ServiceNow’s AI Focused Cybersecurity Growth

For the last reported second quarter, ServiceNow (NYSE:NOW) surpassed market expectations. Its outlook, however, failed to impress the market. The company continues to accelerate on its AI offerings as it looks to expand beyond traditional workflow solutions to establishing itself within the cybersecurity market.

ServiceNow’s Financials

ServiceNow’s second quarter revenues grew 24% to $3.99 billion, ahead of the market’s forecast of $3.92 billion. EPS of $0.90 was also ahead of the market’s estimates of $0.86 per share.

By segment, subscription revenues rose 25% to $3.88 billion, ahead of the consensus estimate of $3.82 billion. Professional and Other Services revenues grew 8% to $110 million, compared to an estimate of $107.3 million. Among key metrics, its current remaining performance obligations came in at $13.2 billion, ahead of estimates of $13.03 billion. 

ServiceNow expects subscription revenues for the year to be between $15.76-$15.78 billion, and $3.975-$3.98 billion for the third quarter. Ahead of its Q3 earnings release later this month, analysts published their revised estimates. They are looking for revenues of $4.09 billion for the quarter and revenues of $16.17 billion for the year.

ServiceNow’s AI Control Tower

During the quarter, ServiceNow expanded the capabilities of its AI Control Tower. ServiceNow had launched the AI Control Tower in 2025 essentially as a visibility and management tool. Today, it has expanded the offering into a comprehensive, end-to-end solution that lets customers find AI assets across the organization, observe live metrics and alerts, govern AI-driven risk assessment across all types of AI, extend identity access governance to hyperscaler AI environments and provide cost tracking and ROI dashboards. For the second quarter, ServiceNow’s AI Annual Contract Value grew 40% q-o-q to over $1 billion.

Besides its existing integrations with Anthropic and OpenAI, ServiceNow has also expanded integrations with AWS, Microsoft, NVIDIA, and other LLM providers so that organizations can leverage governance and observability across the infrastructure layer. These partnerships and improved offerings are helping ServiceNow expand within the enterprise cybersecurity sector.

It plans on continuing to expand its presence and recently announced that it would offer six unified solutions to deliver AI-native cyber defence by December this year. The proposed solutions will cover cyber-physical security, agentic incident response, cyber risk and compliance, unified exposure management, identity and access security, and continuous vulnerability detection. The growth of AI tools within enterprises has led to increased challenges faced by security teams. Every new agent, identity, and line of code deployed leads to an exposure that needs to be addressed by a human team. Ensuring security in the setup requires governance at the same machine speed. According to its internal reports, average enterprises run more than 70 security tools, thus fragmenting insights across the extended attack surface. Through its offering, ServiceNow plans on delivering a consolidated security service that is focused on addressing AI complexities into one unified system.

Its stock is trading at $140.86 with a market capitalization of $146.2 billion. It touched a 52-week high of $192.97 a year ago. It had fallen to a 52-week low of $81.24 in April this year. The stock is still a far cry from the high it was trading at a year ago with the reduction being driven by the macro economic conditions, and the overall worry of AI’s impact on SaaS stocks. Some of the downward movement is also related to market correction as the stock has been trading at a forward P/E ratio of more than 27 compared with the industry average of 13.7.

Disclosure: All investors should make their own assessments based on their own research, informed interpretations, and risk appetite. This article expresses my own opinions based on my own research of product-market fit, channel execution, and other factors. My primary interest is in product strategy. While this may have bearing on stock movements, my writings tend to focus on long-term implications. The information presented is illustrative and educational, but should not be regarded as a complete analysis nor recommendation to buy or sell the securities mentioned herein. I am not a registered investment adviser and I am not receiving compensation for this article. I am an investor in this company.