The software company that sells automation to the world is now applying the same logic to its own payroll — and investors are cheering the result.
ServiceNow, the Santa Clara-based workflow automation specialist, is trimming up to 1,000 positions this year even as it posts record subscription revenue and a quarterly AI order book that has blown past the billion-dollar mark. The juxtaposition is not lost on market watchers: the company’s own technology is increasingly doing the work that humans once did, and the share price is responding accordingly.
A Leaner Organization Takes Shape
The job cuts, confirmed by a company spokesperson as a “low single-digit percentage” of the workforce, will be spread across several months of 2026. The target is to end the year with roughly the same headcount it started with — around 29,000 employees. The restructuring follows the integration of several acquisitions, including Moveworks, Veza and Armis, and touches multiple geographies.
Details from the San Diego Union-Tribune paint a specific picture: 133 employees, largely in senior and director roles, will lose their jobs at the San Diego site, with several hundred more affected globally across customer contact, engineering and quality assurance. The cuts are slated for completion by September 28, 2026. A separate wave of 117 layoffs in San Diego and Santa Clara, disclosed via a WARN notice, takes effect on August 17.
There is a cost to this consolidation. The GAAP gross margin in the subscription business has slipped from 80 percent to 73.5 percent, a decline attributed to amortization of intangible assets tied to the acquisitions.
The Numbers Tell a Different Story
While the human resources department trims, the finance team is reporting records. Subscription revenue for the second quarter of 2026 reached $3.877 billion, up 24.5 percent year over year. Total revenue hit $3.987 billion, also roughly a quarter higher than the prior-year quarter. Adjusted earnings per share came in at $0.90, beating the consensus estimate of $0.86.
The current remaining performance obligations (cRPO) grew 21 percent to $13.20 billion. ServiceNow AI booked more than $1 billion in contract value in the quarter alone, and the company raised its full-year subscription revenue guidance to $15.760–$15.780 billion, implying growth of 22.5 percent.
Should investors sell immediately? Or is it worth buying ServiceNow?
On August 4, ServiceNow also unveiled an expansion of its “Autonomous Security” strategy: six integrated solutions for preventive, AI-native cyber defense, including a “Vulnerability Resolution AI Specialist” designed to complete security workflows independently. The message to the market is unambiguous — software should increasingly take over tasks previously performed by humans, including within ServiceNow’s own walls.
Market Response and Analyst Divergence
The combination of strong results and announced efficiency gains has gone down well on the exchange. The stock closed Friday at €108.00, up 6.19 percent on the day. Over the past seven sessions, the gain totals 11.94 percent, and over 30 days, 14.50 percent. The market capitalization stands at roughly €104.84 billion.
The 14-day relative strength index sits at 66, signaling solid buying momentum while staying below the overbought threshold of 70. That leaves some room for further upside before a consolidation phase, though the annualized volatility of nearly 59 percent is a reminder that this remains a stock for investors with strong nerves.
A cooling US labor market has fueled expectations that the Federal Reserve may soon begin cutting interest rates — a tailwind for high-growth equities like ServiceNow, since cheaper money tends to inflate valuations of growth names disproportionately. That macro backdrop, combined with operational strength, is what separates this rally from a mere technical bounce.
The analyst community, however, was not unanimous in its immediate post-earnings reaction. On July 23, several houses adjusted their price targets. Bernstein called the quarter a “much-needed relief” and lifted its target to $248, after the first quarter had raised doubts about the reliability of the growth story. JPMorgan’s Samik Chatterjee raised his target to $150, viewing the results as evidence that concerns about software stocks broadly were easing. His colleague Mark Murphy, meanwhile, trimmed his price target despite maintaining a buy rating, citing a “strange softness” in organic cRPO growth — even as management raised its 2026 AI booking goal by half to $1.5 billion.
Those assessments are now more than two weeks old, reflecting sentiment immediately after the numbers rather than current positioning. The consensus price target stands at €121.34, implying upside of roughly 12 percent from Friday’s close.
The deeper question for observers is perhaps more existential: how many of the tasks still performed by humans today will be handled a year from now by the very AI tools ServiceNow is selling at record speed? The company is providing a live answer — on its own workforce.
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