NEW YORK, July 23, 2026 – Shares of ServiceNow Inc. (NYSE:NOW) declined 3.7% on Thursday, closing at $91.94, after the company's updated 2026 guidance pointed to a softer performance in the second half of the year. The stock traded at $92.50 in after-hours activity at 17:03 EDT.
The technology sector faced broader pressure, with the Nasdaq Composite falling 2.15% on the day. ServiceNow's trading volume surged to 170% of its 65-day average, reflecting heightened investor attention. Over the past five sessions, the stock has lost 11.6%, bringing its year-to-date decline to approximately 40%.
Guidance Details and Revenue Outlook
ServiceNow's full-year 2026 forecast now implies second-half subscription revenue that is $44.5 million below previous estimates, based on preliminary company midpoint calculations. The midpoint for full-year subscription revenue was raised by only $15 million to $15.77 billion, despite a second-quarter beat of $59.5 million relative to the prior guidance midpoint. This suggests that only a quarter of the quarterly upside was incorporated into the annual outlook, with the remainder effectively reducing the projected second-half total.
Chief Financial Officer Gina Mastantuono explained, “About half of the beat is a pull forward of on-prem for a quarter,” noting that the upside in net-new contracts was factored into the full-year guidance. The guidance currency base was also shifted from March rates to June rates, adding a layer of complexity to the comparisons.
Second-Quarter Results and AI Momentum
For the second quarter, ServiceNow reported subscription revenue of $3.877 billion, exceeding the previous guidance midpoint by $59.5 million. The company's current remaining performance obligations (cRPO) grew 21.5% at constant currency, surpassing earlier guidance by 200 basis points. AI-related demand remained a bright spot, with annual contract value surpassing $1 billion and the number of customers deploying agentic AI in production increasing ninefold over nine months.
The adjusted operating margin came in at 29.5%, three percentage points above guidance, while adjusted earnings per share of $0.90 beat the consensus estimate of $0.85.
Third-Quarter Forecast and Market Context
Looking ahead, ServiceNow's third-quarter revenue forecast of $3.975 billion to $3.980 billion fell short of Wall Street expectations of approximately $4 billion. The company also lowered its subscription gross-margin outlook by 50 basis points to 81%, citing increased usage of hyperscaler infrastructure and faster-than-expected AI adoption.
Analysts are closely watching third-quarter cRPO growth, which is projected at 20% in constant currency. Achieving this target without another acceleration will be key to distinguishing between sustained demand and mere timing shifts in revenue recognition.
Broader market attention is turning to next week's Federal Reserve meeting on July 28-29, along with the release of June PCE inflation data and preliminary second-quarter GDP figures on July 30. These events could further influence technology stock valuations amid ongoing interest rate uncertainty.
