{"id":590485,"date":"2026-04-22T21:03:05","date_gmt":"2026-04-22T21:03:05","guid":{"rendered":"https:\/\/buglecall.org\/?p=590485"},"modified":"2026-04-22T21:03:05","modified_gmt":"2026-04-22T21:03:05","slug":"saas-stocks-slammed-as-servicenow-disappoints-blames-mideast-war-2","status":"publish","type":"post","link":"https:\/\/buglecall.org\/?p=590485","title":{"rendered":"SaaS Stocks Slammed As ServiceNow Disappoints, Blames MidEast War"},"content":{"rendered":"

SaaS Stocks Slammed As ServiceNow Disappoints, Blames MidEast War<\/span><\/p>\n

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Perhaps indicative of the fragility of the current rebound – as Software stocks have recently ripped higher for 8 straight days – SaaS stocks are all deeply in the red after-hours as ServiceNow – the potential poster-child for AI disruption – cut its margin outlook amid lackluster results, sending shares reeling.<\/p>\n

At first glance, it was a good print<\/strong> – the provider of business task management software posted first-quarter adjusted earnings of 97 cents a share, which was in-line <\/strong>with Wall Street estimates, according to FactSet.<\/p>\n

Revenue <\/strong>for the quarter rose 22% to $3.77 billion, marginally above analyst expectations of $3.75 billion<\/strong>.<\/p>\n

Additionally, ServiceNow said that subscription revenue will increase about 23%<\/strong> to $3.82 billion in Q2, the company said (marginally above the consensus<\/strong> of $3.75 billion).<\/p>\n

But it wasn’t all pretty…<\/p>\n

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But, it appears Wall Street was hoping for more – with investors already worried about the disruptive impact of AI on software stocks – as NOW shares sank 13% in extended trading…<\/p>\n

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…after the software company also cut its full-year forecast for subscription adjusted gross margin<\/strong>…<\/p>\n

The software giant now expects a 31.5% margin on its full-year adjusted income from operations, whereas ServiceNow (NOW) was previously targeting a 32% margin.<\/p>\n

The company’s forecast for a 26.5% adjusted operating margin in the second quarter is also meaningfully below the 30.1% Wall Street consensus<\/p>\n

But have no fear, the future looks incredibly rosy!!??<\/strong><\/p>\n

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The lukewarm result was blamed on the Mideast conflict:<\/strong><\/p>\n

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In Q1 2026, subscription revenues growth saw an approximately 75 basis point headwind from delayed closings of several large on-premise deals in the Middle East, due to the ongoing conflict in the region. This outlook reflects a prudent assessment of those geopolitical headwinds on deal timing for the remainder of FY 2026.<\/em><\/p>\n<\/blockquote>\n

The margin narrative overshadowed ServiceNow’s rosier view of its AI prospects, as CEO Bill McDermott said he expects $1.5 billion in AI revenue for 2026, up from a $1 billion projection before. McDermott told MarketWatch that the new outlook could be conservative.<\/p>\n

But NOW’s weakness was already impacting the rest of the SaaS space as pre-war worries re-blossomed…<\/strong><\/p>\n

Among other software stocks:<\/p>\n