ServiceNow Q2 Earnings Preview: subscription revenue growth and Pro+/AI traction in focus

ServiceNow (NYSE:NOW) is set to report second quarter earnings on Wednesday, and investors await to see the company’s subscription revenue growth as well as additional updates on Pro+/AI traction.

Wall Street expects the software company to post EPS of $3.57, implying a 14.1% increase, while revenue is expected to rise 18.6% to $3.12 billion during the quarter.

Ahead of NOW’s second-quarter earnings release, Jefferies maintained its Buy rating.

“Two sizable NOW partners reported y/y growth in the low-20%s range in 2Q, citing ITOM, ITAM, SecOps, Creator, and CRM strength,” highlighted Jefferies analyst Samad Samana, adding that, “Any pauses in early April due to tariff-related macro uncertainty quickly faded and did not impact final 2Q performance.”

ServiceNow said its subscription revenue reached over $3 billion in Q1, implying 20% Y/Y growth. The company also raised its FY subscription revenue guidance to between $12.64 billion and $12.68 billion, while Q2 subscription revenue is expected to be in the range of $3.030 billion to $3.035 billion.

Brokerage firm Citizens is also bullish on NOW and maintained its Market Outperform rating with a price target of $1,300.

“We continue to view ServiceNow as an attractive opportunity for long-term capital appreciation as it offers a robust platform with AI, data, and workflow solutions, and the Now Assist ACV contribution expected to hit $1B by the end of 2026, up from $250M in May,” said Citizens analyst Patrick Walravens.

Over the last two years, NOW has beaten EPS estimates 100% of the time and has beaten revenue estimates 88% of the time.

Over the last three months, EPS estimates have seen 12 upward revisions versus 23 downward revisions, while revenue estimates have seen 27 upward revisions against four downward moves.

As per the Seeking Alpha's Quant Ratings, NOW has a Hold rating with a score of 3.36 out of 5. The company received an A+ for profitability and B+ for growth and revisions, but a D- grade in valuation dragged down the rating.

Shares of the Santa Clara, California-based company have slipped over 9% so far this year, compared to over 7% rise in the broader S&P 500 Index.