April 22 (Reuters) – ServiceNow said on Wednesday its first-quarter subscription revenue growth was impacted by the delayed closure of several large deals due ‌to the ongoing conflict in the Middle East region, sending its ‌shares down 14% in extended trading.

The company, like its peers, is also facing investor concerns that ​artificial intelligence tools could shift enterprise clients away from traditional software by automating some of the tasks previously done by their products.

Its chief operating officer Amit Zavery, however, told Reuters, “I am not worried about the narrative,” as more than 50% of new ‌business comes from non-seat-based ⁠pricing models, where revenue is tied to platform usage rather than user licenses.

Recent launches of advanced coding tools by Anthropic and ⁠OpenAI have sparked a sell-off in software stocks, leading to what Wall Street has dubbed “SaaSpocalypse” – a term reflecting the gloom around software-as-a-service companies.

ServiceNow said its subscription revenue growth ​faced about ​75-basis-point headwind due to the delayed closure ​of several large on-premises deals ‌in the Middle East.

The company has been doubling down on AI integration, partnering with Anthropic and OpenAI, to fend off competition from AI upstarts and rivals like Salesforce.

In the first quarter, ServiceNow secured 16 deals, each exceeding $5 million in annualized value.

ServiceNow expects 2026 subscription revenue to be between $15.74 billion and $15.78 billion, up from ‌its earlier outlook of $15.53 billion and $15.57 billion.

The subscription ​revenue forecast of $3.815 billion to $3.820 billion for the ​second quarter also exceeded analysts’ ​average estimate of $3.75 billion, according to LSEG-compiled data.

ServiceNow said its ‌acquisition of cybersecurity startup Armis for $7.75 billion ​may create near-term ​challenges in fiscal 2026, impacting free cash flow margin by about 200 basis points for the year and operating margin by about 125 basis ​points in the second quarter.

Its ‌first-quarter revenue of $3.77 billion and adjusted earnings per share of 97 ​cents beat estimates of $3.74 billion and 96 cents, respectively.

(Reporting by Jaspreet ​Singh in Bengaluru; Editing by Vijay Kishore)