# ServiceNow (NOW) Q2 2026 earnings

Results filed 2026-07-22 for the quarter ended 2026-06-30. Source page: https://earnings.opennash.com/companies/now/2026-q2/
Press release and exhibits: https://www.sec.gov/Archives/edgar/data/1373715/000137371526000072/0001373715-26-000072-index.htm
> 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

| Metric | Value | Change | Basis |
| --- | --- | --- | --- |
| Total revenues | $3,987 million | up 24% from a year ago | GAAP |
| Subscription revenues | $3,877 million | up 24.5% from a year ago | GAAP |
| Net income | $298 | down from $385 million a year ago | GAAP |
| Diluted EPS | $0.29 | down from $0.37 a year ago | GAAP |
| Non-GAAP diluted EPS | $0.90 | up from $0.81 a year ago | non-GAAP |
| Non-GAAP gross margin | 78% | down from 81% a year ago | non-GAAP |
| Non-GAAP income from operations | $1,173 | up from $955 million a year ago | non-GAAP |
| Non-GAAP operating margin | 29.5% | unchanged from 29.5% a year ago | non-GAAP |
| Net cash provided by operating activities | $587 | down from $716 million a year ago | GAAP |
| Free cash flow | $634 | up from $535 million a year ago | non-GAAP |

## Segments and operating metrics

| Name | 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 | 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 |

## 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

1. **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.
2. **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).
3. **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%.
4. **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%.
5. **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).

## 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.