ServiceNow’s Q2 Earnings Will Reveal Whether the Sell-Off Has Gone Too Far

That wraps up our initial coverage of ServiceNow’s Q2 results. Thank you for stopping by!

ServiceNow closed 123 transactions worth more than $1 million in net new annual contract value during Q2, an increase of nearly 40% year over year.

The company finished the quarter with 658 customers generating more than $5 million in ACV, up approximately 23%. Total remaining performance obligations increased 21% to $29.0 billion, supported by longer customer commitments and stronger partner demand.

Current remaining performance obligations reached $13.20 billion, also up 21%, providing substantial visibility into revenue expected over the next 12 months.

The deal data reinforces the idea that large enterprises are consolidating more workflows, security functions, and AI deployments onto ServiceNow’s platform.

ServiceNow’s Q2 subscription revenue reached $3.88 billion, exceeding the high end of its guidance by 150 basis points and rising 24.5% year over year.

However, investors should note that part of the upside came from strong U.S. federal demand accelerating some on-premise subscription revenue from Q3 into Q2. That timing benefit helps explain why management expects Q3 subscription revenue growth to moderate to 20.5%.

Q3 cRPO growth is also expected to slow to 19.5% on a reported basis, or 20% in constant currency, compared with 21% reported growth in Q2.

The quarter was fundamentally strong, but the pull-forward means investors should avoid extrapolating all of the Q2 outperformance into the second half of the year.

ServiceNow raised its full-year subscription revenue guidance to between $15.76 and $15.78 billion, representing approximately 22.5% growth.

The previous outlook called for $15.53 billion to $15.57 billion, meaning the midpoint increased by roughly $220 million. Management attributed the raise to stronger-than-expected net new annual contract value.

For Q3, ServiceNow expects subscription revenue of $3.975 billion to $3.980 billion, representing 20.5% reported growth. The company maintained its full-year non-GAAP operating margin target of 31.5% and free cash flow margin target of 35%.

The higher revenue outlook suggests enterprise demand remains durable despite the stock’s steep year-to-date decline.

ServiceNow reached a major AI monetization milestone during Q2, with its AI products surpassing $1 billion in annual contract value.

Management said agentic AI deployments increased ninefold over the past nine months, while AI net new ACV growth continued to exceed its expectations. The company’s AI Control Tower is also driving additional demand across its Security and Risk business.

ServiceNow ultimately expects AI products to generate 30% of companywide ACV by 2030. Crossing $1 billion this early provides tangible evidence that its AI strategy is producing commercial results rather than remaining a long-term promise.

ServiceNow just reported Q2 earnings, with shares initially up 2% following the report. Here are the key numbers:

• Revenue: $3.99 billion vs. $3.93 billion expected
• EPS: $0.90 vs. $0.86 expected

Quick Read:

ServiceNow beat expectations on both the top and bottom lines, with revenue rising 24% year over year and 6% sequentially.

EPS increased 10% year over year despite declining 7% from the previous quarter, while the positive initial reaction suggests the results cleared investors’ lowered expectations.

ServiceNow CEO Bill McDermott previously delivered one of the boldest forecasts on Wall Street: “ServiceNow will become a $1 trillion company by 2030.”

With ServiceNow currently valued at just under $100 billion, McDermott is effectively calling for the company’s market value to increase tenfold within four years. He has also put his own money behind the business, purchasing about $3 million of NOW shares at $107 apiece.

Nvidia CEO Jensen Huang has reportedly suggested ServiceNow could eventually grow 100-fold, while President Trump purchased approximately $5 million of the stock.

Amazon, Microsoft, Alphabet, OpenAI, and Anthropic are also expanding their partnerships with the enterprise software leader.

The bull case is that ServiceNow is becoming the essential operating system for AI-powered enterprise workflows. Building a custom alternative through “vibe coding” could reportedly cost 5-10x more than adopting ServiceNow’s platform.

After the stock’s brutal decline, investors now face a remarkable question: Is ServiceNow one of the strongest buying opportunities in the market?

ServiceNow (NYSE:NOW) reports Q2 earnings tonight.

The Consensus Bar

• EPS estimate: $0.40, versus $0.82 in Q2 2025 (pre-split)
• Subscription revenue guide: $3.650B–$3.655B, +21.5% GAAP
• cRPO growth guide: 22.5% GAAP
• Non-GAAP operating margin: 31.5%

Price and Positioning

NOW last traded at $95.66, off 6.27% intraday, -8.08% on the week, and -37.59% YTD.

The full-chain put/call has slipped to 0.53, and the July 24 expiry shows 27,419 calls versus 19,615 puts, pricing in an outsized move.

What Triggers a Rebound

A cRPO print above 23% GAAP, a Now Assist update pacing toward the $1B ACV target, and an FY2026 subscription raise above $15.57B would reset the narrative.

A subscription cut below $15.53B, margin under 31.5%, or vague AI monetization language could extend the stock’s drawdown.

With shares trading at $95.84, down 6.09% intraday ahead of the 4:10 PM ET Q2 earnings release, here is what to listen for on tonight’s call.

Top 5 Analyst Questions

• Is Now Assist tracking to the $1B ACV target by 2026?
• How much cRPO was pulled forward by the July 1 pricing change?
• Financial exposure from CVE-2026-6875?
• Armis, Veza, and Moveworks integration timeline?
• Federal deal slippage quantified?

Key Topics Management Must Address

• Subscription gross margin trajectory after the drop to 82.5%
• Pace of the $2B accelerated buyback
• H2 guidance framing

Buzzwords to Listen For

• “AI control tower,” “agentic operating system,” “Rule of 55+,” “platinum standard”

Red Flags

• cRPO growth below 22.5% guidance
• Operating margin softer than 31.5%
• Any FY2026 subscription cut below $15.53B
• Vague AI monetization metrics

Several wildcards could swing tonight’s reaction for ServiceNow’s (NYSE:NOW) Q2 earnings.

Security Exploit in the Wild

A critical sandbox-escape flaw, CVE-2026-6875 with a CVSS score of 9.5, is being actively exploited, and 31% of tested instances exposed data without credentials.

Management commentary on remediation costs is a swing factor.

Pricing Pull-Forward

A new pricing model effective July 1, 2026, triggered early renewals, which Jefferies flagged and KeyBanc cited in its Underweight, $85 target.

cRPO strength could potentially be borrowed from the upcoming Q3 quarter.

Mix Shift and M&A Drag

Self-hosted-to-hosted conversion carries a ~150bps subscription headwind, while Armis, Veza, and Moveworks integration adds noise.

Options positioning is calm, with a full-chain put/call ratio of 0.54.

This live blog is being updated by Thomas Richmond, a 24/7 Wall St. contributor. You’ll get expert analysis of ServiceNow’s Q2 earnings.

Simply stay on this page, and new updates will appear below automatically. We expect ServiceNow to release earnings shortly after 4:10 p.m. ET.