TLDR
- ServiceNow rose 4.5% on Friday to close at $144.71, on volume of 29 million.
- Q2 subscription revenue climbed 24.5% to $3.88 billion; total revenue hit $3.99 billion.
- AI annual contract value crossed $1 billion; management is targeting $1.5 billion by year-end.
- The stock trades at roughly 89x trailing earnings, well above peers like Salesforce and Oracle.
- Moore Capital and several other institutional investors added to positions in Q2; analysts hold a consensus “Moderate Buy” rating.
ServiceNow (NYSE: NOW) closed Friday at $144.71, up 4.5% on the session. Volume came in at 29 million, well above the 22.4 million average.
The stock is still trading about 26% below its 52-week high of $194.73, even after a roughly 70% climb from its yearly low of $81.24.
Q2 subscription revenue rose 24.5% to $3.88 billion. Total revenue came in at $3.99 billion, up 24% year over year, beating the consensus estimate of $3.93 billion.
EPS came in at $0.90, topping the $0.86 estimate. The company posted return on equity of 16.45% and a net margin of 11.34%.
Remaining performance obligations stood at $29 billion, with current obligations at $13.2 billion. Both grew 21%.
AI is now the headline story. Annual contract value for AI products crossed $1 billion for the quarter, and management is targeting $1.5 billion by the end of the year. That would require roughly 50% growth from the Q2 run rate.
ServiceNow raised its full-year subscription revenue guidance to a range of $15.76 billion to $15.78 billion.
Valuation Under the Microscope
The stock trades at approximately 89x trailing earnings. That puts it well above Workday at 41x, Oracle at 27x, and Salesforce at 23x.
Non-GAAP operating margin sat at 29.5%, and free cash flow for the first half totalled $2.3 billion. The company holds a debt-to-equity ratio of 0.43.
Its platform supports more than 450 integrations, and its AI Control Tower connects AI-driven processes to company data, approvals, and oversight workflows.
Institutional Buying Picks Up
Moore Capital Management initiated a new position in Q2, buying 152,268 units worth around $15.1 million. Alyeska Investment Group also started a new stake, valued at roughly $142 million.
Jasper Ridge Partners lifted its holdings by 201.5%. Flputnam Investment Management increased its position by 1,748.5%. Institutional investors now own 87.18% of the company.
On the analyst side, Bank of America raised its price target from $130 to $150 with a Buy rating. Evercore reissued an Outperform with a $160 target. Barclays raised its target slightly to $134, keeping an Overweight. The consensus sits at “Moderate Buy” with an average target of $144.24.
One risk worth watching: ServiceNow disclosed three maximum-severity security vulnerabilities that could allow unauthenticated attackers to execute code or access SQL systems. Patches have been issued, but the disclosures carry reputational and customer retention risk.
Director Paul Edward Chamberlain sold 1,500 units on August 13th at $125.60, under a pre-arranged 10b5-1 plan. Insiders hold 0.34% of the company.
The stock’s 50-day moving average sits at $112.33 and the 200-day at $106.61. The consensus analyst price target of $144.24 is now essentially in line with the current price.
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