Under pressure from shareholders, the company announced it would lay off workers and replace jobs with AI.
Software company ServiceNow posted billion-dollar revenue and double-digit growth in recent months. While other software companies were announcing layoffs, ServiceNow CEO Bill McDermott pledged to hold headcount steady into next year.
But Wednesday, ServiceNow, whose software platforms help companies manage workflows and integrate AI, announced it would lay off 63 workers in its San Diego office, and dozens more across California. — topped with an AI-generated image of McDermott standing before a stormy sky with the words “You’re fired! ” — blew up Thursday. It has more than 800 comments from stunned former employees, speculating the total layoff count is as high as 2,500.
It is not surprising that a software company is executing large layoffs, as they increasingly replace workers with AI. Everyone fromInstead of directly cutting jobs, he planned to integrate agentic AI slowly. ServiceNow would “absorb positions created by natural attrition through productivity gains from AI,” McDermott said to CNBC.
Still, the financially healthy company on Wednesday sent out layoff notices to dozens of employees across California. A majority of the roles being permanently eliminated are senior positions focused on middle-market sales and consulting at the San Diego office at 4801 Eastgate Mall. Roughly half of the cuts affect senior-level employees — directors, senior managers, staff engineers and senior consultants — alongside reductions in roles exposed to AI automation, such as solution consulting, training, sales enablement and customer support.
In the first quarter of 2026, the software company posted $3.77 billion in revenue, representing a 22% increase year-over-year, and a profit of $469 million.
“The stock is down 12% after hours, so something’s not getting through to investors,” said Keith Weiss, head of U.S. software research, during the call on April 22. “When are we going to see the benefits of ServiceNow’s positioning for this generative AI opportunity? Because we aren’t seeing it. ” Weiss pointed out that other AI labs were each adding $5 billion in net new revenue in a single quarter.
ServiceNow’s AI product, Now Assist, is projected to return $1.5 billion by year’s end — a fraction of that. CFO Gina Mastantuono pushed back, calling $1.5 billion “pretty darn good for a software company building AI into our platform. ” Even so, when the company guided margins down slightly — from 82.1% to 81.5% — shares fell 14% after the earnings call.
Please follow us on Google to support us United States Latest News, United States Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Suspected serial killer charged with 4 murders spanning 3 decades in San DiegoA suspected serial killer has been charged with four murders committed over a span of three decades and investigators are working to determine if he may be linked to additional cold cases.
Read more »
Former Disney Star Bridgit Mendler Drops Surprise EPMendler, who now serves as the CEO of an aerospace communications startup, released six new songs.
Read more »
Xbox CEO says current margins 'cannot continue' in public letter to staffThe more things change, the more they stay the same.
Read more »
Bay Area sports bars for watching World Cup matchesFind soccer screens from San Jose and Los Gatos to San Carlos and Walnut Creek
Read more »