Artificial intelligence was supposed to shrink the software industry from both directions at once: fewer employees needed to run a SaaS company, and fewer customers willing to pay for one when they could build the tool themselves.
The most recent earnings season from three of enterprise software’s largest incumbents shows something closer to the opposite. Atlassian, Datadog and ServiceNow are all using AI to run their own businesses more efficiently, and all three are simultaneously turning AI into a real, fast-growing product line customers pay for directly.
Atlassian reported subscription annual recurring revenue (ARR) of $6.6 billion in its fiscal fourth quarter, up 23% year over year, with remaining performance obligations climbing 44% to $4.8 billion, the company said in its own earnings release. “We’re complementing that top-line strength with real operational discipline,” CFO James Chuong said.
Rovo, Atlassian’s AI product, is used by more than 80% of the Fortune 500, and Rovo-assisted actions grew 50% quarter over quarter, translating into what Atlassian said were millions of hours saved monthly across its customer base, according to the company’s own shareholder letter. Customers who adopt Rovo grow their own ARR with Atlassian at more than twice the rate of customers who don’t.
Datadog and ServiceNow Are Both Running the Same Playbook
Datadog’s results, reported Aug. 6 for the quarter ended June 30, follow the same pattern. Revenue reached $1.12 billion, up 36% year over year, and agentic activity on the platform accelerated sharply: tool calls made by AI agents through the Model Context Protocol, a standard that lets AI systems query external tools, grew fourfold quarter over quarter and 22-fold compared with the fourth quarter of 2025, Datadog said in its earnings release.
“Our customers are building and deploying with AI, and they are using the Datadog platform to observe, secure, and act on their AI-enabled solutions,” CEO Olivier Pomel said. Datadog also launched Bits AI, an autonomous agent that detects, investigates and remediates technical incidents on its own, into general availability during the quarter, with more than 1,000 paying customers already using it.
ServiceNow’s numbers show the same combination from a different angle. The company’s AI annual contract value crossed $1 billion, with agentic AI deployments in production increasing ninefold in just nine months, ServiceNow said in its second-quarter earnings release. “ServiceNow’s exceptional Q2 results solidify our position as the fastest-growing major enterprise software and cybersecurity company,” Chairman and CEO Bill McDermott said.
Subscription revenue reached $3.88 billion, up 24.5% year over year, or 23% in constant currency. ServiceNow uses its own AI Control Tower, a governance layer for managing AI agents across an enterprise, the same way it sells the product to customers. In a separate interview with TheStreet, McDermott described a built-in “kill switch that stops AI agents that go rogue,” the outlet reported.
AI Is Doing Double Duty Inside These Companies
The pattern across all three companies is that the same AI capability shows up twice in the results: once as internal efficiency, and once as external revenue.
That double effect, AI making the SaaS company itself run better while also becoming something customers pay for separately, is different from the AI story most predictions focused on a year ago, which assumed AI would primarily replace software rather than strengthen the businesses selling it. Whether that pattern holds as more companies build AI capability of their own is still an open question.
“New Data Shows How Tech Sectors Are Turning AI Into Strategy,” a PYMNTS Intelligence report based on a survey of 60 senior technology executives at U.S. companies with at least $1 billion in annual revenue, found that SaaS firms show the strongest appetite for experimentation of any tech sub-industry surveyed. Half of SaaS executives said they are likely to fund experimental or innovation-oriented AI projects.
SaaS also leads all three sub-industries in AI adoption for growth and revenue functions, with half of firms reaching high adoption there, which is more evidence that companies like Atlassian, Datadog and ServiceNow are using AI less as a defensive tool and more as a springboard for expansion. Still, 85% of SaaS firms cited financial return on investment as a reason to fund AI, and another 85% cited strategic or competitive positioning, showing that even the most experimental sector still wants proof the bet is paying off.
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