ServiceNow posts upbeat quarterly profit on resilient AI-powered software demand

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By Jaspreet Singh

(Reuters) -ServiceNow beat Wall Street estimates for first-quarter profit on Wednesday, helped by resilient demand for its artificial intelligence-powered software for managing IT services, sending the company’s shares up 7% in extended trading.

The company also marginally raised its annual subscription revenue forecast. ServiceNow said the forecast, which does not entirely include the benefit from a weaker U.S. dollar during the reported quarter, allows it to navigate potential risks related to the current geopolitical environment.

CEO Bill McDermott told Reuters that they raised “the midpoint of our guide, because the environment and its level of uncertainty is out there, we didn’t want to pass all the momentum through. We just saved some for the shareholders as a cushion.”

The results come amid enterprise spending concerns due to economic uncertainty stemming from U.S. President Donald Trump’s tariff policies.

Businesses turn to AI-powered software offered by companies such as ServiceNow, Freshworks and Salesforce to manage their IT services and automate their business operations to enhance efficiency and rein in costs.

ServiceNow also offers services to the U.S. federal government at a time when the Department of Government Efficiency is aiming to reduce government spending and is rigorously reviewing several federal contracts.

McDermott said the company grew its U.S. public sector business 30% year-over-year in the first-quarter.

The company reported an adjusted profit per share of $4.04 for the quarter ended March 31, beating analysts’ average estimate of $3.83 per share, according to data compiled by LSEG.

It reported a quarterly revenue of $3.09 billion, compared with estimates of $3.08 billion.

The company now expect full-year subscription revenue between $12.640 billion and $12.680 billion, compared with its prior forecast of $12.635 billion and $12.675 billion.

It expects second-quarter subscription revenue of $3.03 billion to $3.04 billion, versus estimates of $3.02 billion.

(Reporting by Jaspreet Singh in Bengaluru; Editing by Shailesh Kuber)