An investigation right into a associate pushed the inventory decrease.
Shares of ServiceNow (NOW -3.64%) have been sliding immediately in response to information {that a} associate agency, Carahsoft Know-how, was raided by the FBI yesterday in Virginia.
Whereas the raid on the IT distributor does not immediately implicate ServiceNow, analysts appear to worry that the investigation may put a dent in ServiceNow’s enterprise.
As of 11:11 a.m. ET, the inventory was down 2.9%.
Picture supply: Getty Photos.
How ServiceNow is impacted
In response to Piper Sandler, ServiceNow has in regards to the best publicity of any software program firm, and the transfer may disrupt a few of ServiceNow’s offers with the federal authorities.
It additionally stated that greater than 40% of ServiceNow’s reported federal contracts come via Carahsoft. SAP and Okta have been additionally impacted by the investigation.
Investigators imagine that Carahsoft and its companions could have schemed to overcharge authorities companies. ServiceNow has not addressed that investigation, although the potential influence on the corporate nonetheless appears unclear.
Earlier this yr, SAP agreed to pay $222 million in fines over bribery schemes in seven international locations.
What’s subsequent for ServiceNow
ServiceNow is likely one of the largest cloud software program corporations, and even when the Carahsoft investigation ends in a fantastic, it is unlikely to derail its enterprise in a significant manner. Nonetheless, it is value keeping track of the problem.
In a troublesome atmosphere for the software program business, ServiceNow has continued to ship regular development with income up 22% to $2.63 billion within the second quarter, and 31% development in remaining efficiency obligations (RPO), as much as $18.6 billion, displaying its backlog stays sturdy as nicely. Moreover, working margins proceed to ramp up.
Until the investigation is a component of a bigger drawback, ServiceNow nonetheless seems nicely positioned for long-term development.
