By Emily Bary
The enterprise-software company beats expectations with its latest earnings and boosts its outlook
ServiceNow Inc. said that the rise of artificial-intelligence agents is translating into financial rewards for the company.
The software powerhouse topped expectations with its latest quarterly results Wednesday, while raising its guidance for the full year. Chief Executive Bill McDermott told MarketWatch that AI has underpinned those results, as AI deals were up 50% sequentially in the second quarter.
“The AI revolution is in full flight and knows no boundaries,” he said.
The company turned in $3.11 billion in subscription revenue during the second quarter, up 22.5% from a year earlier and ahead of the $3.03 billion consensus view. Overall revenue amounted to $3.22 billion, while analysts tracked by FactSet were looking for $3.12 billion.
ServiceNow (NOW) easily exceeded expectations on the bottom line, with adjusted earnings per share of $4.09, versus the $3.57 that analysts tracked by FactSet had been modeling.
Shares were rising 7% in Wednesday’s extended session.
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The company reported $10.92 billion in current remaining performance obligations as of the end of the June quarter, with that number representing contract revenue that is expected to be recognized as revenue in the next 12 months. Analysts were expecting $10.47 billion on that metric.
ServiceNow is seeing success with technology that helps link complicated systems within companies and software that connects to clouds, data sources, large language models and AI agents. McDermott said this is becoming more important to companies as they look for more efficient ways to conduct cross-functional work, meaning work that spans multiple departments.
McDermott said he expects AI to represent an “extinction-level event” for traditional customer-relationship management platforms as businesses will look for unified platforms that seek to manage procedures using AI.
ServiceNow’s guidance for the third quarter calls for $3.26 billion to $3.265 billion in subscription revenue, whereas analysts were looking for $3.207 billion. The company also lifted its full-year forecast on that metric, as it now calls for $12.775 billion to $12.795 billion in subscription revenue. ServiceNow’s prior full-year outlook was for $12.64 billion to $12.68 billion.
-Emily Bary
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07-23-25 1631ET
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