ServiceNow (NOW) investor relations material

Executive summary

• Q1 2026 results exceeded guidance, with total revenues of $3.77B and subscription revenues of $3.671B, both up 22% year-over-year, driven by strong AI-driven demand and customer expansion.

• Major acquisitions of Armis, Moveworks, and Veza expanded capabilities in security, employee experience, and identity governance.

• Net income was $469M (GAAP), with non-GAAP net income of $1,012M and diluted EPS of $0.97.

• Free cash flow reached $1.67B (44% margin), and 20.2M shares were repurchased for $2.2B, with $4.2B remaining authorized.

• The company is positioning as the AI Control Tower for enterprise reinvention, with a $600B+ TAM and a $28B RPO business growing 23.5%–25% year-over-year.

Financial highlights

• Q1 2026 subscription revenue was $3.671B, up 22% year-over-year; total revenues were $3.77B, up 22%.

• RPO ended at $27.7B, up 25% year-over-year; current RPO at $12.64B, up 22.5%.

• Non-GAAP operating margin was 32%; free cash flow margin was 44%.

• Non-GAAP subscription gross margin was 81.5% in Q1 2026; GAAP subscription gross margin was 77.5%.

• 630 customers now generate over $5M in ACV, up from 516 a year ago.

Outlook and guidance

• FY 2026 subscription revenue guidance raised to $15.735B–$15.775B (22%–22.5% growth), including 125 bps from Armis.

• Q2 2026 subscription revenue expected at $3.815B–$3.820B (22.5% growth); CRPO growth of 19.5%.

• FY 2026 non-GAAP operating margin expected at 31.5%, free cash flow margin at 35%, and subscription gross margin at 81.5%.

• Margin headwinds from Armis expected to normalize by FY 2027.

• Subscription gross margin expected to decrease due to higher cloud and amortization costs.