ServiceNow raised its annual forecast after reporting a 25% jump in Q2 subscription revenue to $3.88 billion, easing investor fears of an AI-driven "SaaSpocalypse." The enterprise software company's AI business surpassed $1 billion in annual contract value, with AI agent deployments increasing ninefold in nine months. The strong results, which beat estimates, caused the company's stock to rise over 4% in after-hours trading.
Q2 financial results
- ▪For the quarter ending June 30, 2026, ServiceNow's subscription revenue increased about 25% to $3.88 billion
- ▪ServiceNow's total revenue for Q2 2026 was $3.99 billion, a 24% year-over-year increase
- ▪The company reported adjusted earnings of 90 cents per diluted share for Q2 2026, exceeding analysts' estimates
- ▪Current remaining performance obligations (cRPO), a measure of near-term bookings, grew 21% to $13.2 billion
AI business milestone
- ▪Nearly all 50 U.S. states are now using ServiceNow's AI platform to modernize operations and improve citizen services
- ▪The company reported that customer deployments of its AI agents have increased ninefold over the past nine months
- ▪ServiceNow has expanded its AI capabilities by acquiring cybersecurity startup Armis and AI startup Moveworks
- ▪ServiceNow's AI business surpassed $1 billion in annual contract value during the second quarter of 2026
Customer growth metrics
- ▪In Q2 2026, ServiceNow closed 123 deals worth over $1 million in net new annual contract value, up nearly 40% from the previous year
- ▪The company's outperformance in the second quarter was partly driven by strong demand from U.S. federal clients
- ▪As of June 2026, ServiceNow had 658 customers paying more than $5 million annually
Full-year guidance raise
- ▪The company's forecast for third-quarter subscription revenue of approximately $3.98 billion was below the average analyst estimate of $4 billion
- ▪ServiceNow raised its full-year 2026 subscription revenue forecast to a range of $15.76 billion to $15.78 billion
Stock market reaction
- ▪Prior to the report, ServiceNow's stock had fallen about 38% in 2026 amid concerns that new AI tools could disrupt its business
- ▪ServiceNow's shares rose between 4% and 5% in after-hours trading following the earnings announcement
- ▪The positive results eased investor concerns about a "SaaSpocalypse," where AI startups like OpenAI could threaten established software companies
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