ServiceNow stock rockets after earnings, but one number divides Wall Street

ServiceNow stock NYSE:NOW jumped nearly 5% in pre-market trading on Thursday after the enterprise-software company delivered a stronger second quarter and raised its annual subscription-revenue forecast.

The upbeat earnings eased some fears that artificial intelligence is weakening established software platforms.

Revenue rose 24% to $4 billion (approx. Rs 1.1 trillion), while adjusted earnings of 90 cents a share beat the 86-cent consensus.

The reaction came before regular US trading began on Thursday, after the stock entered the results down almost 38% in 2026.

Yet the relief rally did not resolve the central debate.

Wall Street is now focused on current remaining performance obligations, or cRPO, and whether management’s third-quarter forecast signals healthy demand or another step down in organic growth.

ServiceNow stock: Earnings beat resets expectations after a bruising sell-off

ServiceNow’s second-quarter performance challenged the most bearish assumptions surrounding enterprise software.

Subscription revenue increased 24.5% to $3.9 billion (approx. Rs 1.1 trillion), or 23% in constant currency, while cRPO climbed 21% to $13.2 billion (approx. Rs 3.7 trillion) and 21.5% excluding currency movements.

The company also raised its full-year subscription-revenue outlook to between $157.6 billion (approx. Rs 44.1 trillion) and $157.8 billion (approx. Rs 44.1 trillion).

Those figures matter because expectations had fallen sharply during a broad software sell-off driven by concerns that generative-AI tools could displace traditional platforms.

The quarter showed that customers are still signing large contracts.

ServiceNow completed 123 transactions carrying more than $1 million (approx. Rs 279.6 million) in net-new annual contract value, nearly 40% more than a year earlier.

ServiceNow earnings: Why cRPO has split JPMorgan and Jefferies

cRPO represents contracted revenue expected to be recognised over the following 12 months, making it one of the clearest forward-looking indicators for subscription businesses.

ServiceNow forecast third-quarter cRPO growth of 19.5% as reported and 20% in constant currency, below the 21.5% constant-currency rate delivered during the second quarter.

Management also said strong US federal demand accelerated some on-premise subscription revenue from the third quarter into the second.

JPMorgan analyst Mark Murphy retained an Overweight rating but remained cautious.

In a note reported by TipRanks, Murphy said he saw no material execution problem in the quarter, yet warned that an “odd lull” in organic constant-currency cRPO growth could restrain sentiment until the company returns towards its earlier trajectory.

Jefferies analyst Samad Samana took a more constructive view.

According to The Fly, Samana raised his target to $140 from $135 and maintained a Buy rating, arguing that the upside reflected stronger net-new contract value as well as timing benefits.

AI momentum is real, but financial proof matters

ServiceNow’s AI business crossed $1 billion (approx. Rs 279.6 billion) in annual contract value during the quarter, while the number of customers running its AI agents in production increased ninefold over nine months.

That progress supports management’s argument that ServiceNow can benefit from enterprise AI adoption rather than be displaced by it.

The remaining question is whether those contracts will translate into faster organic growth as they move into recognised revenue.

Murphy’s caution reflects the gap between strong AI headlines and a third-quarter cRPO outlook near 20%.

Samana’s stance suggests larger contracts and healthier net-new annual value provide a stronger underlying signal than the headline slowdown implies.