July 23 (Reuters) - ServiceNow ( NOW ) raised its annual

subscription revenue forecast on Wednesday, signaling robust

demand for its artificial intelligence-enabled software designed

to automate digital operations.

Businesses are widely adopting cloud-based enterprise

solutions from vendors including ServiceNow ( NOW ), Salesforce ( CRM )

and Freshworks ( FRSH ) to streamline operations and boost

productivity amid the ongoing AI boom.

ServiceNow ( NOW ) projected its third-quarter subscription revenue

above Wall Street estimates, despite economic uncertainty due to

changing U.S. trade policies and Trump administration's

cost-cutting measures that led to contract cancellations and

delays.

The Santa Clara, California-based company, which in March

announced the acquisition of AI firm Moveworks for $2.85

billion, said the ongoing budget constraints among U.S. federal

agencies are expected to persist through the current quarter.

ServiceNow ( NOW ) has signed contracts with six new customers in

the U.S. public sector, CEO Bill McDermott said in an interview.

The company's planned Moveworks acquisition is under

regulatory review by the U.S. Justice Department, he added.

ServiceNow ( NOW ) said it was following the relevant procedures as

required and expects the deal to close in the second half of the

year or early 2026.

The company said that a larger-than-usual number of customer

contracts are set to expire and will be renewed in the fourth

quarter, adding that this is expected to have a 200 basis points

negative impact on its current remaining performance obligations

in the third quarter.

The company raised its annual subscription revenue forecast

to between $12.78 billion and $12.80 billion, compared with its

prior expectations of between $12.64 billion and $12.68 billion.

Its third quarter subscription revenue forecast of $3.26

billion to $3.27 billion exceeds analysts' average estimate of

$3.20 billion, according to data compiled by LSEG.

ServiceNow's ( NOW ) revenue of $3.22 billion for the quarter ended

June 30 surpassed estimates of $3.12 billion.

Adjusted profit per share of $4.09 also beat estimates of

$3.57 for the second quarter.