ServiceNow Inc. (NYSE:NOW) is pitching artificial intelligence as a growth engine, not a threat, after first-quarter results topped company guidance.
The enterprise software company said customers are moving from AI experiments into broader deployments, according to the ServiceNow earnings call transcript.
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CEO Frames AI As Tailwind
Bill McDermott, ServiceNow’s chairman and CEO, rejected concerns that AI could weaken the business. “There has never been a tailwind for ServiceNow like AI,” McDermott said on the call.
He said ServiceNow sits inside a more than $600 billion total addressable market. He also said the company operates with $28 billion in remaining performance obligations.
Subscription revenue rose 19% in constant currency during the first quarter. Current remaining performance obligations grew 21% in constant currency. Operating margin reached 32%, while free cash flow margin came in at 44%.
AI Demand Accelerates
McDermott said Now Assist continues to exceed internal expectations. He said customers spending more than $1 million grew more than 130% year over year.
ServiceNow executives highlighted AI-driven productivity rather than direct layoffs. McDermott said internal agents resolve 90% of employee IT requests. He said those AI specialists resolve assigned cases 99% faster than human agents.
McDermott also said ServiceNow captured $500 million in productivity from its own AI use.
He said the company can enter a new year with the same headcount.
Spending Environment
McDermott said enterprise customers remain excited about AI, though many feel confused. He said buyers want clarity on what AI models can and cannot do.
Company’s CFO Gina Mastantuono said AI spending comes from several areas. She cited lower labor budgets, technology reallocations and platform consolidation.
McDermott said ServiceNow now sees AI commitments reaching $1.5 billion this year. The company had previously targeted $1 billion.
Investors watching enterprise AI also track Microsoft Corp. (NASDAQ:MSFT) and Salesforce Inc. (NYSE:CRM). Both companies compete in large software markets tied to AI adoption.
What’s Next For ServiceNow?
ServiceNow expects second-quarter subscription revenue of $3.815 billion to $3.82 billion, representing approximately 21% to 21.5% growth. The company sees full-year 2026 subscription revenue in the range of $15.74 billion to $15.78 billion.
“In Q1 2026, subscription revenue growth saw an approximately 75 basis point headwind from delayed closings of several large on-premise deals in the Middle East, due to the ongoing conflict in the region. This outlook reflects a prudent assessment of those geopolitical headwinds on deal timing for the remainder of FY 2026,” the company said.
In connection with earnings, ServiceNow announced a deepened strategic partnership with Google Cloud, unveiling new AI solutions and agents that bring autonomous operations to large global enterprises.
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