Key Highlights
- ServiceNow shares jumped between 2% and 5.5% following second-quarter results that surpassed analyst projections for both revenue and earnings
- Quarterly revenue reached $3.98–$3.99 billion, marking a 24% increase from the prior year and exceeding the Street’s $3.93 billion forecast
- The company delivered adjusted earnings per share of $0.90, surpassing consensus expectations of $0.85–$0.86
- Leadership increased the 2026 annual contract value target for AI products by 50%, elevating it to $1.5 billion
- J.P. Morgan sustained its Buy recommendation with a price objective of $145, suggesting approximately 49% potential appreciation
ServiceNow delivered a solid second quarter performance that exceeded analyst expectations across key metrics. The enterprise software provider announced results Wednesday after market close that prompted share price appreciation during Thursday trading.
Quarterly revenues reached $3.98–$3.99 billion, representing a 24% year-over-year increase and surpassing the analyst consensus of $3.93 billion. On the bottom line, adjusted earnings per share registered at $0.90, topping forecasts of $0.85–$0.86.
Shares advanced approximately 5.5% in pre-market activity to near $100.67, though gains moderated to roughly 2% by the close of Thursday’s regular trading session.
Chief Executive Bill McDermott characterized the performance as exceptional, stating it reinforces ServiceNow’s standing as “the fastest-growing major enterprise software and cybersecurity company.”
Heading into the earnings release, NOW stock had declined nearly 38% year-to-date, pressured by apprehensions surrounding softening enterprise software expenditures and potential AI-driven market disruption. Thursday’s positive movement provided some reprieve, though shares remain substantially below earlier highs.
AI Segment Shows Accelerated Momentum
Company leadership elevated its 2026 annual contract value projection for AI products by 50%, bringing the target to $1.5 billion. The revision signals greater-than-anticipated customer engagement with ServiceNow’s AI offerings, a segment under intense investor scrutiny.
J.P. Morgan’s Mark Murphy highlighted an “odd lull” in organic constant-currency current remaining performance obligations (cRPO) growth as an area of concern. Murphy anticipates cautious investor sentiment may persist until the company demonstrates a return to historical growth rates.
For full-year projections, ServiceNow increased its subscription revenue forecast. Third-quarter guidance calls for subscription revenues of $3.975–$3.98 billion, implying roughly 20.5% year-over-year expansion, with cRPO growth anticipated at approximately 19.5%.
Murphy observed that the conservative nature of the guidance increase might prompt investor questions about why accelerating AI adoption hasn’t translated more visibly into forward projections. He anticipates management will provide clarity at the company’s forthcoming Financial Analyst Day.
Analyst Community Maintains Positive Stance
Murphy retained his Overweight rating while reducing his price target to $145 from $195. The revised target still represents approximately 49% upside potential from current trading levels. He contends that bearish expectations for below-average valuation multiples are “overdone to the downside.”
Jefferies analyst Samad Samana upheld his Buy rating while raising his price objective from $135 to $140. Kirk Materne at Evercore ISI maintained an Outperform rating and increased his target from $150 to $160.
Overall, Wall Street assigns ServiceNow a Strong Buy consensus rating derived from 26 Buy recommendations, 2 Hold ratings, and 1 Sell rating. The mean price target stands at $140.65, suggesting roughly 44% upside potential over the coming twelve months.
Murphy emphasized ServiceNow’s capacity to enable customers to “do more with less” as a compelling value proposition amid tightening enterprise software budgets. He characterizes the current deceleration as comparable to earlier temporary slowdowns that preceded subsequent reacceleration.
The scheduled Financial Analyst Day represents the next major catalyst where management is anticipated to elaborate on long-range targets and strategic initiatives.
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