ServiceNow beats Q2 revenue estimates on AI demand, raises FY outlook
Reuters2026/07/22 20:23
Overview
Enterprise software platform's Q2 revenue rose 24% yr/yr, beating analyst expectations
Adjusted EPS for Q2 beat analyst expectations
Company raised full-year subscription revenue outlook on strong demand and AI adoption
Outlook
ServiceNow raises FY 2026 subscription revenue guidance to $15.76 bln-$15.78 bln
Company expects Q3 2026 subscription revenues of $3.98 bln at 20.5% y/y growth
ServiceNow sees FY 2026 subscription gross margin at 81%
Result Drivers
AI DEMAND - Company said strong demand for ServiceNow AI and agentic deployments contributed to topline growth
LARGE DEALS - Co reported 123 transactions over $1 mln in net new annual contract value, up nearly 40% yr/yr
U.S. FEDERAL DEMAND - Accelerated on-premise subscription revenue due to strong U.S. Federal demand, pulling revenue forward from Q3
Company press release: ID:nBwbFH361a
Key Details
Metric |
Beat/Miss |
Actual |
Consensus Estimate |
Q2 Revenue |
Beat |
$3.99 bln |
$3.93 bln (36 Analysts) |
Q2 Adjusted EPS |
Beat |
$0.90 |
$0.85 (37 Analysts) |
Q2 EPS |
|
$0.29 |
|
Q2 Net Income |
|
$298 mln |
|
Q2 Subscription Revenue |
|
$3.88 bln |
|
Analyst Coverage
The current average analyst rating on the shares is "buy" and the breakdown of recommendations is 46 "strong buy" or "buy", 3 "hold" and 2 "sell" or "strong sell"
The average consensus recommendation for the software peer group is "buy"
Wall Street's median 12-month price target for ServiceNow Inc is $140.00, about 37.2% above its July 21 closing price of $102.06
The stock recently traded at 22 times the next 12-month earnings vs. a P/E of 24 three months ago
Reuters Recommended Reads
July 21 - Pegasystems Q2 adjusted EPS misses as AI shifts delay purchases
July 22 - IBM cuts yearly revenue growth forecast as customers prioritize AI infrastructure spending
July 22 - Google quarterly cloud revenue growth beats expectations
For questions concerning the data in this report, contact Estimates.Support@lseg.com. For any other questions or feedback, contact reuters.support@thomsonreuters.com.
(This story was created using Reuters automation and AI based on LSEG and company data. It was checked and edited by a Reuters journalist prior to publication.)
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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