Enterprise software company ServiceNow (NOW, Financials) which helps organizations automate digital workflows, raised its subscription revenue forecast for 2026 after stronger demand for its AI products boosted second-quarter results.
The company now expects annual subscription revenue of $15.76 billion to $15.78 billion, compared with its prior view of $15.735 billion to $15.775 billion.
Subscription revenue grew to $3.88 billion in the second quarter, above analyst estimates of $3.82 billion, according to LSEG statistics. Adjusted earnings of 90 cents per share also exceeded the 85-cent estimate.
ServiceNow claimed its AI capabilities have topped $1 billion in yearly contract value. In IT, customer service and public-sector operations, demand has soared. The company's platform is used in nearly every U.S. state.
The company has broadened its AI portfolio with products like Otto, and acquisitions such as Moveworks and cybersecurity firm Armis.
But the outlook for the third quarter was weaker. But ServiceNow forecast subscription revenue of $3.975 billion to $3.98 billion, below the roughly $4 billion consensus estimate.
Shares climbed about 4% in after-hours trade. Investors will now be looking to see if AI adoption can keep growth going while overall software spending remains under pressure.