ServiceNow: President, Senior VP Out Months After Probe Found Company Hiring Policy Violated

ServiceNow says that the company had informed the U.S. Department of Justice, the Department of Defense Office of Inspector General and the Army Suspension and Debarment Office of the investigation and ‘is continuing to cooperate with the Department of Justice, which has commenced its own investigation into these matters.’

ServiceNow said that its president and chief operating officer, Chirantan “CJ” Desai, is leaving the AI-focused digital workflow technology developer months after an internal investigation found he violated company policy in the hiring of the U.S. Army’s CIO about a year ago.

Desai, who was promoted to president and COO in early 2023 but has been at the company since late 2016, had a relatively short time at the helm of ServiceNow. Desai played a big role in the rollout of ServiceNow’s Now Platform Vancouver release and in the release of the company’s GenAI products.

ServiceNow said that Desai (pictured above), who was 53 years old as of a recent regulatory filing, resigned in relation to an investigation the company made based on an internal complaint it received earlier this year related to an employee. The company said that it disclosed that investigation in a U.S. Securities and Exchange filing for the quarter that ended March 31. That initial investigation was related to a complaint that “raised potential compliance issues related to one of its government contracts,” according to a regulatory filing.

ServiceNow worked with outside legal counsel and with government entities to investigate the complaint and determined that “company policy was violated regarding the hiring of the former chief information officer of the U.S. Army.”

That person, who was not named Wednesday, has also departed ServiceNow. However, the company is likely referring to Raj Iyer, who previously served as the U.S. Army’s first-ever civilian chief information officer, who joined ServiceNow on March 13, 2023 as its senior vice president of global public sector.

In a regulatory filing Wednesday, ServiceNow said Desai “has fully cooperated with the investigation and maintains that he did not intentionally violate company policy.”

ServiceNow said that the company had informed the U.S. Department of Justice, the Department of Defense Office of Inspector General and the Army Suspension and Debarment Office of the investigation and “is continuing to cooperate with the Department of Justice, which has commenced its own investigation into these matters. The company cannot predict the timing, outcome or possible impact of the investigation.”

The DOJ declined to comment to CRN about the investigation.

Desai did not respond to a CRN request for more information. However, in a Wednesday LinkedIn post, he wrote that he is saying goodbye to ServiceNow “after nearly eight years, 16 major platform releases, numerous new product launches, and AI innovation at a remarkable clip.

“As we are just at the inception of the next tech disruption cycle, it is time to pursue a new challenge at the cutting edge of innovation. You will be hearing from me in the next few weeks as I embark on a new chapter in the AI, Data, and AI Infrastructure space.”

Replacing Desai is Chris Bedi, who was appointed interim chief product officer effective immediately. Bedi has spent nearly 10 years at ServiceNow, and has served as the company’s chief digital information officer and chief customer officer.

The news comes the same day as the company revealed its quarterly earnings. For its second fiscal quarter 2024, which ended June 30, ServiceNow reported total revenue of $2.63 billion, up 22 percent over the $2.15 billion the company reported during its second fiscal quarter 2023.

That included subscription revenue of $2.54 billion, up 23 percent, and professional services and other revenue of $85 million, up 22 percent.

ServiceNow also reported GAAP net income of $262 million or $1.26 per share, down significantly from the $1.04 billion or $5.08 per share the company reported last year.

On a non-GAAP basis, ServiceNow reported net income of $651 million or $3.13 per share, up from last year’s $486 million or $2.37 per share.

Looking ahead, ServiceNow is expecting third fiscal quarter 2024 subscription revenue of $2.660 billion to $2.665 billion, which would be an increase of 20.0 percent to 20.5 percent over last year. ServiceNow also said it expects full year 2024 subscription revenue of $10.575 billion to $10.585 billion, which would be up 22.0 percent over last year.