ServiceNow delivers solid Q2, touts AI Control Tower strength

ServiceNow reported a better-than-expected second quarter, upped its outlook and touted traction in security and its AI Control Tower.

The company reported second quarter earnings of $298 million, or 29 cents a share, on revenue of $3.99 billion, up 24% from a year ago. Non-GAAP earnings were 90 cents a share.

Wall Street expected ServiceNow to report non-GAAP earnings of 86 cents a share on revenue of $3.93 billion.

ServiceNow said that current remaining performance obligations for the second quarter were $13.2 billion, up 21% from a year ago. The company added that its AI business topped $1 billion in annual contract value in the second quarter.

CEO Bill McDermott said the company is seeing strength in cybersecurity and AI Control Tower. ServiceNow President and CFO Gina Mastantuono noted "AI Control Tower is supercharging our Security and Risk business, and ITOM is seeing strong demand tailwinds for the CMDB to serve as an essential governance and data foundation."

As for the outlook, ServiceNow is projecting subscription revenue growth of 20.5% in the third quarter and 22.5% for 2026. The outlook includes Armis.

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McDermott moved to address concerns about ServiceNow and positioned the company as an enabler for enterprise AI. Here's a look at the key quotes from the earnings call;

• "We are who we said we were. The path to value isn't just making AI; it's deploying AI securely across the enterprise. Whichever chip wins, whichever lab wins, whichever price per token regime prevails, the enterprise needs one governed layer of record for work and ServiceNow offers needed certainty in an uncertain stack. Our platform is optionality on all AI outcomes, not a bet on any one."
• "ServiceNow already was a billion-dollar-plus cybersecurity business. Today, our risk and security business is the fastest growing of the top 10 cyber companies in the enterprise. I'll make it very clear: we now have a 10-figure cybersecurity business that's growing faster than all the other top cybersecurity companies. We're building the world's most integrated end-to-end security platform across cyber risk and compliance, agentic incident response, exposure management, identity and access security, cyber-physical security, and continuous vulnerability detection."
• "There are 2.2 billion agents entering the enterprise globally. That's 2.2 billion new identities, a quarter of today's human population. The attack surface is exploding every ungoverned asset and identity multiplies the blast radius. No agent goes live without clearing governance, risk, value validation, and observability."
• "Innovating for the enterprise is like politics. As you may have noticed, it's pretty easy to make noise, hard to make progress."
• "We have a big announcement coming very shortly-a business model evolution that expands our TAM with AI-native products. This new offering will be a conversational service desk experience. No tickets and AI-coded automation in a new product-led motion. We're targeting the Fortune 500, many of whom we expect to replace their legacy offerings and bypass the startups. Stop wasting time. We already have several customers in beta, and soon will be GA. This is the first of many net new AI-native products we'll be bringing to market in the weeks to come."
• "We're in the control business. One platform, one system of action. Any cloud, any agent, any workflow, any model, governed, secured, and accountable. This is the AI Control Tower. ServiceNow is the rules and rails of the enterprise. We're in command of the agentic enterprise from workflow to cyber. Our position is real. It is durable. It is compounding."