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 dangerous for enterprise. However not ServiceNow CEO Invoice McDermott.
McDermott says the present macroeconomic upheaval attributable to Trump’s insurance policies may really present a further enhance to ServiceNow’s enterprise.
The rationale? To higher management prices, firms need to consolidate their expertise stack, turning to only a handful of platforms that can be utilized throughout a company, moderately than buying a number of area of interest software program options, McDermott advised Fortune Wednesday in an interview simply forward of the corporate’s quarterly earnings announcement.
“Corporations have uncertainty within the international financial system, which is why they’re taking a look at their OPEX, they’re taking a look at their margin profile, and so they’re very centered on effectivity and effectiveness,” he mentioned. “They’ll consolidate a lot value and take a lot value out with ServiceNow and implement so shortly and get a [return on investment] so shortly, 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. “Whereas our enterprise stays robust, we’re solely flowing although a part of these advantages into our full yr outlook. This enables us to consider potential dangers as they pertain to the present geopolitical setting,” the corporate mentioned in its earnings launch.
The corporate has advised the market to count on revenues to develop 18.5% to 19% for the total yr to $12.6 billion, which means the corporate would basically preserve the identical 18.5% yr over yr gross sales progress it noticed within the first quarter. ServiceNow buyers have had a troublesome 2025 up to now, 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 advised Fortune he expects ServiceNow’s clients will proceed to implement digital transformation initiatives, and specifically will proceed investing in synthetic intelligence going ahead. “Now we have a $4 trillion [forecast total market size in terms of business spend] market with AI between now and 2030 and ServiceNow has confirmed, based mostly on this quarter alone, the place we actually quadrupled AI revenues yr over yr, that we’re turning into the usual for enterprise grade AI and enterprise software program.”
The CEO mentioned that ServiceNow, which was initially identified for automating the dealing with and determination of firms’ IT help requests, has more and more been profitable 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 an enormous push into promoting AI “brokers” 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 skill to supply a single platform throughout all of a buyer’s practical areas, moderately than providing siloed merchandise for gross sales, human assets, IT, and operations, meant firms may extra simply implement AI brokers with ServiceNow than with its rival. “Discuss to an enormous firm, choose anybody, they will inform you they’ve 50 to 100 situations of Salesforce. How are you going to use brokers to 50 situations that are not built-in? Good luck. So they need a clear platform with a pure play AI functionality to order fulfill and repair on one widespread structure, and we give them that, and we do it at a a lot decrease value.”
In a separate interview with Enterprise Insider, McDermott mentioned that the corporate has up to now 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 reducing federal spending.
For now, ServiceNow’s enterprise momentum seems to be robust. 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 whole revenues of $3.09 billion, utilizing customary GAAP accounting. The corporate additionally reported that it has greater than $22 billion in gross sales already booked in its pipeline and 508 clients 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
