ServiceNow TodayNOWServiceNow$969.24 -26.94 (-2.70%) 52-Week Range$678.66▼$1,198.09P/E Ratio122.16Price Target$1,114.87Add to WatchlistServiceNow’s NYSE: NOW Q2 results and guidance update are a wow moment for investors and an eye-opener for those waiting on AI’s second wave. The second wave, the rise of agentic services and the application of AI, is expected to be a larger, faster-growing, and longer-sustained rally than infrastructure, which has been a rocket-ship of gains for technology investors. The t ...

Key Takeaways CDNS expects Q2 revenues between $1.25B-$1.27B, up from $1.06B in the year-ago quarter.AI trends and chip complexity are driving demand across EDA, IP and System Design divisions.Backlog was $6.4B in Q1, with recurring revenues and strategic partnerships supporting growth.Cadence Design Systems, Inc. (CDNS) will release results for the second quarter of 2025 on July 28.The Zacks Consensus Estimate for second-quarter 2025 earnings has been unchanged in the past 60 days at $1.57 per share. The c ...

Core Insights - The key to the success or failure of startups lies in execution speed, which is more critical than ever before [4][5][6] - The greatest opportunities in the AI industry are found at the application layer, as applications can generate revenue that supports cloud, model, and chip companies [6][8] - Entrepreneurs should focus on specific ideas that can be quickly executed rather than vague concepts [13][15] Group 1: Execution Speed - Execution speed is a crucial factor in determining the future success of a startup, and efficient entrepreneurs are highly respected [5][6] - The new generation of AI technologies significantly enhances startup speed, and best practices are evolving rapidly [5][6] - The trend of Agentic AI is emerging, which emphasizes iterative workflows over linear processes, leading to better outcomes [9][11] Group 2: Specific Ideas - Startups should focus on concrete ideas that engineers can immediately begin coding, as vague ideas hinder execution [13][15] - Successful entrepreneurs often concentrate on a single clear hypothesis due to limited resources, allowing for quick pivots if necessary [17][18] - The "build-feedback" loop is essential, and AI coding assistants have accelerated this process dramatically [18][20] Group 3: AI Coding Tools - The introduction of AI coding assistants has drastically reduced the time and cost of software development, with prototype development becoming significantly faster [18][21] - The evolution of coding tools has made it common for teams to rewrite entire codebases within a month, reflecting lower costs in software engineering [23][24] - Learning to code is increasingly important for all roles within a company, as it enhances overall efficiency [25][26] Group 4: Product Feedback - Rapid product feedback is essential, and traditional methods may become bottlenecks as engineering speeds increase [29][32] - Various feedback methods range from intuitive assessments to A/B testing, with the latter being slower and less effective in early stages [32][33] - The ability to gather user feedback quickly is crucial for aligning product development with market needs [33] Group 5: AI Sensitivity - Understanding AI is vital for enhancing operational speed, as the right technical decisions can significantly impact project timelines [37][38] - Continuous learning about new AI tools and capabilities is essential for leveraging emerging opportunities in the market [38][39] - The combination of various AI capabilities can exponentially increase the potential for innovative product development [39] Group 6: Market Trends and Misconceptions - There is a tendency to overhype AGI, and many companies exaggerate their capabilities for marketing purposes [2][41][42] - The focus should remain on creating products that genuinely meet user needs rather than getting caught up in competitive dynamics [45] - The importance of responsible AI usage is emphasized, as the application of AI technology can have both positive and negative implications [44][48]

ServiceNow, Inc. NOW posted better-than-expected second-quarter financial results on Wednesday.ServiceNow reported second-quarter revenue of approximately $3.22 billion, beating the consensus estimate of $3.12 billion, according to Benzinga Pro. The company reported second-quarter adjusted earnings of $4.09 per share, beating analyst estimates of $3.57 per share."Our beat-and-raise quarter showcases the mission-critical nature of the ServiceNow AI Platform. Every business process in every industry is being ...

Investment Rating - The report indicates a positive investment outlook for ServiceNow, suggesting an "Outperform" rating based on its strong financial performance and product differentiation [5][15]. Core Insights - ServiceNow reported a total revenue of $3.215 billion for Q2 2025, with subscription revenue reaching $3.113 billion, marking a year-on-year growth of 21.5% and exceeding guidance by approximately 200 basis points [2][11]. - The remaining performance obligation (RPO) increased to $23.9 billion, a 25.5% year-on-year growth, providing solid visibility for future performance [2][12]. - The company is advancing its "Agentic AI" strategy, with significant growth in its Now Assist and Plus family products, showcasing strong market demand and operational efficiency improvements [3][13]. - ServiceNow is challenging traditional CRM vendors, with 17 out of the top 20 deals in Q2 being for CRM and industry workflow solutions, reflecting a 70% increase year-on-year [4][14]. - The company raised its full-year subscription revenue guidance for FY 2025 by $125 million, projecting a total of $12.775 billion to $12.795 billion, which represents a year-on-year growth of approximately 20% [5][15]. Summary by Sections Financial Performance - Total revenue for Q2 2025 was $3.215 billion, with subscription revenue at $3.113 billion, accounting for 96.8% of total revenue [2][11]. - Non-GAAP operating margin improved by 250 basis points to 29.5%, and free cash flow margin increased by 300 basis points to 16.5% [2][12]. AI Strategy - The "Agentic AI" strategy is being implemented effectively, with Now Assist's new ACV exceeding expectations and significant growth in related products [3][13]. - AI tools developed internally are expected to save approximately $100 million in labor costs this year [3][13]. CRM and Industry Workflow - ServiceNow's integrated CRM solutions have gained traction, with a notable increase in large deals since the acquisition of Logik.ai [4][14]. - The company has been recognized as a leader in CRM customer experience and service by Gartner [4][14]. Future Guidance - The company has raised its subscription revenue forecast for FY 2025 to between $12.775 billion and $12.795 billion, with a third-quarter guidance of $3.26 billion to $3.265 billion [5][15]. - ServiceNow aims to achieve $1.5 billion in Now Assist ACV by the end of 2026, indicating a strong long-term growth strategy [5][15].

ServiceNow Stock Up 4% After Guidance Raise On Agentic AI Growthhttps://t.co/GbdyC0CEDS https://t.co/pwvtFexcIy ...

Financial Data and Key Metrics Changes - Subscription revenue for Q2 was $3,113 million, growing 21.5% year-over-year in constant currency, exceeding guidance by 200 basis points [26] - Remaining Performance Obligations (RPO) ended at approximately $23,900 million, representing 25.5% year-over-year constant currency growth [26] - Current RPO was $10,920 million, reflecting 21.5% year-over-year constant currency growth, also a 200 basis point beat versus guidance [26] - Operating margin was 29.5%, over 250 basis points above guidance, while free cash flow margin was 16.5%, up 300 basis points year-over-year [31] Business Line Data and Key Metrics Changes - Technology workflows had 40 deals over $1 million, including four over $5 million [7] - CRM and industry workflows showed strong momentum with 17 of the top 20 deals over $1 million [7] - ITAM Now Assist net new ACV surged nearly six times quarter-over-quarter, with average deal sizes more than tripling [29] - ITSM Plus and CSM Plus deal volume quadrupled year-over-year, while ITOM Plus tripled and HRSD Plus doubled [30] Market Data and Key Metrics Changes - Transportation and logistics delivered over 100% year-over-year net new ACV growth [26] - Technology, media, and telecom sectors grew over 70% year-over-year, while retail and hospitality, and energy and utilities each grew over 50% year-over-year [27] - The company achieved a robust 98% renewal rate, showcasing its strategic importance as an AI platform for business transformation [27] Company Strategy and Development Direction - The company is focused on AI, data, and workflows as key growth drivers, with a strong emphasis on integrating AI across all business functions [8][10] - The CRM opportunity is viewed as massive, with a shift towards autonomous front-end agents expected to render traditional CRM obsolete [14] - The acquisition of Logic AI is aimed at reimagining CRM and delivering a fully integrated AI-powered front office [15] Management's Comments on Operating Environment and Future Outlook - Management noted that the global environment is rapidly changing, with AI transformation being a top priority for enterprises [9] - The company remains confident in its guidance for Q3 and the remainder of 2025, despite challenges in the U.S. federal sector [33][49] - The outlook for 2025 has been raised, with subscription revenue expected to be between $12,775 million and $12,795 million, representing 20% year-over-year growth [34] Other Important Information - The company closed 89 deals greater than $1 million in net new ACV during the quarter, with 11 deals over $5 million [28] - The company ended Q2 with approximately $10,800 million in cash and investments, and bought back approximately 381,000 shares as part of its share repurchase program [31] Q&A Session Summary Question: What is driving the better-than-expected execution? - Management attributed the success to a strong culture and the transformative impact of AI on business models, leading to larger business cases across industries [40][42] Question: How is the federal sector performing? - Despite challenges, the federal team executed well, closing six new logos in Q2, and management is building prudence into their assumptions for the U.S. federal sector [48][49] Question: What are the immediate opportunities in front office workflows? - The CRM opportunity is significant, with a focus on sales and order management, and the company is addressing pain points in the market with its integrated solutions [62][64] Question: How is the demand environment changing? - Management indicated that the demand environment remains open for AI innovation, with companies needing an agentic AI layer to adapt to changing market conditions [85][88] Question: What is the outlook for operating margins? - Management is maintaining a conservative outlook for operating margins while investing in growth to meet demand for AI transformation [102][103]

Financial Data and Key Metrics Changes - Subscription revenues for Q2 reached $3,113 million, growing 21.5% year over year in constant currency, exceeding guidance by 200 basis points [27] - Remaining Performance Obligations (RPO) ended at approximately $23,900 million, representing 25.5% year over year constant currency growth [27] - Current RPO was $10,920 million, reflecting 21.5% year over year constant currency growth, also a 200 basis point beat versus guidance [27] - Operating margin was reported at 29.5%, over 250 basis points above guidance, while free cash flow margin was 16.5%, up 300 basis points year over year [26][32] Business Line Data and Key Metrics Changes - Technology workflows had 40 deals over $1 million, including four over $5 million, while ITSM, ITOM, ITAM, Security, and Risk were involved in at least 15 of the top 20 deals [7] - CRM and industry workflows maintained strong momentum with 17 of the top 20 deals exceeding $1 million [7] - The Now Assist product line saw significant growth, with net new ACV for ITAM surging nearly six times quarter over quarter [30] Market Data and Key Metrics Changes - Transportation and logistics delivered over 100% year over year growth in net new ACV, while technology, media, and telecom grew over 70% year over year [28] - Retail and hospitality, as well as energy and utilities, also showed strength, each growing over 50% year over year [28] - The company achieved a robust 98% renewal rate, highlighting its strategic importance as an AI platform for business transformation [28] Company Strategy and Development Direction - The company is focused on integrating AI into its workflows, emphasizing the importance of cross-functional work in AI applications [9][45] - The acquisition of Logic AI is aimed at reimagining CRM, with a strong push into the front office and significant growth in CPQ [15][30] - The company is positioning itself as a leader in enterprise AI, with a vision of embedding AI agents into everyday tools rather than traditional CRM screens [14][67] Management's Comments on Operating Environment and Future Outlook - Management noted that the global environment is rapidly changing, with AI transformation being a top priority for enterprises across all industries [8][9] - The company remains confident in its guidance for Q3 and the remainder of 2025, despite navigating challenges in the U.S. federal sector [34][53] - The outlook for 2025 has been raised, with subscription revenue expected to reach between $12,775 million and $12,795 million, representing 20% year over year growth [34] Other Important Information - The company ended Q2 with approximately $10,800 million in cash and investments, and bought back approximately 381,000 shares as part of its share repurchase program [32] - The company is investing in AI talent and technical selling to meet the growing demand for AI transformation [110] Q&A Session Summary Question: What is driving the better-than-expected execution? - Management attributed the success to a strong culture and the transformative impact of AI, which has led to larger business cases across all industries [41][44] Question: How is the pipeline for federal activity? - Management indicated that despite uncertainties, the federal team executed well, closing six new logos in Q2, and they are building prudence into their assumptions for the U.S. federal sector [51][53] Question: Are customers using AI Control Tower as a central control plane? - Management confirmed that the AI Control Tower is designed to manage all agents, including third-party agents, and is expected to enhance collaboration across business processes [55][60] Question: What are the immediate opportunities in front office workflows? - Management highlighted significant opportunities in sales and order management, particularly in public sector entities looking to replace fragmented legacy CRM systems [66][69] Question: What drove the robust upside in revenue guidance? - Management noted strong net new ACV performance and better-than-expected on-prem performance, largely due to early renewals [120]

Core Viewpoint - C3.ai, Inc. has experienced a significant share price increase of 17.9% over the past month, outperforming the S&P 500 and its industry peers, raising questions about the sustainability of this momentum versus speculative interest [1][2]. Group 1: Stock Performance - C3.ai's stock closed at $28.49, which is 37% below its 52-week high of $45.08 and well above its 52-week low of $17.03 [3]. - The stock is trading above its 50-day moving average, indicating strong upward momentum and price stability [7]. Group 2: Growth Drivers - C3.ai's growth is attributed to its differentiated position as a pure-play provider of turnkey enterprise AI applications, addressing core business challenges like supply-chain optimization and fraud detection [9][10]. - The company has over 100 agentic AI applications in production, generating approximately $60 million in annual recurring revenues from this segment [8][13]. - Strategic partnerships with major cloud providers such as Microsoft Azure, AWS, and Google Cloud enhance market access and streamline contract processes [11]. Group 3: Industry Positioning - C3.ai's early investment in agentic AI technology, with a patent from December 2022, positions it ahead of competitors who are just beginning to explore this area [12][23]. - The company is diversifying its industry presence beyond oil and gas, expanding into manufacturing, life sciences, and government sectors [14][15]. Group 4: Financial Outlook - The Zacks Consensus Estimate for fiscal 2026 and 2027 loss per share has improved, narrowing to 37 cents and 16 cents, respectively [16]. - Sales growth estimates for fiscal 2026 and 2027 are projected at 20.1% and 21.8%, respectively, indicating a positive financial trajectory [18]. Group 5: Valuation - C3.ai is currently priced at a forward 12-month price-to-sales ratio of 7.8, which is significantly lower than its industry peers, suggesting an attractive valuation [19]. - The company is recognized as a compelling investment opportunity due to its innovative solutions, strong partnerships, and favorable growth prospects [22][24].

AI Market Growth & Trends - AI infrastructure spending has reached $0.5 trillion, yet many companies are limited to basic chatbots and code generation [2] - Anthropic's annualized revenue has grown rapidly, 3xing in 5 months, reaching $3 billion by the end of May [3] - OpenAI is projected to reach $12 billion in revenue by the end of 2025, a 3x increase from the previous year, driven by enterprise AI spending [4] - Cost per token for AI inference dropped dramatically by 99.7% from 2022 to 2024 [33] - Google searches for "AI agents" increased 11x in the last 16 months [34] Retool's Agentic AI Solution - Retool is breaking into Agentic AI with the release of Retool Agents, enabling enterprises to build agents with guardrails that integrate into production systems [2] - Retool customers have automated over 100 million hours of work, freeing up human potential [31] - Retool's cheapest agent is priced at $3 per hour [33] Agent Development Strategies - Companies have four options for agent development: building from scratch, using a framework like Lang graph, using an agent platform like Retool Agents, or using verticalized agents [16][17][18][19] - The decision to build or buy agents depends on whether it's part of the core product, involves regulated data, or is a commodity workflow needed quickly [21] - When considering a managed platform, evaluate the breadth of connectors, built-in permissioning, compliance, audit trails, and observability [22][23] Enterprise Considerations for AI Agents - Enterprises need to consider single sign-on, role-based access control, secure integration with external services, audit logs, compliance, and internationalization when deploying AI agents [13][14] - Risks of using AI-generated code in production include hallucinations, unpredictable results, security vulnerabilities, and cost overruns [15]