the company’s AI tools may reduce long-term user demand. ServiceNow acknowledged at its analyst day that AI adoption could lead to fewer users over time, weighing on investor sentiment.
The company also closed its acquisition of Armis earlier than expected in April, which could further impact future revenue streams. Despite the sell-off, management remains optimistic about the stock’s long-term outlook.