TLDR
- ServiceNow stock rebounded after second-quarter earnings despite a lower regular session close.
- Subscription revenues jumped 24.5% as enterprise demand remains strong.
- Remaining performance obligations increased to $13.2 billion year over year.
- Expansion of the AI platform and new partnerships have fueled its long-term growth plans.
- ServiceNow has reaffirmed its ambitious revenue and profitability goals through 2030.
ServiceNow (NOW) shares closed at $95.46, down 6.47%, before rebounding to $99.03 in after-hours trading, up 3.74%, after the company announced its second-quarter earnings. The software company posted stronger subscription revenue growth and increased interest by expanding momentum in its AI-related business. Higher contract commitments and corporate demand supported the positive after-hours recovery.
Subscription growth and enterprise demand boost quarterly performance
Service now It generated $3.877 billion in subscription revenue during the second quarter ending June 30, 2026. The number increased 24.5% from the previous year and was up 23% on a constant currency basis. The company also exceeded its guidance on revenue and profitability metrics during the quarter.
Current remaining performance obligations reached $13.20 billion at the end of the quarter. The balance rose 21% year-on-year and advanced 21.5% in constant currency. Longer customer commitments have supported growth and improved future revenue visibility.
ServiceNow completed 123 transactions worth more than $1 million in new annual contract value during the quarter. The total represents growth of approximately 40% over the previous year. Additionally, the number of clients generating more than $5 million in annual contract value increased to 658, representing approximately 23% year-over-year growth.
Product Expansion and Partnerships Expand AI platform strategy
The company expanded its enterprise platform with several new products during the quarter. ServiceNow introduced Otto, a unified AI experience that brings together multiple AI services into a single interface. The platform has also expanded Control Tower AI with additional capabilities for governance, security, monitoring and measurement.
Service now Launched Autonomous Workforce AI specializing in IT, customer management, employee services, and security operations. Furthermore, the Build Agent is now generally available across multiple development environments, including GitHub Copilot, Cloud Code, Cursor, and Windsurf. Context Engine, Autonomous Data Analytics, and Action Fabric have also come into the platform to improve enterprise workflow automation.
Strategic partnerships continued to expand during the quarter. ServiceNow has leveraged collaborations with NVIDIA, Microsoft, Amazon Web Services, and Accenture to scale AI deployment and management in the enterprise. The company also expanded its industry partnerships with Experian, TeamViewer, FedEx, Lenovo and Leidos to integrate workflow automation across additional business segments.
Long-term goals and industry position support the business outlook
ServiceNow provided updated long-term goals during its Financial Analyst Day in May. Management has outlined plans to exceed $30 billion in subscription revenue with AI targeting to contribute 30% of annual contract value by 2030. The company has also committed to reducing stock-based compensation to less than 10% of revenue by 2029.
Institutional accreditation continued across public and private institutions during the quarter. Almost every US state now uses it Service now Artificial intelligence platform for government operations and citizen services. Many organizations have also expanded deployments to improve cybersecurity, workflow automation, and operational efficiency.
Industry recognition also increased during the reporting period. ServiceNow has earned leadership positions in several Gartner Magic Quadrant reports covering AI governance, workplace experience, and SaaS management platforms. The company also maintained its spot on the Fortune 500 list for the fourth year in a row while remaining among the Fortune 100 Best Companies to Work For list.
