NEW YORK, July 23, 2026, 17:10 (EDT) — ServiceNow Inc. NYSE:NOW shares slipped 3.7% following the company’s 2026 forecast, which suggested a softer performance in the second half of the year.
- U.S. cash markets are shut. ServiceNow ended the session at $91.94, down 3.69%. Shares changed hands at $92.50 in after-hours trading at 17:03 EDT.
- Initial midpoint estimates suggest second-half subscription revenue is $44.5 million lower than previously projected.
- Annual contract value for AI exceeded $1 billion. Current backlog increased by 21.5% at constant currency.
ServiceNow’s updated 2026 outlook suggests second-half subscription revenue that is $44.5 million below previous expectations, based on preliminary company midpoint estimates. Shares ended Thursday down 3.7 percent.
Subscription revenue in the second quarter totaled $3.877 billion, surpassing the previous guidance midpoint by $59.5 million. The midpoint for the full year was increased by just $15 million.
Only a quarter of the quarterly increase was reflected in the annual midpoint, with the rest reducing the projected total for the second half.
CFO Gina Mastantuono stated, “About half of the beat is a pull forward of on-prem for a quarter.” She mentioned that the upside in net-new contracts was factored into the full-year guidance. Investing.com
The calculation relies on reported-dollar midpoints and does not adjust for currency effects. ServiceNow moved the guidance currency base from March rates to June rates.
| Subscription-revenue bridge, $ million | Prior view | Latest view | Change |
|---|---|---|---|
| First-quarter result | 3,671.0 | 3,671.0 | — |
| Second quarter | 3,817.5 midpoint | 3,877.0 actual | +59.5 |
| Midpoint for the full year | 15,755.0 | 15,770.0 | +15.0 |
| Projected second half* | 8,266.5 | 8,222.0 | -44.5 |
Preliminary. The earlier estimate reflects the previous midpoint for the second quarter. The updated estimate reflects the actual reported outcomes. Currency fluctuations are included.
The forecast for the third quarter also missed Wall Street expectations. ServiceNow projected revenue between $3.975 billion and $3.980 billion, coming in under the consensus estimate of about $4 billion.
Contracted business showed ongoing strength, with current remaining performance obligations increasing by 21.5% at constant currency. This exceeded earlier guidance by 200 basis points.
AI-related demand offered further support. Annual contract value topped $1 billion. The number of customers running agentic AI in production increased ninefold over nine months.
The adjusted operating margin came in at 29.5%, surpassing guidance by three points. Adjusted earnings posted at 90 cents per share, ahead of the 85 cents forecast.
The early gains faded. ServiceNow climbed close to 4% following its results on Wednesday, but finished Thursday’s session at $91.94.
Technology stocks came under further strain on Thursday, with the Nasdaq Composite declining 2.15%. Shares of ServiceNow declined 3.69%. Trading volume surged to 170% of its 65-day average.
The share price declined 11.6% across five sessions. Its loss for 2026 is now close to 40%.
Focus turns to interest rates and economic growth next week. The Federal Reserve is set to meet on July 28–29. June PCE inflation data and preliminary second-quarter GDP will be released on July 30.
Risks persist. Additional timing changes may impact third-quarter performance. ServiceNow lowered its subscription gross-margin outlook by 50 basis points to 81%, pointing to increased hyperscaler usage and quicker AI uptake.
The upcoming challenge is third-quarter cRPO growth, which is forecast at 20% in constant currency. Achieving this without another acceleration would clarify the distinction between ongoing demand and the timing of revenue.
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