ServiceNow (NOW) · Software
ServiceNow Q2 2026 earnings: summary, key numbers & outlook
Results filed 22 Jul 2026 · Quarter ended 30 Jun 2026
Press release ↗Investor relations ↗
Summaries and transcripts are machine-generated and can contain errors.
In brief
ServiceNow reported Q2 2026 subscription revenues of $3,877 million, representing 24.5% year-over-year growth, and total revenues of $3,987 million, representing 24% year-over-year growth.
ServiceNow's second quarter revenue grew 24% to $3,987 million, with subscription revenues of $3,877 million up 24.5%. Current remaining performance obligations reached $13.20 billion, up 21%. GAAP net income fell to $298 million from $385 million a year earlier, as amortization of acquired intangibles and higher costs weighed on margins. Non-GAAP operating margin was 29.5%, and ServiceNow AI crossed $1 billion in annual contract value.
For the third quarter, management expects subscription revenues of $3,975 - $3,980 million and a 31% non-GAAP operating margin. It raised its full-year subscription revenues outlook to $15,760 - $15,780 million. The main tension is that growth is slowing, with Q3 cRPO growth guided to 19.5%, and that some federal on-premise revenue was pulled into Q2 from Q3. Gross margin is also pressured by hyperscaler use and AI adoption, and the company took on debt for acquisitions.
Key numbers
- Total revenues · GAAP
- $3,987 million
- Subscription revenues · GAAP
- $3,877 million
- Net income · GAAP
- $298.0M
- Diluted EPS · GAAP
- $0.29
- Non-GAAP diluted EPS · non-GAAP
- $0.90
- Non-GAAP gross margin · non-GAAP
- 78%
- Non-GAAP income from operations · non-GAAP
- $1.2B
- Non-GAAP operating margin · non-GAAP
- 29.5%
up 24% from a year ago
up 24.5% from a year ago
down from $385 million a year ago
down from $0.37 a year ago
up from $0.81 a year ago
down from 81% a year ago
up from $955 million a year ago
unchanged from 29.5% a year ago
| Segment or metric | Value | Change |
|---|---|---|
| Current remaining performance obligations | $13.20 billion | 21% year-over-year growth, 21.5% in constant currency |
| Remaining performance obligations | $29.0 billion | 21% year-over-year growth, 22% in constant currency |
| Professional services and other revenues | $110.0M | up from $102 million a year ago |
| ServiceNow AI annual contract value | $1 billion | crossed $1 billion in Q2 2026 |
| Transactions over $1 million in net new ACV | 123 | growing nearly 40% year-over-year |
| Customers with more than $5 million in ACV | 658 | approximately 23% year-over-year growth |
Where each number comes from
- Total revenues: “Total revenues of $3,987 million in Q2 2026, representing 24% year-over-year growth, 22.5% in constant currency”
- Subscription revenues: “Subscription revenues of $3,877 million in Q2 2026, representing 24.5% year-over-year growth, 23% in constant currency”
- Net income: “Net income | $298 | $385 | $767 | $845”
- Diluted EPS: “Net income per share - diluted (2) | $0.29 | $0.37 | $0.74 | $0.81”
- Non-GAAP diluted EPS: “Non-GAAP net income per share - diluted (2)(3) | $0.90 | $0.81 | $1.87 | $1.62”
- Non-GAAP gross margin: “Stock-based compensation as % of total revenues | 2.5% | 2.5% | 2.5% | 2.5% Amortization of purchased intangibles as % of total revenues | 4.5% | 0.5% | 3% | 0.5% Severance costs as % of total revenues | —% | —% | —% | —% Non-GAAP gross margin | 78% | 81% | 78.5% | 81.5%”
- Non-GAAP income from operations: “Non-GAAP income from operations | $1,173 | $955 | $2,372 | $1,908”
- Non-GAAP operating margin: “Non-GAAP operating margin | 29.5% | 29.5% | 30.5% | 30.5%”
- Current remaining performance obligations: “Current remaining performance obligations of $13.20 billion as of Q2 2026, representing 21% year-over-year growth, 21.5% in constant currency”
- Remaining performance obligations: “Remaining performance obligations of $29.0 billion as of Q2 2026, representing 21% year-over-year growth, 22% in constant currency”
- Professional services and other revenues: “Professional services and other | 110 | 102 | 209 | 185 Total revenues | 3,987 | 3,215 | 7,757 | 6,303”
- ServiceNow AI annual contract value: “ServiceNow AI crossed $1 billion in annual contract value in Q2 2026”
- Transactions over $1 million in net new ACV: “The company had 123 transactions over $1 million in net new annual contract value (“ACV”) in Q2 2026, growing nearly 40% year-over-year”
- Customers with more than $5 million in ACV: “ended the quarter with 658 customers with more than $5 million in ACV, representing approximately 23% year-over-year growth”
Copied from the press release ↗ and other documents in the SEC filing ↗. A figure is published only if its sentence is in the filing.
| From the filing | Q2 2026 | vs year ago | vs last quarter |
|---|---|---|---|
| Revenue | $4.0B | +24.0% | +5.8% |
| Operating income | $162.0M | −54.7% | −67.8% |
| Net income | $298.0M | −22.6% | −36.5% |
| Diluted EPS | $0.29 | −21.6% | −35.6% |
| Free cash flow | $473.0M | −10.1% | −69.1% |
| Gross margin | 70.7% | −6.8 pts | −4.4 pts |
| Operating margin | 4.1% | −7.0 pts | −9.2 pts |
Calculated by code from XBRL, not by the model.
Outlook
| Metric | Period | Outlook |
|---|---|---|
| Subscription revenues | third quarter 2026 | $3,975 - $3,980 million |
| Non-GAAP operating margin | third quarter 2026 | 31% |
| Subscription revenues | full-year 2026 | $15,760 - $15,780 million |
| Non-GAAP subscription gross margin | full-year 2026 | 81% |
| Non-GAAP operating margin | full-year 2026 | 31.5% |
| Non-GAAP free cash flow margin | full-year 2026 | 35% |
Key takeaways
Subscription revenue growth stayed strong at 24.5%
Subscription revenues of $3,877 million grew 24.5% year-over-year, or 23% in constant currency. ServiceNow said it beat the high end of its guidance range by 150 basis points.
GAAP profit fell as acquisition costs rose
GAAP net income was $298 versus $385 a year earlier, and GAAP operating margin fell to 4% from 11%. Amortization of purchased intangibles rose to $219 from $25 (in millions).
Federal demand pulled revenue into Q2
Management said strong U.S. Federal demand accelerated some on-premise subscription revenues from Q3 2026 into Q2 2026. That helps explain the Q3 subscription revenue growth guide of 20.5%.
Full-year subscription outlook was raised
ServiceNow now guides full-year 2026 subscription revenues of $15,760 - $15,780 million, citing net new ACV strength. It guides a non-GAAP operating margin of 31.5% and free cash flow margin of 35%.
Balance sheet shifted toward debt and acquisitions
Business combinations used $7,451 million of cash in Q2, while goodwill rose to $9,837 from $3,578 (in millions). Long-term debt, net was $5,435 and short-term debt, net was $2,082 (in millions).
Charts
Fourth quarter worked out from the annual figure.
Data
| Q4 2024 | $3.0B * |
| Q1 2025 | $3.1B |
| Q2 2025 | $3.2B |
| Q3 2025 | $3.4B |
| Q4 2025 | $3.6B * |
| Q1 2026 | $3.8B |
| Q2 2026 | $4.0B |
| Q3 2026 | $4.1B |
Data
| Q1 2025 | $0.44 |
| Q2 2025 | $0.37 |
| Q3 2025 | $0.48 |
| Q1 2026 | $0.45 |
| Q2 2026 | $0.29 |
| Q3 2026 | $0.27 |
Fourth-quarter EPS appears once the press release is read; filings report it only for the full year.
Data
| Q4 2024 | 12.6% |
| Q1 2025 | 14.6% |
| Q2 2025 | 11.1% |
| Q3 2025 | 16.8% |
| Q4 2025 | 12.4% |
| Q1 2026 | 13.3% |
| Q2 2026 | 4.1% |
| Q3 2026 | 9.4% |
Data
| Q4 2024 | $1.4B |
| Q1 2025 | $1.5B |
| Q2 2025 | $526.0M |
| Q3 2025 | $578.0M |
| Q4 2025 | $2.0B |
| Q1 2026 | $1.5B |
| Q2 2026 | $473.0M |
| Q3 2026 | $748.0M |
Operating cash flow minus capital expenditure, from cash flow statements.
Questions
What were ServiceNow's Q2 2026 revenues?
Total revenues were $3,987 million, up 24% year over year, and subscription revenues were $3,877 million, up 24.5%. In constant currency, growth was 22.5% and 23%.
How profitable was the quarter?
GAAP net income was $298 million, or $0.29 per diluted share, versus $385 million and $0.37 a year earlier. Non-GAAP net income was $930 million, or $0.90 per diluted share, with a 29.5% non-GAAP operating margin.
What is ServiceNow guiding for Q3 2026?
It guides subscription revenues of $3,975 - $3,980 million, cRPO growth of 19.5%, and a 31% non-GAAP operating margin. Weighted-average diluted shares are expected to be 1.05 billion.
Did ServiceNow change its full-year outlook?
Yes, it raised its full-year 2026 subscription revenues guidance to $15,760 - $15,780 million, citing net new ACV strength. It also guides a 31.5% non-GAAP operating margin and a 35% free cash flow margin.
How is ServiceNow's AI business doing?
ServiceNow AI crossed $1 billion in annual contract value in Q2 2026. The CEO said agentic deployments of ServiceNow AI increased ninefold in just nine months.
Documents
SEC filing