ServiceNow (NOW) Stock Soars After Smashing Q2 Targets Amid AI Boom
Warning! GuruFocus has detected 3 Warning Sign with NOW.
Subscription revenue climbed to $3.113 billion, up 21.5% year?over?year in constant currency and exceeding guidance by roughly two percentage points. Operating margin widened to 29.5%, more than 2.5 points above projections, while free cash flow margin rose to 16.5%, up three points from last year.
Remaining performance obligations reached $23.9 billion, a 25.5% jump, with current RPO at $10.92 billion, up 21.5%. ServiceNow closed 89 deals over $1 million in net new annual contract value, including 11 above $5 million, as renewal rates held at 98%. The company ended the quarter with $10.8 billion in cash and investments and repurchased about 381,000 shares under its $2.6 billion buyback authorization.
Management raised full?year subscription revenue guidance by $125 million to a $12.775 billion$12.795 billion range, signalling roughly 20% growth. Third?quarter subscription revenue is expected between $3.260 billion and $3.265 billion, with operating margin forecast at 30.5%.
CEO Bill McDermott noted rapid adoption of its AI Pro Plus platform, which may drive larger deals and deeper customer engagement going forward.
This article first appeared on GuruFocus.
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