ServiceNow beats Q2 revenue estimates on AI demand, raises FY outlook

ServiceNow

22/07/2026 21:23

    

    Overview
  
Enterprise software platform's Q2 revenue rose 24% yr/yr, beating analyst expectations
Adjusted EPS for Q2 beat analyst expectations
Company raised full-year subscription revenue outlook on strong demand and AI adoption

    

    Outlook
  
ServiceNow raises FY 2026 subscription revenue guidance to $15.76 bln-$15.78 bln
Company expects Q3 2026 subscription revenues of $3.98 bln at 20.5% y/y growth
ServiceNow sees FY 2026 subscription gross margin at 81%

    

    Result Drivers
  
AI DEMAND - Company said strong demand for ServiceNow AI and agentic deployments contributed to topline growth
LARGE DEALS - Co reported 123 transactions over $1 mln in net new annual contract value, up nearly 40% yr/yr
U.S. FEDERAL DEMAND - Accelerated on-premise subscription revenue due to strong U.S. Federal demand, pulling revenue forward from Q3

    
Company press release: ID:nBwbFH361a

    

    Key Details
  

            Metric
          

            Beat/Miss
          

            Actual
          

            Consensus Estimate
          
Q2 Revenue
Beat
$3.99 bln
$3.93 bln (36 Analysts)
Q2 Adjusted EPS
Beat
$0.90
$0.85 (37 Analysts)
Q2 EPS
 
$0.29
 
Q2 Net Income
 
$298 mln
 
Q2 Subscription Revenue
 
$3.88 bln
 

    

    Analyst Coverage
  
The current average analyst rating on the shares is "buy" and the breakdown of recommendations is 46 "strong buy" or "buy", 3 "hold" and 2 "sell" or "strong sell"
The average consensus recommendation for the software peer group is "buy"
Wall Street's median 12-month price target for ServiceNow Inc is $140.00, about 37.2% above its July 21 closing price of $102.06
The stock recently traded at 22 times the next 12-month earnings vs. a P/E of 24 three months ago

    

    Reuters Recommended Reads
  
July 21 - Pegasystems Q2 adjusted EPS misses as AI shifts delay purchases
July 22 - IBM cuts yearly revenue growth forecast as customers prioritize AI infrastructure spending
July 22 - Google quarterly cloud revenue growth beats expectations

    
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(This story was created using Reuters automation and AI based on LSEG and company data. It was checked and edited by a Reuters journalist prior to publication.)