Key Takeaways ServiceNow shares advanced approximately 2–5.5% following second-quarter results that surpassed expectations for both revenue and earnings Quarterly revenue reached $3.98–$3.99
ServiceNow delivered an impressive second quarter. The enterprise software provider announced financial results Wednesday after market close that exceeded analyst expectations across key metrics, driving shares higher in Thursday trading.
Quarterly revenue totaled $3.98–$3.99 billion, representing a 24% year-over-year climb and surpassing the Street’s $3.93 billion projection. Non-GAAP earnings per share registered at $0.90, exceeding the consensus range of $0.85–$0.86.
Shares jumped approximately 5.5% to around $100.67 in pre-market activity on Thursday, before moderating to roughly 2% gains during the standard trading session.
Chief Executive Bill McDermott described the performance as exceptional, stating the results “solidify our position as the fastest-growing major enterprise software and cybersecurity company.”
Heading into the earnings release, NOW stock had tumbled nearly 38% year-to-date, pressured by worries surrounding softening enterprise software expenditures and potential AI-related disruption. Thursday’s positive movement provided some respite, though shares remain far from recovering their earlier losses.
The company elevated its 2026 AI annual contract value objective by 50%, bringing the target to $1.5 billion, citing better-than-anticipated customer uptake. This represents a significant leap for a segment that has captured considerable investor attention.
J.P. Morgan’s Mark Murphy highlighted an “odd lull” in organic constant-currency cRPO expansion as a remaining area of concern. He anticipates cautious investor sentiment may persist until the company demonstrates growth rebounding to previous rates.
Regarding full-year projections, ServiceNow upgraded its subscription revenue forecast. For the third quarter, executives provided subscription revenue guidance of $3.975–$3.98 billion, indicating roughly 20.5% year-over-year growth, with cRPO expansion around 19.5%.
Murphy observed that the conservative guidance increase might prompt investors to question why robust AI traction wasn’t more prominently visible. He anticipates management will provide additional clarity during the forthcoming Financial Analyst Day.
Murphy preserved his Overweight stance while reducing his price objective to $145 from $195. That target still represents approximately 49% potential upside from present levels. He contended that pessimistic expectations for below-historical valuation multiples are “overdone to the downside.”
Jefferies’ Samad Samana maintained his Buy rating while increasing his price target from $135 to $140. Kirk Materne of Evercore ISI retained an Outperform rating and elevated his target from $150 to $160.
Overall, ServiceNow carries a Strong Buy consensus rating from the analyst community, comprised of 26 Buy ratings, 2 Hold ratings, and 1 Sell rating. The mean price target stands at $140.65, suggesting approximately 44% upside potential over the coming 12 months.
Murphy emphasized ServiceNow’s capacity to enable customers to “do more with less” as a critical value proposition as organizations constrain software budgets. He views the current deceleration as comparable to earlier temporary slowdowns that preceded renewed acceleration.
The scheduled Financial Analyst Day represents the next significant event where leadership is anticipated to elaborate on long-range objectives and strategic direction.
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