Q2 came through for ServiceNow. The enterprise software company posted results Wednesday evening that beat Wall Street on both the top and bottom lines, sending the stock higher in Thursday’s session.
Revenue for the quarter hit $3.98–$3.99 billion, up 24% year-over-year, against a consensus estimate of $3.93 billion. Adjusted earnings per share came in at $0.90, beating the $0.85–$0.86 estimate.
The stock rose roughly 5.5% in pre-market trading to around $100.67, before settling to a gain of about 2% during Thursday’s regular session.
CEO Bill McDermott called the results exceptional, saying they “solidify our position as the fastest-growing major enterprise software and cybersecurity company.”
Going into the report, NOW stock was down nearly 38% on the year, weighed down by concerns over slower software spending and AI disruption. Thursday’s reaction offered some relief, though it stopped well short of a full recovery.
Management raised its 2026 AI annual contract value target by 50% to $1.5 billion, pointing to stronger-than-expected customer adoption. That’s a notable acceleration for a business many investors have been watching closely.
J.P. Morgan analyst Mark Murphy flagged an “odd lull” in organic constant-currency cRPO growth as a lingering concern. He thinks cautious sentiment could stick until the company shows growth returning to prior levels.
On full-year guidance, ServiceNow lifted its subscription revenue outlook. For Q3, management guided for subscription revenue of $3.975–$3.98 billion, representing approximately 20.5% year-over-year growth, with cRPO growth of about 19.5%.
Murphy noted that the modest guidance raise could leave investors questioning why stronger AI momentum wasn’t more clearly reflected. He expects management to address this at the upcoming Financial Analyst Day.
Murphy kept his Overweight rating but cut his price target to $145 from $195. That still implies around 49% upside from current levels. He argued that bears expecting a below-historical valuation multiple are “overdone to the downside.”
Jefferies analyst Samad Samana maintained his Buy rating and raised his price target from $135 to $140. Evercore ISI’s Kirk Materne kept an Outperform rating and lifted his target from $150 to $160.
Across the Street, ServiceNow holds a Strong Buy consensus based on 26 Buys, 2 Holds, and 1 Sell. The average price target sits at $140.65, implying around 44% upside over the next 12 months.
Murphy pointed to ServiceNow’s ability to help customers “do more with less” as a key selling point as enterprises tighten software budgets. He sees the current slowdown as similar to previous temporary lulls before the company returned to faster growth.
The upcoming Financial Analyst Day is the next event where management is expected to give more detail on long-term targets and growth strategy.
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