ServiceNow rises after earnings as cybersecurity business accelerates

ServiceNow Inc. reported second-quarter earnings that highlighted accelerating momentum in its cybersecurity business, sending shares higher after the close.

"The attack surface is exploding," Chief Executive Officer Bill McDermott said in a statement accompanying the results.

The Santa Clara, California-based company did not immediately disclose full revenue and earnings per share figures. Analysts had projected revenue of $3.92 billion for the quarter, according to consensus estimates compiled by Zacks, representing 22 percent growth from a year earlier. The consensus estimate for adjusted earnings was 86 cents a share.

ServiceNow has been investing heavily in security capabilities through acquisitions, including Armis and Veza, which expanded its AI governance, identity management and cybersecurity offerings. The company's Now Assist AI platform has also been a key growth driver, with management raising its AI revenue target to $1.5 billion from $1 billion on the prior earnings call.

The cybersecurity strength comes as enterprise customers face an increasingly complex threat environment, with McDermott pointing to the expanding attack surface as a catalyst for demand. ServiceNow's security and risk management offerings are part of a broader push to position the platform as an AI control tower for enterprise workflows.

The results contrast with a challenging period for the stock, which had fallen roughly 50 percent from its late-2024 peak amid the broader selloff in software stocks. The company's subscription revenue grew 21 percent in the first quarter, outpacing rivals such as Salesforce Inc., and its remaining performance obligations stood at $27.7 billion.

ServiceNow trades at about 22.6 times forward earnings, a premium to Salesforce at 11.7 times and Oracle Corp. at 14.8 times, according to Zacks data. The company faces intensifying competition from Microsoft Corp., Salesforce and Oracle as they embed generative AI into their platforms.

The earnings report marks a pivotal test for the turnaround thesis. Investors will watch the upcoming earnings call for updated guidance on operating margins and whether the cybersecurity momentum can sustain the AI-driven growth trajectory.

This article is for informational purposes only and does not constitute investment advice.