Here's our initial take on ServiceNow's (NOW 4.56%) financial report.
Key Metrics
| Metric | Q2 2024 | Q2 2025 | Change | vs. Expectations |
|---|---|---|---|---|
| Revenue | $2.63 billion | $3.22 billion | 22.5% | Beat |
| Adjusted earnings per share (EPS) | $3.13 | $4.09 | 31% | Beat |
| Subscription revenue | $2.54 billion | $3.11 billion | 22.5% | n/a |
| Remaining performance obligations | $18.6 billion | $23.9 billion | 29% | n/a |
Agentic AI Is Leading the Way
ServiceNow handily beat analyst expectations in the second quarter, with revenue growth of 22.5% and adjusted EPS growth of 31%. Remaining performance obligations, which measures the future revenue of existing contracts with customers, soared 29% to $23.9 billion.
Artificial intelligence was a key growth driver during the quarter. "Our beat‑and‑raise quarter showcases the mission‑critical nature of the ServiceNow AI Platform. Every business process in every industry is being refactored for agentic AI," said ServiceNow CEO Bill McDermott.
ServiceNow signed 89 deals with at least $1 million in net new annual contract value in the second quarter, and it ended the quarter with 528 customers spending at least $5 million annually. The company's Now Assist AI product performed well and remains on track to reach $1 billion in annual contract value by 2026.
Along with its earnings report, ServiceNow announced agentic workforce management, an extension to its end-to-end AI agent orchestration capabilities. This new feature enables people to oversee and teach an agentic workforce directly from ServiceNow's platform.
Immediate Market Reaction
Shares of ServiceNow were up about 7% in after-hours trading Wednesday following the company's strong second-quarter results. Both revenue and earnings were well ahead of analyst estimates, and the company provided strong guidance for the third quarter. Going into the second-quarter report, ServiceNow stock was down 9% year to date.
What to Watch
ServiceNow expects to generate subscription revenue between $3.26 billion and $3.265 billion in the third quarter, which represents year-over-year growth between 20% and 20.5%. Current remaining performance obligations, which is the amount of contracted future revenue set to be realized over the next year, is expected to rise by 18.5%. For the full year, the company expects 20% subscription revenue growth.
ServiceNow is producing strong growth thanks to its investments in AI, and the company sees agentic AI in particular as a key long-term growth driver. ServiceNow did note that there could be a headwind from budget changes at U.S. federal government customers, but that the company's guidance reflects that trend.
