ServiceNow, Inc.

What they do

ServiceNow provides a cloud-based AI Platform that connects AI-generated insights to operational systems and workflows. Its workflow applications are grouped into four areas: Technology, CRM and Industry, Core Business, and Creator and Other. The platform includes AI-powered applications, and the company has combined its Security Operations with Armis and Veza to deliver cyber asset intelligence and identity governance capabilities.

Revenue drivers

• Subscription revenues — The largest revenue stream, totaling $3,877 million in Q2 2026, up 24.5% year-over-year. Includes sales of platform subscriptions and related services.
• AI solutions / AI Control Tower — ServiceNow AI crossed $1 billion in annual contract value in Q2 2026. AI net new ACV growth is outpacing expectations and is a key growth driver.
• Security and Risk business — AI Control Tower is described as supercharging this segment, combining Armis and Veza capabilities for AI agent and asset governance.
• ITOM (IT Operations Management) — Strong demand tailwinds for the CMDB, which serves as an essential governance and data foundation.

Recent performance

In Q2 2026, subscription revenues were $3,877 million, up 24.5% year-over-year (23% constant currency), and total revenues were $3,987 million, up 24% (22.5% constant currency). Current remaining performance obligations were $13.20 billion, up 21% year-over-year (21.5% constant currency); total RPO was $29.0 billion, up 21% (22% constant currency). The company beat the high end of guidance across all topline and profitability metrics and raised its full-year subscription revenue outlook.

Strategy

Management emphasizes the 'AI Control Tower' as the market standard for governing, deploying, and scaling AI across enterprises. They are expanding the platform with new capabilities like 'Autonomous Workforce' AI specialists, 'Build Agent' for third-party developer environments, and 'Context Engine' for data governance. They are also partnering with Anthropic as a design partner for 'Action Fabric' to integrate third-party AI into ServiceNow workflows. Long-term targets include $30 billion+ in subscription revenues and 30% of ACV from AI, announced at the May 2026 Financial Analyst Day.

Risks

• AI integration challenges — Incorporating AI into offerings may create operational, legal, regulatory, ethical, and other challenges that could harm the business.
• Intense competition — Failure to innovate and adapt to rapidly evolving technological changes in a highly competitive market could harm its competitive position.
• Complex sales cycles — Customer deals are becoming more complex, involving longer, more expensive sales cycles and increased pricing pressure.
• Macroeconomic uncertainty — Global conflicts, inflation, tariffs, and interest rate changes could disrupt the global economy and materially impact business operations.

Outlook

Management raised the full-year subscription revenue outlook after Q2 2026. They cite 'sterling fundamentals' and are operating to the 'Rule of 56,' on the way to 'Rule of 60.' They highlight ninefold growth in agentic deployments of ServiceNow AI in nine months and a $29 billion RPO backlog fueled by longer customer commitments. They expect continued strong demand from AI, security, and ITOM.