ServiceNow CFO saw delays in Middle East deal due to geopolitical tensions, affecting revenue impact despite strong overall quarterly growth and steady demand.
ServiceNow an American software company that helps organizations automate and manage business workflows, reported delays in finalizing several major deals in the Middle East in the first quarter of 2026, as ongoing geopolitical tensions involving the U.S.-Israel alliance and Iran disrupted regional business activity, leading to a revenue impact.
Speaking during the company’s earnings call, CFO Gina Mastantuono said subscription revenue was impacted by “about a 75 basis point headwind” due to postponed closings of major on-premise contracts in the Middle East. She explained that while demand remains intact, the timing of revenue recognition shifted because of the uncertainty created by the conflict.
According to the CFO the situation highlights how global tensions are increasingly affecting corporate earnings discussions. Recent data shows that references to Iran and Middle East have appeared frequently in S&P 500 earnings calls over the past two months, reflecting growing investor focus on geopolitical risk.
CEO Bill McDermott noted that the impact is more pronounced in regions where sovereign cloud and on-premise deployments are involved. He explained that revenue from Middle East deals is not gradual and any delay can create noticeable short-term fluctuations in financial results.
Despite these setbacks, ServiceNow delivered a strong quarter overall. The company posted total revenue of $3.8 billion, marking a 22% increase compared to the same period last year. Subscription revenue also rose 22% to $3.67 billion, largely in line with market expectations.
CFO Mastantuono added that the company has maintained its full-year financial guidance, emphasizing that the delayed deals were not canceled. “We didn’t reduce guidance for any potential conflicts,” she said, noting that on-premise transactions tend to have a larger impact when they shift in timing.
However, investors reacted sharply to the results, with the company’s shares falling nearly 18% the following day, marking its steepest single-day drop since going public. The stock has now declined significantly year-to-date, reflecting broader uncertainty in the software sector as companies navigate both AI transformation and macroeconomic uncertainty.
While ServiceNow continues to invest in AI-driven products, Business Fortune notes that the latest results underline how geopolitical instability can still create near-term volatility, even for global software leaders with limited physical exposure to affected regions.
