ServiceNow lifts outlook on strong Q2

ServiceNow (NOW) reported second‑quarter 2026 subscription revenue of $3,877 million, an increase of 24.5% year over year. Total revenue for the quarter reached $3,987 million, up 24% from the prior‑year period. These figures underscore continued demand for the company’s workflow and enterprise software offerings. The results form the basis for management’s updated guidance for the remainder of the year.

Subscription revenue remains the core of the business and accounts for nearly all of total revenue. The growth rates in both subscription and total revenue indicate broad‑based expansion across the company’s customer base. ServiceNow (NOW) also emphasized that it is maintaining a focus on profitability alongside this growth trajectory.

The company reported that its AI product portfolio surpassed $1 billion in annual contract value during the second quarter. Management noted that agentic AI deployments in production increased ninefold over the past nine months. This trend suggests accelerating customer adoption of AI‑driven capabilities within ServiceNow’s (NOW) platform. AI is emerging as a key contributor to higher‑value deals and platform usage.

ServiceNow positions these AI products as integrated components of its workflow solutions rather than standalone tools. The rapid growth in AI annual contract value indicates that customers are committing to multi‑year, subscription‑based AI usage. This strengthens the company’s recurring revenue base and supports its raised outlook.

Large‑deal activity strengthened in the quarter, with 123 transactions generating more than $1 million in net new annual contract value. This represented nearly 40% year‑over‑year growth in such high‑value deals. The company ended the quarter with 658 customers contributing more than $5 million in annual contract value, an increase of about 23% from a year earlier.

Remaining performance obligations also grew at solid double‑digit rates. Current remaining performance obligations reached $13.20 billion, while total remaining performance obligations were $29.0 billion, with both metrics up 21% year over year. These obligations represent contracted revenue that will be recognized over time, supporting visibility into future growth.

Reflecting the strong second‑quarter performance and bookings, ServiceNow raised its full‑year 2026 subscription revenue guidance to a range of $15.76 billion to $15.78 billion. For the third quarter, the company guided subscription revenue to between $3.975 billion and $3.980 billion. These updated figures indicate confidence in sustained demand across the remainder of the year.

At the same time, ServiceNow maintained its full‑year non‑GAAP operating margin target of 31.5% and free cash flow margin target of 35%. Holding these profitability goals while increasing revenue expectations highlights management’s intention to balance growth and margins. This combination is a key element of the company’s financial outlook for investors.

Following the release of the second‑quarter results and updated guidance, ServiceNow shares rose roughly 4.6% in after‑hours trading. The share price move reflects a positive investor response to the company’s revenue growth, AI monetization milestone, and strong bookings metrics. The reaction suggests that the market viewed the quarter as a reinforcement of the company’s growth narrative.