ServiceNow (NOW) delivered strong performance in the Q1, but Q2 and full-year subscription revenue expectations fell below market forecasts, leading to a 5% decline in after-hours stock price.

Q1 financials revealed that ServiceNow's subscription revenue reached $2.52 billion, a 24.5% year-over-year increase at fixed exchange rates, surpassing the company's earlier projections. Adjusted earnings per share stood at $3.41, beating analysts' estimates of $3.13. Total revenue amounted to $2.6 billion, slightly above the market's expected $2.59 billion. The company's adjusted operating margin exceeded 30%.

In terms of deals, ServiceNow closed eight transactions, each with new annual contract values exceeding $5 million, marking a 100% year-over-year growth. Four deals surpassed $10 million, representing a 300% increase. Additionally, the company repurchased 225,000 shares of stock, totaling $175 million.

Despite the strong Q1 performance, ServiceNow anticipates Q2 subscription revenue between $2.525 billion and $2.53 billion, slightly below the market's expected $2.54 billion due to forex impacts. Full-year subscription revenue forecasts were revised from the previous $10.555 billion to $10.575 billion range to $10.56 billion to $10.58 billion. This weaker-than-expected financial guidance caused the stock to drop 5% in after-hours trading.

ServiceNow CEO Bill McDermott will host an analyst day on May 6, providing updates on company strategy and developments in generative artificial intelligence.