ServiceNow Surges on AI-Fueled Earnings Beat
Enterprise Software Giant Exceeds Expectations, Boosts Full-Year Outlook
ServiceNow Inc. is experiencing significant financial gains driven by the widespread adoption of artificial intelligence agents, as the company announced strong second-quarter results that surpassed analyst predictions and led to an upward revision of its annual forecast. The enterprise software leader reported that AI initiatives are directly contributing to its bottom line.
AI Revolution Drives Financial Rewards
The company posted subscription revenue of $3.11 billion for the second quarter, marking a 22.5% increase year-over-year and exceeding the $3.03 billion consensus estimate. Total revenue reached $3.22 billion, also beating the $3.12 billion analysts expected. Adjusted earnings per share came in at $4.09, significantly higher than the $3.57 forecast.
ServiceNow CEO Bill McDermott on AI’s impact: “The AI revolution is in full flight and knows no boundaries.” #AI #ServiceNow @ServiceNow
— TechCrunch (@TechCrunch) July 23, 2025
In response to the robust performance, shares of ServiceNow (NOW) saw a 7% increase in after-hours trading. The company’s current remaining performance obligations, representing contracted revenue expected within the next 12 months, stood at $10.92 billion at the close of the June quarter, surpassing the $10.47 billion analyst projection.
Strategic Integration of AI Fuels Growth
Bill McDermott, Chief Executive Officer, highlighted the pivotal role of AI in the company’s success, noting a 50% sequential increase in AI deals during the second quarter. He stated, The AI revolution is in full flight and knows no boundaries.
“The AI revolution is in full flight and knows no boundaries.”
—Bill McDermott, Chief Executive Officer, ServiceNow
ServiceNow’s technology, which facilitates the connection of complex internal systems and integrates with cloud environments, data sources, large language models, and AI agents, is proving increasingly vital. This is helping businesses streamline cross-functional operations, which involve collaboration across multiple departments.
McDermott also predicted that AI will instigate an extinction-level event
for traditional customer relationship management (CRM) platforms. He anticipates a shift towards unified platforms that leverage AI for process management.
The company provided an optimistic outlook for the third quarter, projecting subscription revenue between $3.26 billion and $3.265 billion, exceeding the $3.207 billion expected by analysts. For the full year, ServiceNow raised its subscription revenue forecast to between $12.775 billion and $12.795 billion, up from its previous guidance of $12.64 billion to $12.68 billion.
This growth mirrors broader industry trends, with worldwide spending on generative AI expected to reach $153 billion in 2024, a substantial increase from $45 billion in 2023 (Gartner, 2024).
