ServiceNow's AI-Driven Growth: Q2 Earnings Surge and Raised Guidance

ServiceNow raises annual subscription revenue forecast on AI-driven tools demand

July 23 (Reuters) - ServiceNow (NOW.N), opens new tab raised its annual subscription revenue forecast on Wednesday, signaling robust demand for its artificial intelligence-enabled software designed to automate digital operations and sending its shares up more than 7% in extended trading. Businesses are widely adopting cloud-based enterprise solutions from vendors including ServiceNow, Salesforce (CRM.N), opens new tab and Freshworks (FRSH.O), opens new tab to streamline operations and boost productivity amid the ongoing AI boom. ServiceNow projected its third-quarter subscription revenue above Wall Street estimates, despite economic uncertainty due to changing U.S. trade policies and Trump administration's cost-cutting measures that led to contract cancellations and delays. The Santa Clara, California-based company, which in March announced the acquisition of AI firm Moveworks for $2.85 billion, said the ongoing budget constraints among U.S. federal agencies are expected to persist through the current quarter. ServiceNow has signed contracts with six new customers in the U.S. public sector, CEO Bill McDermott said in an interview. The company's planned Moveworks acquisition is under regulatory review by the U.S. Justice Department, he added. ServiceNow said it was following the relevant procedures as required and expects the deal to close in the second half of the year or early 2026. The company said that a larger-than-usual number of customer contracts are set to expire and will be renewed in the fourth quarter, adding that this is expected to have a 200 basis points negative impact on its current remaining performance obligations in the third quarter. The company raised its annual subscription revenue forecast to between $12.78 billion and $12.80 billion, compared with its prior expectations of between $12.64 billion and $12.68 billion. Its third quarter subscription revenue forecast of $3.26 billion to $3.27 billion exceeds analysts' average estimate of $3.20 billion, according to data compiled by LSEG. ServiceNow's revenue of $3.22 billion for the quarter ended June 30 surpassed estimates of $3.12 billion. Adjusted profit per share of $4.09 also beat estimates of $3.57 for the second quarter. Reporting by Jaspreet Singh in Bengaluru; Editing by Mohammed Safi Shamsi Our Standards: The Thomson Reuters Trust Principles., opens new tab

ServiceNow lifts guidance on AI growth

Here's how the company performed compared to LSEG estimates: Subscription revenues, which account for the majority of the enterprise technology company's revenues, hit $3.11 billion and topped a $3.03 billion forecast from StreetAccount. The company boosted its full-year subscription revenue guidance to between $12.775 billion and $12.795 billion as it benefits from artificial intelligence adoption. "Every business process in every industry is being refactored for agentic AI," said ServiceNow chairman and CEO Bill McDermott in a release. Net income grew 47% to $385 million, or $1.84 per share, from $262 million, or $1.26 per share a year ago. Revenues grew nearly 23% to about $3.22 billion.

ServiceNow Q2 earnings show AI momentum as company announces 'Agentic Workforce Management' product

ServiceNow reports Q2 2025 subscription revenues of $3.113 billion, representing 22.5% year-over-year growth and beating the high end of guidance - and analyst expectations - as Artificial Intelligence (AI)-powered solutions increasingly drive large customer deals. The results, announced today alongside a new 'Agentic Workforce Management' product, reflect the company's ambition to become the 'central orchestration layer' for enterprise AI. Current remaining performance obligations (cRPO) reached $10.92 billion, growing 24.5% year-over-year and exceeding expectations. The company sees 89 transactions over $1 million in net new Annual Contract Value (ACV) in Q2, while 528 customers now generate more than $5 million in ACV - up 19.5% year-over-year. The number of customers with more than $20 million in ACV grows over 30%. Undeniably an excellent set of results. CEO Bill McDermott says: ServiceNow's outstanding second quarter results continue our long track record of elite level execution. Every business process in every industry is being refactored for agentic AI. ServiceNow has never been more differentiated as a full stack agentic operating system for the enterprise. The quarterly performance supports the aggressive market positioning McDermott outlines at Knowledge 2025, where he declares that enterprise customers are actively seeking to eliminate underperforming software vendors from their technology stacks. The strong financial results also reflect growing customer adoption of ServiceNow's AI capabilities. In a pre-earnings interview, Amit Zavery, ServiceNow's President, Chief Product and Operating Officer, attributes the momentum to enterprises seeking proven AI implementations rather than experimental approaches. Zavery explains: AI is top of mind for pretty much every enterprise company out there. A lot of them are looking for guidance and technology that works. With our experience doing this work for a long time at the enterprise level, a lot of customers appreciate our expertise in this area. Zavery explains that ServiceNow's cross-functional platform gives it credibility in AI discussions with senior executives: When we talk to the C-suite, Chief Information Officers (CIOs), technology teams, and line of business, they look at our breadth of capabilities as well as real-world implementation, and that gets us on the top of the list for them to work with. The company's positioning, with what Zavery calls an "enterprise OS", appears to be resonating: We have a pretty large business with enterprise companies as well as different organizations and government agencies. In follow-up conversations, when they're thinking of AI, they're reaching out and saying, 'What does ServiceNow think? What should we do? How should we approach this, and what kind of use cases can we work on?' This consultative approach translates into implementations that demonstrate measurable value. Zavery notes: You're starting to see a lot of these AI use cases getting live and creating value. We can approach this problem in many ways because of the breadth of things we do across the enterprise - we touch every part of the business and connect many things together as an enterprise OS. A notable development in Q2 is the prominence of ServiceNow's Workflow Data Fabric in 17 of the company's top 20 deals, reflecting how buyers see AI implementation requiring comprehensive data access across enterprise systems (again, a key ServiceNow proposition since the early days). Zavery explains that Workflow Data Fabric addresses a fundamental challenge in AI deployments: You want to automate business processes and connect various things together, but to get the most value out of AI use cases, especially agentic use cases, you have a lot of dependency on data. Data in every enterprise is fragmented in various data silos. ServiceNow's approach uses what Zavery describes as a "zero-copy architecture" that avoids the complexity of traditional data integration projects. He adds: The Workflow Data Fabric message resonates as technology that solves the problem of getting value out of data into business processes and workflows, without having to do a lot of restructuring and moving things around. The platform connects to major data sources including Snowflake, Databricks, Oracle, Teradata, BigQuery, and Redshift. Zavery explains: Our ecosystem works with any data, and that helps us get better value from AI. It's becoming more combined in our conversations, and customers are starting to want to use Workflow Data Fabric to solve other problems while also implementing AI capabilities. ServiceNow also announces its new Agentic Workforce Management tool today, which is described as an extension of its AI agent orchestration capabilities, with the aim being to allow employees and AI agents to work together on complex tasks. The product represents the next phase of ServiceNow's AI strategy, moving beyond individual agents to 'coordinated digital workforces'. Zavery outlines the multi-layered approach ServiceNow takes to agentic AI: There are multiple things happening with agentic AI. There's the need for an agentic platform, which is part of our AI platform capabilities - not just AI agents, but connectivity between various AI agents, with the ability to orchestrate, reason, and plan with, not just ours, but third-party AI agents as well. The company's AI Control Tower provides lifecycle management including "security, risk, compliance, evolution, and ensuring agents are doing the right things with expected outcomes and control across your enterprise." The new Agentic Workforce Management layer addresses what Zavery calls the 'operational complexity' of managing digital workers: Many companies are also asking, 'Can I use these AI agents to create a digital workforce?' When you bind agents together with the ability to run and operate work instead of humans doing all those tasks, that becomes complicated to manage. How do you manage this hybrid of humans with digital workers in a thoughtful way? ServiceNow already implements the technology internally with measurable results. The company has automated 97% of software provisioning requests while reducing service desk volume by nearly 40%. Internal IT support sees 85% of routine requests resolved autonomously, helping the department scale by more than 40%. Customer support operations show similar results, with the agentic workforce resolving 80% of complex instance administration cases and achieving 50% faster resolution times. The Q2 results come as ServiceNow pushes a broader thesis about enterprise software consolidation driven by AI requirements. Zavery acknowledges that this transformation is in its infancy but sees clear momentum: Customers are in the early stage of re-evaluating their underlying legacy systems. Enterprises have always wanted to modernize, but they're rarely able to completely transition to something modern over many years. AI is one driving factor making customers think, 'Maybe I should rethink how I build my stack.' This shift toward what Zavery calls an "agentic AI stack" represents a departure from traditional siloed enterprise architecture: Many companies we speak to are moving systems into more modern data sources while moving user experiences away from legacy systems. A lot is happening at the business workflow level versus the siloed, stack-to-stack mindset people were using. ServiceNow's value proposition centers on bridging existing systems during this transformation. Zavery adds: When we come in and say we'll rewire your business processes, make them flexible and agile, and give you the ability to evolve quickly across existing systems, it resonates. Once it resonates, customers start thinking about whether to shut down some pieces or consolidate parts of their legacy architecture while modernizing. The approach appears to be generating both operational savings and strategic value: It doesn't just save money through automation, but they can modernize and make their businesses much more agile than the architectures they've had for many years. When asked about market perception of ServiceNow's growth potential, Zavery suggests that investors are still developing their understanding of the company's expanded scope. With a smile on his face, he comments: The market is still figuring out what ServiceNow does. It's interesting for them to understand because we run enterprise operating systems for business processes and workflows, which are hard to put in a box. This positioning challenge reflects ServiceNow's evolution beyond its traditional categories. We're doing many different things to help businesses, versus traditional businesses that fit in specific segments. We're in a much broader segment now. Zavery expects market understanding to evolve as AI implementations demonstrate measurable business impact: Agentic AI is real - and you can see the results - people will start realizing there's a transformation happening, and ServiceNow will be a major player in that transformation. ServiceNow's Q2 results show the company successfully monetizes its AI platform strategy, with strong revenue growth driven by customer adoption of AI products like Now Assist and Workflow Data Fabric. The launch of agentic workforce management demonstrates ServiceNow's evolution from workflow automation to AI orchestration. The key test will be whether ServiceNow can sustain this momentum while carrying out complex enterprise AI implementations at scale. The company's unified platform architecture and cross-functional reach provide advantages, but translating McDermott's ambitious consolidation vision into sustained market share will require multi-year, ambitious execution. That being said, I think ServiceNow has surprised many with its successful expansion in recent years. As Zavery notes:

ServiceNow's agentic AI push pays off with blowout earnings and strong revenue growth - SiliconANGLE

ServiceNow's agentic AI push pays off with blowout earnings and strong revenue growth The information technology service management software specialist ServiceNow Inc. delivered another strong earnings and revenue beat today as it posted its second-quarter results, sending its stock higher in extended trading. The company reported earnings before certain costs such as stock compensation of $4.09 per share, trouncing the analysts' target of $3.57 by a big distance. Revenue for the period rose 23% from a year earlier to $3.22 billion, easily surpassing the consensus estimate of $3.12 billion. The strong numbers meant ServiceNow continued to expand its profitability, and it posted a net income of $385 million in the quarter, up 47% from one year ago. ServiceNow also posted subscription revenue, which makes up the bulk of its sales, of $3.11 billion, way ahead of the Street's forecast of $3.03 billion. Chairman and Chief Executive Officer Bill McDermott (pictured) said the results once again underline the company's "elite-level" execution. "Our beat‑and‑raise quarter showcases the mission‑critical nature of the ServiceNow AI Platform," he exclaimed. "Every business process in every industry is being refactored for agentic AI." ServiceNow has spent the last couple of years investing billions of dollars into AI, looking to position itself at the center of a new trend around "AI agents" that can automate various business processes and workflows with little to no human intervention. Its AI tools are used to provide intelligent recommendations, automate tasks and provide proactive support to business workers, among other things, with the goal being to boost productivity and enhance efficiency. Valoir analyst Rebecca Wettemann told SiliconANGLE that the latest results underscore the compelling case ServiceNow makes for its end-to-end approach to AI and workflows. She added that leaders in sales, service, finance, supply chain and human resources recognize that AI and workflows must span multiple applications and data sources to be effective, and they see ServiceNow as one of the best platforms to do that. By leveraging end-to-end AI, ServiceNow is making strong inroads into areas such as customer relationship management, which is an industry dominated by Salesforce Inc., another company that's betting big on AI. "ServiceNow is clearly putting a target on Salesforce's back," Wettemann said. "We expect to continue to hear more about customer wins and how capabilities like Sales Order Management, CPQ, and front-office to back-office workflows are trojan horses for ServiceNow to expand its invasion into the CRM market." However, the real AI battleground at the moment is centered on AI orchestration and agent management, and that's another area where ServiceNow excels, the analyst said. "This is why ServiceNow and others are talking about supporting multiple LLMs and agents, and why it will be interesting to see how its new agentic workforce management announcement lands in the market," Wettemann added. "With everyone from contact center to talent management to analytics to CRM vendors talking about how work between human and AI agents will be managed, evaluated, and governed, the vendor that owns the management of agents will have a huge role in determining whose agents take on which workloads and what LLM costs they incur - giving them a big say on where the revenues flow." During the quarter, ServiceNow kept up its rapid pace of innovation, announcing a revamped CRM platform and new AI tools that make it easier to deploy and manage AI agents, as well as a new family of agents focused on managing security and risk. ServiceNow's ongoing push into AI and AI agents is the key driving force behind its relentless growth, which was illustrated by its rising current remaining performance obligations - up 25% from a year earlier to $10.92 billion. CRPO is a number that refers to the total value of revenue the company expects to generate from existing contracts over the next 12 months. However, ServiceNow Chief Financial Officer Gina Mastantuono told analysts on a conference call that the company is expecting a 2% hit on its CRPO in the current quarter due to "seasonality" and the fact that more customers will come to renew their contracts in the final quarter. It also anticipates a small hit from some U.S. government agencies, which may face reduced budgets. "While federal business is a bit uncertain today versus a year ago, we're navigating it well, and we feel confident that our guidance reflects any potential changes that we're seeing," Mastantuono said. That's important, because the U.S. government is a major customer of ServiceNow. Last year, the company revealed that a single federal agency accounted for 11% of its total revenue. Nevertheless, ServiceNow remains optimistic about the immediate future, and said it expects subscription revenue of between $3.26 billion and $3.27 billion in the current quarter, well ahead of the Street's target of $3.21 billion. Investors liked what they saw, and ServiceNow's stock gained more than 7% in extended trading, erasing a slight loss from earlier in the day. But there's more work to be done, for the company's stock is still down 9% in the year to date.

ServiceNow Stock Jumps on Strong Results as AI Demand Grows

ServiceNow raised its full-year subscription revenue guidance. ServiceNow (NOW) shares surged Thursday after the company reported better-than-anticipated results and boosted its guidance on increasing demand for its artificial intelligence (AI) business platform. The software maker posted second-quarter earnings per share of $4.09, $0.52 more than analysts surveyed by Visible Alpha were looking for. Revenue soared 22.5% year-over-year to $3.22 billion, above forecasts as well. Subscription revenue also rose 22.5% to $3.11 billion, and the number of customers with more than $20 million in annual recurring revenue grew 30%. CEO Bill McDermott said the performance reflected the importance of the ServiceNow AI Platform. "Every business process in every industry is being refactored for agentic AI, he said. "ServiceNow has never been more differentiated as a full stack agentic operating system for the enterprise." The company lifted its full-year subscription revenue outlook to a range of $12.775 billion to $12.795 billion from the previous expectation of $12.640 billion to $12.680 billion. Despite today's advance, ServiceNow shares are down about 6% in 2025.

These Analysts Revise Their Forecasts On ServiceNow After Q2 Results - ServiceNow (NYSE:NOW)

ServiceNow, Inc. NOW posted better-than-expected second-quarter financial results on Wednesday. ServiceNow reported second-quarter revenue of approximately $3.22 billion, beating the consensus estimate of $3.12 billion, according to Benzinga Pro. The company reported second-quarter adjusted earnings of $4.09 per share, beating analyst estimates of $3.57 per share. "Our beat-and-raise quarter showcases the mission-critical nature of the ServiceNow AI Platform. Every business process in every industry is being refactored for agentic AI," said Bill McDermott, chairman and CEO of ServiceNow. ServiceNow expects third-quarter subscription revenue of $3.26 billion to $3.265 billion. The company also increased its full-year subscription revenue outlook to $12.775 billion to $12.795 billion, up from prior guidance of $12.64 billion to $12.68 billion. ServiceNow shares gained 3.7% to trade at $991.49 on Thursday. These analysts made changes to their price targets on ServiceNow following earnings announcement. Trending Investment OpportunitiesAdvertisementArrivedBuy shares of homes and vacation rentals for as little as $100. Get StartedWiserAdvisorGet matched with a trusted, local financial advisor for free.Get StartedPoint.comTap into your home's equity to consolidate debt or fund a renovation.Get StartedRobinhoodMove your 401k to Robinhood and get a 3% match on deposits.Get Started Needham analyst Mike Cikos maintained ServiceNow with a Buy and raised the price target from $1,050 to $1,200. B of A Securities analyst Brad Sills maintained the stock with a Buy and raised the price target from $1,110 to $1,200. Barclays analyst Raimo Lenschow maintained ServiceNow with an Overweight rating and raised the price target from $1,200 to $1,210. Wells Fargo analyst Michael Turrin maintained the stock with an Overweight rating and raised the price target from $1,150 to $1,225. BMO Capital analyst Keith Bachman maintained ServiceNow with an Outperform rating and raised the price target from $1,150 to $1,160. UBS analyst Karl Keirstead maintained ServiceNow with a Buy and lowered the price target from $1,125 to $1,100. Citigroup analyst Tyler Radke maintained ServiceNow with a Buy and boosted the price target from $1,160 to $1,234. Piper Sandler analyst Rob Owens maintained the stock with an Overweight rating and raised the price target from $1,120 to $1,150. DA Davidson analyst Gil Luria maintained the stock with a Buy and raised the price target from $1,150 to $1,250. Considering buying NOW stock? Here's what analysts think: Read This Next: Jim Cramer Loves 'That Yield' But Passes On This Stock: 'Fundamentals Are Hurting' Photo via Shutterstock NOWServiceNow Inc$991.103.62%Stock Score Locked: Want to See it? Benzinga Rankings give you vital metrics on any stock - anytime. Reveal Full ScoreEdge RankingsMomentum58.47Growth95.93Quality64.28Value8.99Price TrendShortMediumLongOverviewMarket News and Data brought to you by Benzinga APIs

ServiceNow Earnings: AI Fuels Momentum | The Motley Fool

ServiceNow handily beat analyst expectations in the second quarter, with revenue growth of 22.5% and adjusted EPS growth of 31%. Remaining performance obligations, which measures the future revenue of existing contracts with customers, soared 29% to $23.9 billion. Artificial intelligence was a key growth driver during the quarter. "Our beat‑and‑raise quarter showcases the mission‑critical nature of the ServiceNow AI Platform. Every business process in every industry is being refactored for agentic AI," said ServiceNow CEO Bill McDermott. ServiceNow signed 89 deals with at least $1 million in net new annual contract value in the second quarter, and it ended the quarter with 528 customers spending at least $5 million annually. The company's Now Assist AI product performed well and remains on track to reach $1 billion in annual contract value by 2026. Along with its earnings report, ServiceNow announced agentic workforce management, an extension to its end-to-end AI agent orchestration capabilities. This new feature enables people to oversee and teach an agentic workforce directly from ServiceNow's platform. Shares of ServiceNow were up about 7% in after-hours trading Wednesday following the company's strong second-quarter results. Both revenue and earnings were well ahead of analyst estimates, and the company provided strong guidance for the third quarter. Going into the second-quarter report, ServiceNow stock was down 9% year to date. ServiceNow expects to generate subscription revenue between $3.26 billion and $3.265 billion in the third quarter, which represents year-over-year growth between 20% and 20.5%. Current remaining performance obligations, which is the amount of contracted future revenue set to be realized over the next year, is expected to rise by 18.5%. For the full year, the company expects 20% subscription revenue growth. ServiceNow is producing strong growth thanks to its investments in AI, and the company sees agentic AI in particular as a key long-term growth driver. ServiceNow did note that there could be a headwind from budget changes at U.S. federal government customers, but that the company's guidance reflects that trend.

Servicenow targets $15B-plus subscription revenue for 2026 as AI momentum drives 21.5% growth (NYSE:NOW)

CEO William McDermott highlighted "ServiceNow's Q2 results were outstanding. They continue our long track record of elite level execution, and we are at the forefront of enterprise AI." McDermott reported subscription revenue growth of 21.5% in Seeking Alpha's Disclaimer: The earnings call insights are compilations of earnings call transcripts and other content available on the Seeking Alpha website. The insights are generated by an AI tool and have not been curated or reviewed by editors. Due to inherent limitations in using AI-based tools, the accuracy, completeness, or timeliness of the earnings call insights cannot be guaranteed. Please see full earnings call transcripts here. The earnings call insights are intended for informational purposes only. Seeking Alpha does not take account of your objectives or your financial situation and does not offer any personalized investment advice. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank.