Key Takeaways

  • Enterprise software company ServiceNow said Wednesday that several large deals in the Middle East were delayed in the first quarter due to the U.S.-Israel conflict with Iran.
  • During the Q1 fiscal 2026 earnings call, CFO Gina Mastantuono noted that "about 75 basis points of headwind" in subscription revenue came from "several large on-premise deals in the Middle East that were delayed due to the ongoing conflict in the region."
  • Mastantuono added that ServiceNow's outlook "takes a prudent approach to the geopolitical environment, particularly the Middle East conflict and its potential impact on the timing of deals."

Deep Dive

The disclosure comes amid rising attention to geopolitical risks on corporate earnings calls. According to FactSet data (shared with CFO Dive), between March 1 and April 22, 26 S&P 500 companies mentioned "Iran" on earnings calls, while 58 mentioned the "Middle East" during the same period.

ServiceNow's call on Wednesday highlighted the spillover effect of regional instability on enterprise software vendors—even those with limited direct exposure to physical supply chains.

"When you operate sovereign clouds in the Middle East, everything that happens in the region gets recognized as on-premise revenue," CEO Bill McDermott said on the call. "That revenue is not linear, not ratable—it's recognized all at once."

Executives said the deals are expected to close later this year, but the exact timing remains uncertain.

Despite the delays, ServiceNow reported results above its own guidance. The company posted total Q1 revenue of $3.8 billion, up 22% year over year.

Additionally, Mastantuono said the company maintained its full-year guidance. "We did not lower guidance due to any potential conflict," she said. "It's just that a few on-premise deals slipped out of the quarter, and on-premise deals have a bigger revenue impact."