Cloud-based process management platform ServiceNow – whose stock soared 15.5% Thursday – has emerged as a beneficiary of President Donald Trump’s tariffs. The company reported expectations-beating first quarter results and raising guidance for the current quarter, according to the Wall Street Journal.
This brings back memories of the spring of 2020, when some public companies – such as Zoom and Peloton – discovered they were in the right place to profit from a global pandemic.
Five years later, Trump’s tariffs and government job cuts are creating global economic turmoil – producing a different set of beneficiaries.
Netflix’s first quarter earnings revealed the streaming leader is one of them, noted my April 2025 Forbes post. Netflix — whose stock is up 24% in 2025 as of this writing, while the S&P 500 has fallen about 7% — may benefit from a rise in demand as consumers seek an escape from the current period’s general uncertainty — akin to what the market experienced during the COVID-19 pandemic.
Another such winner could be ServiceNow – which tracks and manages services delivered by corporate departments such as information technology, human resources, customers, and security, according to Investor’s Business Daily.
The company expects to capitalize on the current macroeconomic turmoil. “I am pleased investors understand that despite the macroeconomic challenges, ServiceNow continues to execute amazingly,” ServiceNow CFO Gina Mastantuono told me in an April 24 interview.
ServiceNow sees companies buying its services to lower costs and boost growth in the midst of these challenges. “The demand signals remain strong. Leaders are concerned and thinking about the short term and focusing on the future. They want growth in, cost out,” she added.
If the company helps its clients exceed investors’ revenue and growth expectations, ServiceNow stock could be a good stock to own.
ServiceNow’s Performance And Prospects
Due to strong public and private sector demand, ServiceNow surpassed expectations for first-quarter earnings and revenue and raised its second quarter outlook, reported the Journal.
Here are the key numbers:
- First quarter 2025 revenue: $3.09 billion – up about 19% from the previous year and $10 million ahead of London Stock Exchange Group estimates, noted CNBC.
- Q1 2025 adjusted earnings per share: $4.04 – 21 cents above the LSEG estimate, CNBC reported.
- Q1 2025 net income: $460 million – 33% more than the previous year, CNBC wrote.
- Q1 current remaining performance obligations: $10.3 billion – a 22% year over year increase – $200 million ahead of estimates, according to IBD.
- Q2 subscription revenue forecast: $3.02 billion at the midpoint of a range – up 19.25% and matching analysts’ expectations, the Journal noted.
- 2025 full year subscription revenue forecast: $12.66 billion – at the midpoint of a range – up 18.75% and $10 million more than Wall Street views, noted the Journal.
ServiceNow sees business opportunity amid government job cuts and tariff confusion. Supply chain optimization and government efficiency are driving demand for the company’s products amid tariffs and spending cuts, ServiceNow CEO Bill McDermott told the Journal.
As companies aim to “optimize their supply chains amid recent tariff announcements and federal clients aim to boost efficiency amid government spending cuts, the platform is operating in a best-case-scenario environment,” he added.
Artificial intelligence services helped the company report expectations-beating current remaining performance obligations – the sum of deferred revenue and backlog the company must deliver over the next twelve months. The bigger CRPO was due to “strength in the company’s net new annual contract values and Now Assist generative AI business,” Mastantuono told the Journal.
Will ServiceNow Keep Beating And Raising?
While Trump’s government job cuts and tariffs are a big headwind for many public- and private-sector organizations – more than 12 companies have “cut or pulled their full-year guidance,” noted CNBC – they represent a strong tailwind for ServiceNow. What’s more, the company’s NowAssist service could be a killer app for generative AI.
Public And Private Sector Organizations Using ServiceNow To Take Out Costs
Rather than realizing investors’ worry that cuts by the Department of Government Efficiency would reduce public sector demand, ServiceNow’s revenue in its public sector business rose 30%.
The company had “very positive discussions” with DOGE, McDermott told CNBC. In the first quarter of 2025, the company won “11 federal deals topping $1 million,” he added.
“A large federal agency serving millions of citizens replaced legacy systems with the ServiceNow platform,” Mastantuono told me. “Federal agencies seek greater transparency, accountability, and efficiency” and ServiceNow’s platform is helping them achieve those aims, she added.
ServiceNow is also helping the private sector boost productivity. “An example of cost out is Orica Mining Services,” she said. “Using our IT support services, they have increased the rate at which they deflect a service request to chatbots and self-service from 18% to 94% – cutting resolution time by a day and a half.”
ServiceNow’s platform can help automobile makers and other importers manage supply chain disruptions. “Our platform can help companies can switch from Tier I suppliers in countries with high tariffs to Tier 2 and Tier 3 suppliers with lower tariffs,” Mastantuono told me. “This saves companies from incurring a $10,000 cost increase per car.”
AI Is Boosting Demand For ServiceNow
Generative AI has been an important part of ServiceNow’s business for years – and last year the company was seeing the potential for meaningful added revenue from Now Assist, I noted in a March 2024 Forbes column.
What’s more, agentic AI – prompting an AI chatbot to, say, plan, book and pay for a vacation to Paris and letting the AI agent pick the best hotels, restaurants, and visits – was a wave of the future last year, according to my book, Brain Rush.
Agentic AI is helping ServiceNow customers. The company “plays into the trend of agentic AI by helping customers automate tasks in parallel with those processes,” McDermott told MarketWatch. In addition, “customers are responding to the company’s ability to implement systems quickly,” he added.
ServiceNow is delivering on the promise to quantify AI’s contribution to the company’s revenue growth. “Our AI business quadrupled year over year and our average deal size increased by a third.” Mastantuono told me Thursday.
Through an acquisition and partnerships, ServiceNow is investing more in AI. For example, in March 2025, ServiceNow agreed to pay $2.85 billion for Moveworks, a generative AI platform for employee support, noted IBD.
Moreover, the company announced new partnerships to strengthen its AI offerings – including one with “telecom operator Vodafone Business,” noted the Journal.
For investors interested in profiting from ServiceNow’s growth tailwind, there could be other software companies likely to beat expectations. “Against negative sentiment, ServiceNow delivered a solid quarter and outlook, which likely leaves investors with a better tone around software spending than what was previously expected,” RBC Capital analyst Matthew Hedberg wrote in a report featured by IBD.
With its stock price trading 22% below its all-time high, if AI helps ServiceNow deliver services that help organizations cope with macroeconomic turbulence, the company could keep beating and raising – which would send its shares higher.
Read the full article here
