ServiceNow CFO Gina Mastantuono says it will take longer for enterprise software deals to close for the rest of the year as inflation and geopolitical uncertainty hit IT departments.
Speaking to a Citi Group analyst, Mastantuono echoed concerns from other major software vendors Salesforce and Workday, both of which presented evidence of a slowdown in deals at their company current financial results.
“We expect extended deal cycles or increased deal scrutiny and approval processes to continue through the end of the year,” she told investors, adding that the company has already factored in the trend in its revenue guidance.
“Now that we know that approval levels are going a little higher, we spend a lot of time with our clients to really make sure the business value proposition is there, that they have all the data they need to make sure the approval process runs smoothly .”
In July, ServiceNow saw its valuation fall after it lowered its revenue guidance for the year. It is now expected to grow to $6.915-$6.925 billion compared to April’s estimated $7.03 billion.
Sales cycles have also been extended at Salesforce. In conversation with the following investors its Q2 results, Marc Benioff, Co-Founder and CEO, said: “We are seeing customers becoming more measured in the way they shop. Sales cycles can be lengthy. Businesses are reviewed by higher levels of management.” Salesforce is taking a “very deliberate” approach to hiring after it missed analysts’ expectations for revenue growth, CFO Amy Weaver said on a conference call.
End of August, Bloomberg reports that Palantir, Workday, Zoom and many other technology companies observed a similar trend among enterprise customers.
Earlier this week, said Charles Giancarlo, CEO of Pure Storage there were signs of anticipatory reluctance to buy on the part of customers. “However, we are seeing signs of increased buying from enterprise customers, leading to some lengthening of the sales cycle.”
This week we saw further evidence of a slowdown in broader technology spending as consumer confidence fell. ®
https://www.theregister.com/2022/09/09/servicenow_software_slowdown/ ServiceNow CFO Expects Software Slowdown • The Register