ServiceNow Says AI Is Driving Growth, Not Budget Pressure

AI is driving expansion, not displacing budgets, according to CFO Gina Mastantuono, who said customers are funding ServiceNow’s software through productivity and labor savings. The company reported 23% second-quarter revenue growth with flat headcount and expects $500 million in AI-related efficiencies this year. ServiceNow’s AI business surpassed $1 billion in the second quarter and remains on track for a $1.5 billion full-year target. The company expects AI to represent 30% of revenue by 2030, supported by pricing gains and growth in security, data analytics and CRM. The company is expanding its AI ecosystem through the vendor-neutral Control Tower, security acquisitions and data-integration tools, while continuing to prioritize organic innovation and shareholder returns. ServiceNow has more than $4 billion remaining on its share-repurchase authorization.

Chief Financial Officer Gina Mastantuono said the company sees artificial intelligence as an expansion opportunity rather than a source of budget pressure, citing customer demand for AI-enabled workflow automation and the company’s own reported efficiency gains. Speaking with Deutsche Bank Software Equity Research’s Brad Zelnick, Mastantuono said ServiceNow’s platform architecture—built around a single data model, architecture and platform—positions the company to help enterprises apply AI across functions including IT, human resources, finance, legal and customer service.

“In an AI world, autonomous work is more important than ever,” Mastantuono said. She pointed to billions of workflows and trillions of annual transactions on the platform, arguing that ServiceNow has the context, data and governance controls needed to help customers automate more work.

Mastantuono acknowledged that businesses are increasing spending on AI tokens and that some companies may be reducing spending in other areas to accommodate those costs. However, she said ServiceNow is not seeing its business crowded out when its products demonstrate rapid value creation.

She said ServiceNow grew top-line revenue 23% in the second quarter while keeping headcount flat for the year, including the effects of acquisitions. The company expects to generate $500 million of AI-related efficiencies this year, according to Mastantuono.

“We’re seeing a lot of customers lean into a labor pool dollar budget for spend,” she said, describing productivity gains as a source of funding for software investments. Mastantuono also said ServiceNow’s AI business crossed $1 billion in the second quarter and remained on track for the company’s previously stated $1.5 billion full-year target.

The CFO reiterated that organic innovation remains ServiceNow’s first capital-allocation priority, followed by tuck-in acquisitions and talent acquisitions. She also highlighted the company’s focus on shareholder returns, noting that ServiceNow completed a $2 billion share repurchase in the first quarter and had more than $4 billion remaining under its authorization. ServiceNow’s long-term growth plan includes AI, security and risk, data and analytics, and customer relationship management. Mastantuono said the company expects its security and risk, data and analytics, and CRM portfolios to each grow more than 25% over a three-year period. The company has also said it expects AI to account for 30% of revenue by 2030. She said the company’s AI-native bundles offer custo...