ServiceNow Stock News Today: Shares Slide as Restructuring Reports Offset Strong AI Growth

Key takeaways:

• ServiceNow shares fell 4.9% to $110.07 on Thursday, ending a four-session winning streak.
• The company is reportedly considering eliminating up to 1,000 positions as it integrates recent acquisitions and restructures parts of its workforce.
• Second-quarter revenue rose 24% to $3.99 billion, while adjusted earnings of $0.90 per share exceeded Wall Street expectations.
• ServiceNow’s AI business surpassed $1 billion in annual contract value, helping the company raise its full-year subscription revenue forecast.

ServiceNow shares moved sharply lower on Thursday as investors assessed reports of further workforce reductions alongside the enterprise software company’s strong second-quarter results and accelerating artificial intelligence revenue.

The stock dropped 4.92% to close at $110.07 on July 30, snapping four consecutive sessions of gains. The decline came despite a broadly positive day for US equities, with the S&P 500 rising 1.66%.

The latest ServiceNow stock news today highlights the conflicting forces affecting the company’s valuation. ServiceNow continues to report double-digit subscription growth and rapid adoption of its AI products, but investors remain concerned about restructuring, acquisition integration and the possibility that generative AI could disrupt established enterprise software providers.

ServiceNow Reportedly Considers Cutting Up to 1,000 Jobs

ServiceNow could eliminate as many as 1,000 positions during 2026 as part of a planned restructuring following a series of acquisitions, according to people familiar with the matter.

The reported reductions are intended to remove overlapping roles and improve operating efficiency as ServiceNow integrates cybersecurity and AI companies including Armis, Veza and Moveworks. The restructuring could take place over several months rather than through a single round of layoffs.

ServiceNow has separately confirmed that recent changes affected a low-single-digit percentage of its global workforce. The company had 29,187 employees at the end of 2025, suggesting that several hundred positions have already been affected.

Chief Executive Bill McDermott previously indicated that ServiceNow expected to finish 2026 with broadly the same number of employees it had at the beginning of the year. The company may therefore continue hiring in areas such as AI, engineering and cybersecurity while reducing positions elsewhere.

ServiceNow did not announce a specific job-cut target in its second-quarter earnings release. The final number of affected roles may consequently differ from the reported maximum of 1,000.

Q2 Revenue Rises 24% to $3.99 Billion

The workforce reports followed a stronger-than-expected second-quarter earnings announcement.

ServiceNow generated total revenue of $3.99 billion for the three months ended June 30, an increase of 24% from the previous year. Constant-currency revenue growth reached 22.5%.

Subscription revenue, the company’s main source of sales, climbed 24.5% to $3.88 billion. On a constant-currency basis, subscription revenue increased 23% and exceeded the upper end of management’s previous guidance by approximately 1.5 percentage points.

The result also surpassed the $3.82 billion subscription revenue forecast compiled by FactSet. ServiceNow attributed the outperformance to stronger net-new annual contract value and higher-than-expected demand from US federal customers.

Some government-related on-premise subscription revenue originally expected in the third quarter was recognised during the second quarter. That timing benefit supported Q2 growth but will create a more difficult sequential comparison in the current period.

ServiceNow reported GAAP net income of $298 million, equivalent to diluted earnings of $0.29 per share. Adjusted net income reached $930 million, while adjusted diluted earnings came in at $0.90 per share, above the Wall Street estimate of approximately $0.86.

AI Annual Contract Value Surpasses $1 Billion

Artificial intelligence remained one of the most important growth drivers in ServiceNow’s quarterly report.

ServiceNow’s AI products exceeded $1 billion in annual contract value during the second quarter. The number of customers with agentic ServiceNow AI deployments increased ninefold over nine months, indicating that more businesses are moving beyond pilot programmes and placing AI tools into active use.

The company is targeting approximately $1.5 billion in AI annual contract value by the end of 2026. Management ultimately expects AI products to account for around 30% of total annual contract value by 2030.

ServiceNow is positioning its platform as a control layer through which companies can govern, monitor and deploy AI agents across different departments and software systems.

Its AI Control Tower is designed to give enterprises visibility over AI models, agents and workflows regardless of where they were developed. This could become increasingly important as businesses use products from multiple AI providers while attempting to maintain security, compliance and cost controls.

ServiceNow also launched Otto, a unified AI interface combining capabilities from Now Assist, Moveworks and the company’s broader AI platform. Otto can interpret a user’s request, select the appropriate agent and execute tasks within an organisation’s security and governance rules.

Other recent releases include autonomous AI specialists for IT management, customer relationship management, employee services and cybersecurity. ServiceNow also introduced Action Fabric, which allows its own and third-party AI agents to take action through ServiceNow workflows. Anthropic became the product’s first design partner.

Contracted Revenue Reaches $29 Billion

ServiceNow’s remaining performance obligations provided further evidence of long-term customer demand.

Current remaining performance obligations, representing contracted revenue expected to be recognised within the next 12 months, increased 21% to $13.2 billion. Constant-currency cRPO growth reached 21.5%.

Total remaining performance obligations rose 21% to $29 billion, or 22% after adjusting for currency movements.

ServiceNow recorded 123 transactions with more than $1 million in net-new annual contract value during the quarter, an increase of almost 40% from a year earlier. The company ended June with 658 customers generating more than $5 million each in annual contract value, up approximately 23%.

The growth in large contracts suggests that major companies are expanding the number of ServiceNow products used across their organisations rather than limiting the platform to traditional IT service management.

Cybersecurity has become another important source of expansion following the acquisitions of Armis and Veza. ServiceNow is combining their asset-monitoring and identity-security technology with AI Control Tower to manage devices, identities, vulnerabilities and autonomous agents through a single platform.

Adjusted Operating Margin Reaches 29.5%

ServiceNow also exceeded its profitability guidance.

GAAP operating income was $162 million, producing an operating margin of 4%. Adjusted operating income reached $1.17 billion, equivalent to a margin of 29.5%.

Operating cash flow totalled $587 million, while adjusted free cash flow reached $634 million. The corresponding free-cash-flow margin was 16%.

The wide difference between GAAP and adjusted earnings partly reflects stock-based compensation, acquired intangible amortisation and costs related to acquisitions and restructuring.

ServiceNow has committed to reducing stock-based compensation to less than 10% of revenue by 2029. Its longer-term targets include more than $30 billion in annual subscription revenue and a combined constant-currency subscription growth rate and free-cash-flow margin of over 60% by 2030.

ServiceNow Raises Full-Year Revenue Outlook

Following the Q2 performance, ServiceNow raised its full-year subscription revenue guidance.

The company now expects 2026 subscription revenue of between $15.76 billion and $15.78 billion, representing reported growth of approximately 22.5% and constant-currency growth of 21%.

ServiceNow maintained its forecast for an adjusted operating margin of 31.5% and a free-cash-flow margin of 35%. Subscription gross margin is expected to be approximately 81%.

For the third quarter, subscription revenue is forecast at between $3.975 billion and $3.980 billion, representing reported growth of 20.5% and constant-currency growth of 20%.

The company expects current remaining performance obligations to grow 19.5%, or 20% in constant currency. Management also projected a third-quarter adjusted operating margin of 31%.

A stronger US dollar is expected to create an approximately $35 million year-over-year headwind for third-quarter cRPO. The earlier recognition of some federal revenue in Q2 will also affect the quarterly growth comparison.

Software Investors Remain Concerned About AI Disruption

ServiceNow’s financial performance remains strong, but its shares have struggled amid broader weakness in enterprise software stocks.

Investors are debating whether generative AI will strengthen established software platforms or allow businesses to replace some traditional applications with autonomous agents and custom-built tools.

ServiceNow argues that AI proliferation increases demand for its platform because enterprises need a central system to coordinate agents, govern access to data and connect AI tools with existing business processes.

The company’s second-quarter results offered some support for that argument. AI annual contract value surpassed $1 billion, agentic deployments increased ninefold and subscription revenue continued to grow by more than 20%.

Nevertheless, ServiceNow shares remain well below their 52-week high. The stock closed Thursday approximately 45% below the $198.61 level reached on July 30, 2025.

What Could Move ServiceNow Stock Next?

The next major test for ServiceNow stock will be whether AI revenue continues to accelerate while subscription growth remains near management’s 20% target.

Investors will also watch for more information about the company’s restructuring, including the final number of affected employees, potential severance costs and expected operating savings.

Successful integration of Armis, Veza and Moveworks could expand ServiceNow’s presence in AI and cybersecurity. However, integration costs, overlapping products and changes to the workforce could create near-term execution risks.

For now, the latest ServiceNow stock news today presents a mixed picture: the company is delivering strong subscription growth, rising AI adoption and improved adjusted profitability, but restructuring uncertainty and wider concerns about AI’s effect on enterprise software continue to pressure its valuation.

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