ServiceNow Exceeds Q1 Expectations, CEO Attributes Success to Resilient Demand Amid Tariff Uncertainty.

ServiceNow reported Q1 results that beat estimates and issued a strong outlook, indicating resilient software demand despite the economic impact of tariffs. CEO Bill McDermott stated that President Trump's tariff policies are good for his business. McDermott believes that tariffs on Chinese goods have accelerated the shift towards digitization and increased demand for ServiceNow's services.

ServiceNow Inc. reported strong first-quarter (Q1) results and provided a robust outlook for the remainder of 2025, indicating resilience in software demand despite the economic headwinds of tariffs. The company's subscription revenue for the quarter ending in June is projected to be approximately $3.03 billion, narrowly topping analysts’ estimates. For the full year, ServiceNow expects subscription revenue to reach about $12.7 billion, an increase from its previous guidance [1].

CEO Bill McDermott highlighted that the company's business remains strong, attributing the resilience to a shift towards digitization accelerated by President Trump's tariff policies. He believes that the increased cost of Chinese goods has driven businesses to prioritize digital transformation, thereby boosting demand for ServiceNow's services [2].

ServiceNow's subscription revenue grew by 19% in Q1, reaching $3.01 billion, and the company reported adjusted earnings per share of $4.04, exceeding the average estimate of $3.83. The company's current remaining performance obligations, a measure of near-term bookings, rose by 22% to $10.3 billion, underscoring the strong demand for its products [1].

McDermott noted that businesses are reducing their dependency on high-tariff regions by reprioritizing Tier 2 and 3 suppliers, and activating the certification of new vendors. The company is also deepening its focus on US federal agencies, anticipating significant growth opportunities from their operational requirements [2].

Despite the positive outlook, ServiceNow has factored in potential risks related to the current geopolitical environment, leading to a more conservative full-year revenue guidance. The company's stock gained about 7% in extended trading after closing at $812.70, reflecting investor confidence in the company's ability to navigate economic uncertainty [1].

References:
[1] https://www.bloomberg.com/news/articles/2025-04-23/servicenow-gives-outlook-that-signals-resilient-software-demand
[2] https://finance.yahoo.com/news/servicenow-raises-2025-subscription-revenue-105651208.html