1 hour ago
1
Geoffrey Seiler, The Motley Fool
Mon, April 27, 2026 astatine 11:05 AM CDT 4 min read
The marketplace has 1 wide connection for software-as-a-service (SaaS) stocks: Accelerate gross maturation oregon get punished. That's a pugnacious predicament to beryllium successful erstwhile galore of their customers are trying to recognize what artificial quality (AI) is going to mean for their ain businesses and find what their roadmaps should look like.
The latest unfortunate of the marketplace shooting archetypal and asking questions aboriginal with SaaS stocks is ServiceNow (NYSE: NOW). The banal plunged aft announcing its Q1 results, and its shares are down astir 45% twelvemonth to date, arsenic of this writing.
Will AI make the world's archetypal trillionaire? Our squad conscionable released a study connected a little-known company, called an "Indispensable Monopoly," providing the captious exertion Nvidia and Intel some need. Continue »
For a institution that is the backbone of its customers' interior bundle plumbing, this sell-off looks similar a acquisition -- astatine slightest implicit the agelong term.
Based connected its terms reaction, you mightiness presume that ServiceNow missed expectations oregon lowered guidance, but that was not the case. For Q1, gross climbed 22% twelvemonth implicit twelvemonth to $3.77 billion, portion adjusted net per stock (EPS) roseate 20% to $0.97. That topped the expert consensus, which was looking for EPS of $0.96 connected gross of $3.74 billion, arsenic compiled by the LSEG, contempt the institution saying a fewer ample on-premise deals failed to adjacent successful the Middle East owed to the war.
Subscription gross jumped 22% twelvemonth implicit twelvemonth to $3.67 billion, portion nonrecreational services gross accrued 18.5% to $99 million. While subscription gross did accelerate, connected a changeless currency basis, it ticked down somewhat from 19.5% maturation successful Q4 to 19% maturation successful Q1.
Another important SaaS metric is remaining show obligations (RPO), which is deferred gross positive backlog growth. This measurement tin beryllium an indicator of aboriginal gross growth, and frankincense tends to beryllium intimately scrutinized. In the quarter, ServiceNow saw its RPO summation by 23.5% to $27.3 billion, portion existent RPO (cRPO) roseate by 21% to $12.45 billion. That was a deceleration from RPO maturation of 26.5% and cRPO maturation of 25% successful Q4.
Looking ahead, the institution expects its Q2 subscription gross to turn 22.5% to a scope of $3.815 cardinal to $3.82 billion. It anticipates cRPO to summation by 19%. For the afloat year, it raised its subscription gross guidance to a scope of $15.735 cardinal and $15.775 billion, representing maturation of 22% to 22.5%. That was up from anterior gross guidance of betwixt $15.53 cardinal and $15.57 billion, representing maturation of 20.5% to 21%. However, the caller acquisition of cyber information concern Armis should adhd 125 ground points of growth.
.png)
English (CA) · 
English (US) · 
Spanish (MX) ·