Many CEOs have used their quarterly earnings calls to warn that the Trump administration’s tariff coverage, and the following financial uncertainty, goes to be unhealthy for enterprise. However not ServiceNow CEO Invoice McDermott.
McDermott says the present macroeconomic upheaval attributable to Trump’s insurance policies may really present an extra enhance to ServiceNow’s enterprise.
The rationale? To higher management prices, corporations need to consolidate their expertise stack, turning to only a handful of platforms that can be utilized throughout a corporation, fairly than buying a number of area of interest software program options, McDermott instructed Fortune Wednesday in an interview simply forward of the corporate’s quarterly earnings announcement.
“Companies have uncertainty in the global economy, which is why they’re looking at their OPEX, they’re looking at their margin profile, and they’re very focused on efficiency and effectiveness,” he mentioned. “They can consolidate so much cost and take so much cost out with ServiceNow and implement so quickly and get a [return on investment] so quickly, they love that.”
Nonetheless, McDermott mentioned the steering ServiceNow gave the market yesterday about its future earnings displays uncertainty about precisely what affect Trump’s insurance policies could have. “While our business remains strong, we are only flowing though part of those benefits into our full year outlook. This allows us to factor in potential risks as they pertain to the current geopolitical environment,” the corporate mentioned in its earnings launch.
The corporate has instructed the market to anticipate revenues to develop 18.5% to 19% for the complete yr to $12.6 billion, that means the corporate would primarily keep the identical 18.5% yr over yr gross sales progress it noticed within the first quarter. ServiceNow traders have had a troublesome 2025 to date, with issues in regards to the impact of Trump’s insurance policies, together with cuts to authorities spending on software program, serving to to push the corporate’s shares down greater than 20% from an all-time excessive of $1,170.39 reached on January 28.
McDermott instructed Fortune he expects ServiceNow’s prospects will proceed to implement digital transformation initiatives, and particularly will proceed investing in synthetic intelligence going ahead. “We have a $4 trillion [forecast total market size in terms of business spend] market with AI between now and 2030 and ServiceNow has proven, based on this quarter alone, where we literally quadrupled AI revenues year over year, that we’re becoming the standard for enterprise grade AI and enterprise software.”
The CEO mentioned that ServiceNow, which was initially recognized for automating the dealing with and backbone of corporations’ IT help requests, has more and more been successful marketshare in buyer relationship administration (CRM) options from rival Salesforce. He mentioned 16 of ServiceNow’s 20 largest offers for the quarter had been for CRM options.
Each ServiceNow and Salesforce have been making a giant push into promoting AI “agents” that automate workflows for purchasers. ServiceNow introduced plans to purchase Moveworks an organization that has developed AI brokers to assist resolve IT and human useful resource duties and questions, for $2.85 billion to assist bolster its agentic AI choices. It additionally acquired Logik.ai, an organization that makes use of AI to assist salespeople quote for advanced product choices, so as to add to its CRM capabilities.
McDermott says that ServiceNow’s capacity to supply a single platform throughout all of a buyer’s practical areas, fairly than providing siloed merchandise for gross sales, human assets, IT, and operations, meant corporations may extra simply implement AI brokers with ServiceNow than with its rival. “Talk to a big company, pick any one, they’ll tell you they have 50 to 100 instances of Salesforce. How are you going to apply agents to 50 instances that aren’t integrated? Good luck. So they want a clean platform with a pure play AI capability to order fulfill and service on one common architecture, and we give them that, and we do it at a much lower cost.”
In a separate interview with Enterprise Insider, McDermott mentioned that the corporate has to date not been impacted by cuts to authorities contracts mandated by the Division of Authorities Effectivity (DOGE), which has been focusing on software program licenses as an space for chopping federal spending.
For now, ServiceNow’s enterprise momentum appears to be like sturdy. For the primary quarter, the corporate introduced earnings per share that topped analysts’ consensus forecasts by 5% and topped market expectations for each gross sales and earnings. For the three months ended March thirty first, the corporate made $460 million in internet revenue on complete revenues of $3.09 billion, utilizing normal GAAP accounting. The corporate additionally reported that it has greater than $22 billion in gross sales already booked in its pipeline and 508 prospects with greater than $5 million in annual contract worth, a rise of greater than 20% yr over yr. ServiceNow’s shares rose 11% in after hours buying and selling on Wednesday night time following the announcement.
This story was initially featured on Fortune.com
