ServiceNow (NOW) had a "strong" Q2 contrary to negative investor expectations, with financial results supported by accelerating current remaining performance obligations, or cRPO, and subscription revenue growth, RBC Capital Markets said in a Thursday note.

The company posted constant currency cRPO growth of 21.5%, beating guidance of 19.5%, and subscription revenue growth of 23%, surpassing guidance of 21.0% to 21.5%, although RBC analysts estimated organic cRPO growth at around 19.25% after removing contributions from Armis and Moveworks.

ServiceNow's artificial intelligence-related net new annual contract value surpassed $1 billion for the quarter and is on track for $1.5 billion by the end of the year, while its fast-growing cybersecurity-related offerings have reached $1 billion, analysts said.

The company also expressed confidence in continued seat expansion, although RBC noted that more than half of new business came from non-seat-based sources.

The investment firm said ServiceNow is well-positioned to monetize its AI capabilities, consolidate spending, and boost estimates over H2.

RBC Capital Markets maintained its outperform rating and $130 price target on the stock.

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