ServiceNow raises annual subscription revenue forecast again on AI-driven demand

Read a summary of this article on FAST.
Get bite-sized news via a new
cards interface. Give it a try.
Click here to return to FAST Tap here to return to FAST
FAST

July 22 : ServiceNow on Wednesday raised its forecast for annual subscription revenue for the second time after beating second-quarter revenue and profit estimates, driven by growing demand for its AI-powered software.

Shares of ServiceNow rose over 5 per cent in volatile extended trading. They have fallen about 37 per cent so far this year.

The results come as software giants are grappling with concerns of a "SaaSpocalypse" - a term reflecting the gloom around software-as-a-service companies amid growing capabilities of new AI tools provided by startups like OpenAI and Anthropic.

But ServiceNow is expanding its AI agent portfolio across domains like IT and customer service, helping enterprise clients to automate complex, time-consuming workflows.

CNA Games

Guess Word
Crack the word, one row at a time

Buzzword
Create words using the given letters

Mini Sudoku
Tiny puzzle, mighty brain teaser

Mini Crossword
Small grid, big challenge

Word Search
Spot as many words as you can
Show More
Show Less

Earlier this year, ServiceNow launched Otto, an AI experience designed to handle requests from employees and complete complex cross-department workflows. It also enhanced its capabilities by acquiring cybersecurity startup Armis and AI startup Moveworks.

ServiceNow said its AI platform has seen widespread adoption across the public sector, with nearly all 50 U.S. states now using it to improve citizen services and modernize operations.

The company now expects full-year 2026 subscription revenue of $15.760 billion to $15.780 billion, up from its earlier projection of $15.735 billion to $15.775 billion.

Second-quarter subscription revenue of $3.88 billion and adjusted profit per share of 90 cents exceeded LSEG-compiled analysts' average estimates of $3.82 billion and 85 cents, respectively.

However, the company's forecast for third-quarter subscription revenue of $3.975 billion to $3.980 billion came in below the average estimate of about $4 billion.

ServiceNow said its current remaining performance obligations, contract revenue expected to be recognized within the next 12 months, hit $13.20 billion as of June 30, a 21 per cent increase from a year earlier.

"Our $29 billion in remaining performance obligations is fueled by longer customer commitments and skyrocketing demand from our partner ecosystem," CEO Bill McDermott said in a statement.

Newsletter

Week in Review

Subscribe to our Chief Editor’s Week in Review

Our chief editor shares analysis and picks of the week's biggest news every Saturday.

Sign up for our newsletters

Get our pick of top stories and thought-provoking articles in your inbox

Subscribe here

Get the CNA app

Stay updated with notifications for breaking news and our best stories

Download here

Get WhatsApp alerts

Join our channel for the top reads for the day on your preferred chat app

Join here