NEW YORK, July 27, 2026, 19:17 EDT — U.S. markets have closed.
- ServiceNow finished the session at $105.56, marking a two-day recovery of 14.8%.
- The midpoint for full-year guidance increased by $15 million following a $57 million Q2 subscription revenue beat.
- Wednesday brings the next key events with Microsoft earnings and the Federal Reserve decision.
Shares of ServiceNow Inc. NYSE:NOW advanced 6.9% on Monday, reaching $105.56. The stock has now gained 14.8% since Thursday’s close.
The rally was significant, while the guidance adjustment remained modest.
ServiceNow has set its updated annual subscription-revenue midpoint at $15.770 billion, an increase of $15 million over its earlier midpoint. This adjustment amounts to about 26% of the company’s second-quarter outperformance versus analyst expectations.
The figures provide a clearer perspective on the quarter:
| Measure | Actual or new midpoint | Comparator | Difference |
|---|---|---|---|
| Q2 subscription revenue | $3.877 billion | $3.820 billion consensus | +$57 million |
| FY2026 subscription guidance | $15.770 billion | $15.755 billion prior | +$15 million |
| Q3 subscription guidance | $3.9775 billion | About $4.000 billion consensus | -$22.5 million |
Management reported that robust federal demand moved a portion of on-premise revenue into the second quarter, rather than the third quarter as previously anticipated.
The timing accounts for the muted yearly rise. The next milestone for the company will be Q3 bookings.
ServiceNow dropped 4.3% over the prior week, tracking from Friday to Friday. A 7.4% gain on Friday partially offset the earlier decline. On Monday, shares were up 10.6% from their July 22 earnings close.
Monday also saw a broad-based recovery across sectors:
| Software name | Monday close | Daily move |
|---|---|---|
| ServiceNow | $105.56 | up 6.86% |
| Workday NASDAQ:WDAY | $147.54 | up 9.00% |
| Salesforce NYSE:CRM | $173.60 | up 6.04% |
| Oracle NYSE:ORCL | $119.90 | up 4.32% |
| iShares Expanded Tech-Software ETF (NYSEARCA:IGV) | $90.91 | up 3.31% |
ServiceNow outperformed the software fund by roughly 3.6 percentage points, but Workday posted an even larger gain. The trend suggests company-specific relief combined with a broader shift.
Underlying growth stayed robust, but a period of slower expansion is expected. Subscription revenue in Q2 climbed by 24.5%, and current remaining performance obligations went up by 21%. Guidance for Q3 points to subscription revenue growth of 20.5% and cRPO growth of 19.5%.
AI is now contributing tangible revenue. ServiceNow reported that annual contract value for its AI products surpassed $1 billion. CEO Bill McDermott stated that agentic deployments “increased ninefold in just nine months.” ServiceNow Newsroom
Major contracts provided further evidence of strength. ServiceNow secured 123 net-new ACV deals worth over $1 million, up almost 40% from the prior year. The number of customers with ACV over $5 million rose approximately 23% to 658.
Cash performance showed a slower pace of growth. Free cash flow increased by 16% to $634 million, while overall revenue expanded 24%. The free-cash-flow margin edged down to 16%, compared with 16.5% previously.
Needham’s Joshua Reilly stated software stocks might have “reached an inflection point.” Broad gains on Monday back up this perspective, but a sustained rerating is not yet confirmed. Barron’s
Microsoft NASDAQ:MSFT is set to release its fiscal fourth-quarter earnings Wednesday after markets close. The Federal Reserve is also set to reveal its rate decision on the same day. The outcomes may impact software stock valuations ahead of the weekend.
Risks: Q2 results included a federal timing advantage, while Q3 cRPO growth guidance has been set lower. ServiceNow currently trades at about 65 times trailing earnings. A shift back in the software sector could put the stock under pressure.
ServiceNow is once again seeing upward price movement. The bigger challenge will be sustaining bookings close to 20% without a further timing advantage.
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