Many CEOs have utilized their quarterly earnings calls to caution that the Trump administration’s tariff policy, along with the resulting economic uncertainty, could negatively impact business. However, ServiceNow CEO Bill McDermott holds a different perspective.
McDermott indicates that the ongoing macroeconomic disturbance due to Trump’s policies may actually serve as an advantage for ServiceNow. According to him, organizations seeking better cost management are consolidating their technology infrastructure, shifting towards a few comprehensive platforms instead of numerous specialized software solutions. He shared these insights with Fortune in an interview preceding the company’s quarterly earnings announcement.
Companies are focusing on operational expenditures, margin profiles, and increasing efficiency due to the existing uncertainty in the global economy, McDermott explained. By adopting ServiceNow, organizations can significantly reduce costs, implement rapidly, and quickly achieve a return on investment, which is highly appealing to them.
Despite the optimistic view, McDermott acknowledged that ServiceNow’s guidance to the market concerning future earnings embodies some uncertainty regarding the precise impact of Trump’s policies. The company disclosed that although its business is robust, it is only partially incorporating those benefits into its full-year forecast to accommodate potential risks related to the current geopolitical environment.
ServiceNow projects a revenue growth of 18.5% to 19% for the entire year, amounting to $12.6 billion, thereby maintaining the 18.5% year-over-year sales growth experienced in the first quarter. ServiceNow investors faced challenges in 2025, with worries about Trump’s policies, including reductions in government spending on software, contributing to a decline in the company’s shares by over 20% from an all-time high of $1,170.39 attained on January 28.
McDermott conveyed to Fortune his anticipation that ServiceNow’s clients will persist in executing digital transformation initiatives, with a particular emphasis on further investments in artificial intelligence. He highlighted a forecasted $4 trillion market for AI between now and 2030, asserting that ServiceNow is establishing itself as a standard for enterprise-grade AI and software, given its quadrupled AI revenues year over year in the current quarter alone.
ServiceNow, originally known for automating corporate IT support request management and resolution, is now capturing market share in customer relationship management (CRM) solutions from competitor Salesforce. In the most recent quarter, 16 out of ServiceNow’s 20 largest deals involved CRM solutions.
Both ServiceNow and Salesforce are aggressively advancing their AI “agent” offerings, which automate customer workflows. ServiceNow announced its plan to acquire Moveworks, a company specializing in AI agents for IT and HR tasks and inquiries, for $2.85 billion to enhance its AI agent capabilities. Additionally, the acquisition of Logik.ai, which employs AI to aid salespeople in quoting complex product offerings, aims to expand ServiceNow’s CRM functionalities.
According to McDermott, ServiceNow’s capability to provide a singular platform spanning all of a customer’s functions allows companies to more easily integrate AI agents without resorting to isolated products for sales, HR, IT, and operations. He stated that companies prefer a unified platform with a pure AI capability for fulfilling orders and providing services on a common architecture, and ServiceNow provides this at a significantly lower cost.
In a separate interview with Business Insider, McDermott mentioned that ServiceNow has not yet been impacted by government contract reductions mandated by the Department of Government Efficiency (DOGE), which has been focusing on reducing federal expenditures on software licenses.
Currently, ServiceNow’s business momentum appears robust. In the first quarter, the company reported earnings per share exceeding analysts’ consensus predictions by 5%, surpassing market expectations for both sales and profits. For the three months ending March 31st, the company recorded $460 million in net income on total revenues of $3.09 billion, according to standard GAAP accounting. Additionally, the company reported over $22 billion in sales already secured in its pipeline and an increase of more than 20% year-over-year among its 508 customers, each with over $5 million in annual contract value. Following the announcement, ServiceNow’s shares rose 11% in after-hours trading on Wednesday night.
This story was originally featured on Fortune.com.
