Overview
- ServiceNow reported results Wednesday, posting subscription revenue of about $3.88 billion and adjusted EPS of $0.90 that topped Wall Street estimates and prompted a raise to full-year subscription guidance.
- Management said AI annual contract value passed $1 billion in the quarter and raised its 2026 AI ACV target to roughly $1.5 billion, underscoring faster customer adoption of AI-native and agentic offerings.
- Near-term bookings improved as current remaining performance obligations rose to about $13.2 billion, a key signal that contracted revenue visibility strengthened despite management saying some federal deals shifted revenue into Q2.
- Markets reacted unevenly with shares falling in the regular session then recovering in after-hours trading, and analysts gave mixed but mostly constructive takes while flagging valuation, margins and pacing of organic growth.
- Investors should watch gross-margin pressure from AI consumption and hyperscaler costs, the company’s new hybrid pricing model, and upcoming Financial Analyst Day for evidence the AI-driven growth is sustainable.