ServiceNow Lifts 2026 Subscription Revenue Outlook as AI Software Demand Remains Strong

ServiceNow has increased its full-year 2026 subscription revenue forecast for the second time after delivering stronger-than-expected results for the second quarter, supported by continued demand for its artificial intelligence software.

Following the announcement, the company's shares gained nearly 4% in extended trading. The results helped reassure investors at a time when software companies have faced concerns that rapidly advancing AI tools from startups could disrupt the traditional software-as-a-service market.

The company has continued expanding its AI agent offerings across areas such as information technology and customer service, enabling organizations to automate complex business processes. Earlier this year, ServiceNow introduced Otto, an AI experience built to manage employee requests and coordinate workflows across departments. It also strengthened its AI capabilities through the acquisitions of cybersecurity startup Armis and AI company Moveworks.

Chief Executive Officer Bill McDermott said the company has not experienced any noticeable changes in customer purchasing cycles despite increased spending on AI and hardware. ServiceNow also reported broad adoption of its AI platform across the U.S. public sector, with nearly all 50 states using the platform to enhance citizen services and modernize government operations. The company said its AI business has surpassed $1 billion in annual contract value.

Chief Financial Officer Gina Mastantuono said the stronger second-quarter performance was supported by federal customers, although part of the growth reflected on-premises revenue that was recognized earlier than expected from the third quarter.

ServiceNow now expects 2026 subscription revenue to range between $15.760 billion and $15.780 billion, compared with its previous forecast of $15.735 billion to $15.775 billion.

For the second quarter, subscription revenue reached $3.88 billion, while adjusted earnings were 90 cents per share, both exceeding analysts' expectations compiled by LSEG. However, the company's subscription revenue outlook for the third quarter was slightly below market estimates.

ServiceNow also reported that its current remaining performance obligations—representing contract revenue expected to be recognized over the next 12 months—rose 21% year over year to $13.20 billion as of June 30.