NEW YORK, July 21, 2026, 5:09 p.m. EDT – ServiceNow NYSE:NOW is under pressure to reach a 20.5% growth in current remaining performance obligations before its Q2 earnings report, setting the bar as investors weigh the company’s upcoming financial performance.
- The U.S. regular trading session has finished. ServiceNow closed at $102.06, a decline of 2.5%.
- ServiceNow is set to report second-quarter earnings after markets close on Wednesday. Analysts expect revenue of $3.92 billion and earnings of $0.86 per share.
- Morgan Stanley NYSE:MS projects that investors are looking for constant-currency cRPO growth of 20.5%-21.5%. ServiceNow provided guidance of 19.5%.
ServiceNow NYSE:NOW approaches Wednesday’s earnings having to surpass its stated outlook. According to Morgan Stanley, market consensus anticipates constant-currency cRPO growth in the 20.5%-21.5% range.
The difference stands at 100 to 200 basis points. Even with a beat of this magnitude, it might only align with forecasts.
cRPO reflects revenue under contract anticipated in the next 12 months. According to Morgan Stanley, the forecast suggests about 17% organic growth.
| Q2 cRPO benchmark | Constant-currency growth |
|---|---|
| ServiceNow projected | 19.5% |
| Initial organic figure at projection | About 17% |
| Morgan Stanley investor threshold estimate | 20.5%-21.5% |
| Initial organic figure at threshold | About 18%-19% |
Preliminary figures are organic estimates from Morgan Stanley, not official company guidance.
ServiceNow reports that Armis adds roughly 125 basis points to its Q2 cRPO outlook. As a result, the acquisition mix is expected to influence investor reaction.
The valuation is clear-cut. ServiceNow is valued at almost 60 times its trailing earnings.
| Company | Tuesday close | Daily move | Trailing P/E |
|---|---|---|---|
| ServiceNow NYSE:NOW | $102.06 | down 2.5% | 60.0x |
| Salesforce NYSE:CRM | $170.06 | down 2.1% | 23.5x |
| Workday NASDAQ:WDAY | $141.17 | down 4.1% | 44.0x |
| Atlassian NASDAQ:TEAM | $90.60 | down 6.0% | N/M |
Prices reflect Tuesday’s closing levels. Atlassian’s multiple is not applicable as trailing earnings are negative.
ServiceNow trades at a multiple that is 2.6x that of Salesforce and 1.4x higher than Workday. This premium increases the risk associated with slowing organic growth.
The stock dropped 4.1% over the past week and fell a further 1.1% by Tuesday. On Tuesday, the Nasdaq Composite rose 1.34%.
ServiceNow will release its results following Wednesday’s market close, with a conference call set for 5 p.m. EDT.
Morgan Stanley’s Sanjit Singh assigns an Overweight rating and sets a $180 price target on the shares. “The setup looks achievable,” Singh wrote following recent assessments of demand. TipRanks
The bullish outlook has backing. Constant currency cRPO increased 21% in the first quarter. The number of customers committing over $1 million a year to Now Assist surged by more than 130%.
Volatility may increase in the coming week. Options indicated an implied move of roughly 12% by the time Friday’s expiration arrives.
Risks are evident. Missing cRPO could put pressure on ServiceNow’s premium valuation. Armis is projected to reduce Q2 operating margin by roughly 125 basis points. The full-year free-cash-flow margin is also expected to fall by approximately 200 basis points.
