ServiceNow reported solid first-quarter results and raised forecasts, underscoring continued demand for its software even as questions swirl about the impact of AI on the industry.
The company posted subscription revenue of $3.67 billion in the quarter, up 22% year over year. ServiceNow said it beat the high end of its guidance across all topline growth and profitability metrics in the quarter, and lifted its full-year subscription revenue outlook.
For 2026, ServiceNow now expects subscription revenue of $15.7 billion to $15.8 billion, representing growth of roughly 22% to 22.5%. That beat Cowen analysts’ expectations heading into the print.
CEO Bill McDermott emphasized the company’s momentum and once again dismissed the threat of AI in an interview on Tuesday.
“The results speak a lot louder than the words. We’re now in another beat and raised quarter,” he told Business Insider.
McDermott highlighted accelerating adoption of ServiceNow’s AI products as a key driver of growth. The company had previously forecast $1 billion in AI software sales in 2026, and McDermott now expects that to be at least $1.5 billion.
“We’ll probably blow through that, too, because the acceptance of our AI solutions is just absolutely stunning,” he added.
The company’s remaining performance obligations, a key forward-looking metric, rose 25% to $27.7 billion, while current RPO grew 22.5% to $12.64 billion.
Software stocks, including ServiceNow, have been hammered over the past six months on concerns that generative AI models and related offerings from Anthropic and OpenAI could replace established software services.
McDermott brushed those concerns aside on Tuesday, arguing instead that ServiceNow is benefiting from the shift.
He said customers considering tapping AI models more directly are seeing that the cost of these new approaches can end up being a lot more than expected, due to unpredictable usage-based pricing.
McDermott said the CIO of a major customer recently evaluated a more direct AI model approach for running her IT operations. It would have cost 10 times more than just focusing on ServiceNow’s AI offerings, which are more accurate and predictable, McDermott argued.
He called AI model offerings for enterprise software customers “parlor tricks.”
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