ServiceNow has reported stronger-than-expected financial results for the second quarter of fiscal 2026, exceeding the high end of its guidance across revenue and profitability while raising its full-year subscription revenue outlook.
The enterprise software company reported subscription revenue of US$3.877 billion for the quarter ended June 30, 2026, representing 24.5% year-over-year growth. Total revenue reached US$3.987 billion, up 24% compared to the same period last year.
A key milestone during the quarter was ServiceNow’s AI business surpassing US$1 billion in Annual Contract Value (ACV), underscoring growing enterprise demand for AI-powered workflow automation and business transformation solutions.
AI Adoption Continues to Accelerate
ServiceNow said customer adoption of its AI platform continued to accelerate during the quarter, with deployments of its agentic AI solutions increasing ninefold over the past nine months.
The company’s remaining performance obligations (RPO)—a key indicator of future contracted revenue—rose to US$29 billion, representing 21% year-over-year growth, while current remaining performance obligations (cRPO) increased to US$13.2 billion.
ServiceNow also reported:
- 123 transactions exceeding US$1 million in net new Annual Contract Value during the quarter
- Nearly 40% year-over-year growth in million-dollar ACV transactions
- 658 customers generating more than US$5 million in annual contract value, up approximately 23% year over year
These figures reflect continued enterprise investment in AI-driven digital transformation despite broader macroeconomic uncertainty.
Company Raises Full-Year Outlook
Following the strong quarterly performance, ServiceNow increased its full-year subscription revenue guidance.
Commenting on the results, Bill McDermott, Chairman and Chief Executive Officer of ServiceNow, said:
“ServiceNow’s exceptional Q2 results solidify our position as the fastest-growing major enterprise software and cybersecurity company. The company’s strong fundamentals have us operating to the Rule of 56, well on our way to the Rule of 60. With our AI Control Tower as the market standard, agentic deployments of ServiceNow AI increased ninefold in just nine months. Our US$29 billion in remaining performance obligations reflects longer customer commitments and growing demand across our partner ecosystem.”
Gina Mastantuono, President and Chief Financial Officer, added:
“Q2 was an outstanding quarter that highlights ServiceNow’s broad-based demand, strong execution, and operating leverage. We exceeded the high end of our guidance across every topline and profitability metric. AI continues to outperform expectations, while our AI Control Tower is strengthening our Security and Risk business and driving demand for enterprise governance capabilities.”
AI Platform Expansion Takes Centre Stage
During its annual Knowledge 2026 conference, ServiceNow unveiled several AI innovations aimed at helping enterprises govern, deploy, and scale artificial intelligence across business operations.
Among the major announcements were:
- ServiceNow Otto, a unified AI experience that combines Now Assist, Moveworks, and AI Experience into a single enterprise assistant
- Expanded AI Control Tower capabilities for AI governance, security, monitoring, and compliance
- New Autonomous Workforce AI specialists for IT, customer service, employee workflows, and cybersecurity
- Build Agent, enabling developers to build AI-powered applications from multiple development environments
- Context Engine and Autonomous Data Analytics for enterprise-wide AI decision-making
- ServiceNow Action Fabric, allowing third-party AI models to securely execute enterprise workflows
These product launches reinforce ServiceNow’s strategy of positioning itself as a central platform for enterprise AI governance and workflow automation.
Strategic Partnerships Strengthen AI Ecosystem
The company also expanded several high-profile partnerships during the quarter.
ServiceNow deepened collaborations with:
- NVIDIA to enhance enterprise AI governance and autonomous computing
- Microsoft to extend AI Control Tower across Microsoft Agent 365
- Amazon Web Services (AWS) after surpassing US$1 billion in AWS Marketplace transactions
- Accenture to help enterprises modernise cybersecurity operations using AI
- Experian to integrate AI-powered decision intelligence into enterprise workflows
- TeamViewer, FedEx, Lenovo, and Leidos to automate IT operations, logistics, and enterprise productivity
These partnerships are expected to accelerate AI adoption across multiple industries while expanding ServiceNow’s enterprise ecosystem.
Long-Term AI Growth Strategy
Earlier this year, ServiceNow outlined ambitious long-term financial targets during its Financial Analyst Day.
The company expects to achieve:
- More than US$30 billion in annual subscription revenue
- AI contributing 30% of Annual Contract Value
- A Rule of 60+ operating model by 2030
- Stock-based compensation reduced to below 10% of revenue by 2029
The targets reflect management’s confidence in the growing role of AI as a primary driver of enterprise software demand.
Why It Matters
ServiceNow’s latest results highlight the accelerating adoption of AI-powered enterprise platforms as organisations seek measurable returns from artificial intelligence investments.
Unlike many companies still experimenting with AI use cases, ServiceNow is positioning its platform as an operational layer that enables enterprises to automate workflows, govern AI deployments, strengthen cybersecurity, and improve productivity at scale.
Crossing US$1 billion in AI Annual Contract Value signals that enterprise AI spending is moving beyond pilot projects into large-scale production deployments.
Looking Ahead
With strong revenue growth, expanding customer commitments, and increasing AI adoption, ServiceNow enters the second half of FY2026 with significant momentum.
As enterprises continue investing in AI-driven automation, governance, and digital transformation, the company appears well positioned to strengthen its leadership in the enterprise software market while executing on its long-term growth strategy.
Ruchi Kumar is the associate editor at Entrepreneur News Network and TVW News India, where she leads editorial strategy, brand storytelling, and startup ecosystem coverage. With a strong focus on innovation, business, and marketing insights, he curates impactful narratives that spotlight India’s evolving entrepreneurial landscape. She has written extensively on fintech, AI and emerging startups.