ServiceNow (NYSE:NOW) shares climbed around 4.5% in premarket trading on Thursday after the enterprise software provider reported second-quarter results that exceeded expectations and increased its full-year subscription revenue forecast, supported by growing demand for its artificial intelligence platform.
The stronger guidance reflected continued momentum across the company’s software portfolio as businesses increased spending on AI-powered enterprise solutions.
Subscription revenue outlook moves higher
ServiceNow lifted its full-year 2026 subscription revenue forecast to between $15.76 billion and $15.78 billion, representing growth of approximately 22.5%.
The company attributed the improved outlook to stronger-than-expected growth in net new annual contract value.
For the third quarter, ServiceNow projected subscription revenue of approximately $3.98 billion at the midpoint of its guidance, although management noted that the stronger U.S. dollar is expected to reduce current remaining performance obligation (cRPO) growth by roughly $35 million.
AI business continues to accelerate
Demand for ServiceNow’s artificial intelligence platform remained a key growth driver during the quarter.
The company surpassed $1 billion in AI annual contract value, while deployments of its agentic AI solutions increased ninefold over the past nine months.
Management also highlighted continued strength across its AI Control Tower platform, cybersecurity products and IT operations software, reflecting increasing enterprise adoption of AI technologies.
Quarterly results exceed expectations
Adjusted earnings reached $0.90 per share, ahead of analysts’ forecasts of $0.86.
Total revenue increased to $3.99 billion, while subscription revenue climbed 24.5% year over year to $3.88 billion.
Current remaining performance obligations (cRPO), a key indicator of future revenue, rose 21% to $13.2 billion.
During the quarter, ServiceNow completed 123 transactions generating more than $1 million each in net new annual contract value, representing an increase of nearly 40% compared with the same period last year.
Enterprise partnerships expand AI ecosystem
ServiceNow said organisations are increasingly using its platform to deploy, manage and scale artificial intelligence applications across their businesses.
The company expanded strategic partnerships during the quarter with Nvidia, Microsoft, Amazon Web Services, Accenture, Experian, FedEx and Lenovo to strengthen its AI capabilities and broaden enterprise adoption.
Despite the strong results, analysts at Vital Knowledge noted that software companies continue to face growing competition from emerging artificial intelligence developers.
They said, “ServiceNow had a solid beat-and-raise, but this doesn’t come close to erasing the cloud of negative sentiment suffocating legacy software.”
