ServiceNow $NOW falls 14% after 75 bps Middle East hit

ServiceNow $NOW fell 14% after a first-quarter beat failed to offset a deal-timing warning tied to the Middle East conflict. CNBC reported that adjusted EPS was $0.97 versus the $0.96 LSEG estimate and revenue was $3.77B versus $3.74B expected. The company's earnings release said subscription revenue was $3.671B, up 22% year over year, and total revenue was $3.770B, also up 22%.

The negative catalyst was not the headline quarter but the sales-cycle detail. ServiceNow said subscription-revenue growth had an approximately 75 bps headwind from delayed closings of several large on-premise deals in the Middle East. The company said its outlook reflects a prudent assessment of those geopolitical deal-timing risks for the rest of FY 2026.

Metric | Q1 2026 | Market context
Stock reaction | -14% | CNBC reported post-earnings move
Adjusted EPS | $0.97 | LSEG expected $0.96
Total revenue | $3.77B | LSEG expected $3.74B
Subscription revenue | $3.671B | 22% year over year
cRPO | $12.64B | 22.5% year over year

Guidance moved up in nominal terms but carried more caveats. Full-year 2026 subscription-revenue guidance is now $15.735B-$15.775B, implying 22%-22.5% growth, or 20.5%-21% in constant currency. Q2 subscription revenue is guided to $3.815B-$3.820B. The outlook includes about 125 bps of contribution from Armis, the cybersecurity acquisition that ServiceNow expected to close in 2026.

The market reaction shows how high-multiple software names are being judged on organic durability, not only reported beats. ServiceNow also reported $27.7B of remaining performance obligations, 16 transactions above $5M in net new ACV, and 630 customers above $5M in ACV. Those are still large enterprise metrics, but the 75 bps regional headwind raised questions about whether the sales cycle is lengthening at the margin.

The next watch item is the May 4 Financial Analyst Day and Q2 cRPO growth. If delayed Middle East deals close, the issue may be timing. If the headwind broadens, investors will focus on organic subscription growth after stripping out Armis contribution.

Not investment advice. Verify all figures with primary sources before acting.