ServiceNow Earnings: AI Fuels Momentum

Key Points

• ServiceNow easily beat analyst expectations for the second quarter.

• AI products are driving growth, and management sees agentic AI as a key growth driver.

• Strong guidance supports the company's momentum continuing through the rest of 2025.

• 10 stocks we like better than ServiceNow ›

Here's our initial take on ServiceNow's (NYSE: NOW) financial report.

Key Metrics

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.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

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.

• Full earnings report
• Investor relations page

Should you invest $1,000 in ServiceNow right now?

Before you buy stock in ServiceNow, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and ServiceNow wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $641,800!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,023,813!*

Now, it’s worth noting Stock Advisor’s total average return is 1,034% — a market-crushing outperformance compared to 180% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of July 21, 2025

Timothy Green has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends ServiceNow. The Motley Fool has a disclosure policy.