ServiceNow (NOW) Q2 2026 earnings summary

Executive summary

• Q2 2026 delivered topline and profitability results exceeding guidance, with total revenues of $3.99 billion, up 24% year-over-year, and subscription revenues of $3.877 billion, up 24.5% year-over-year, driven by strong AI and cybersecurity momentum and broad-based demand across all segments.

• AI annual contract value surpassed $1 billion, with agentic AI deployments up ninefold in nine months and AI Control Tower adoption exceeding 500 customers in six months.

• Major acquisitions of Armis Security Ltd. ($7.6B), Veza Technologies ($1.2B), and Moveworks expanded AI-native security and identity offerings, with integration plans and no headcount reductions post-acquisition.

• CRM, EmployeeWorks, and security/risk segments saw rapid growth, with notable wins in voice AI, HR automation, and U.S. Federal customers accelerating revenue.

• Net income for Q2 2026 was $298 million (GAAP), with non-GAAP net income at $930 million, reflecting higher operating expenses and acquisition-related costs.

Financial highlights

• Q2 2026 subscription revenues reached $3.877 billion, up 24.5% year-over-year, and total revenues were $3.99 billion, up 24%.

• Remaining performance obligations (RPO) ended at $29.0 billion, up 21% year-over-year; current RPO at $13.2 billion, up 21%.

• Non-GAAP operating margin was 29.5%; GAAP operating margin was 4%.

• Free cash flow margin was 16% (non-GAAP) and 14.5% (GAAP); free cash flow for H1 2026 was $2.3 billion, up 14% year-over-year.

• 123 deals over $1 million in net new ACV, up nearly 40% year-over-year; 658 customers now generate over $5 million in ACV.

Outlook and guidance

• Full-year 2026 subscription revenue guidance raised to $15.760–$15.780 billion, representing 22.5% year-over-year growth.

• Q3 2026 subscription revenues expected between $3.975–$3.980 billion, up 20.5% year-over-year; cRPO growth of 20% expected.

• FY 2026 non-GAAP subscription gross margin expected at 81%, non-GAAP operating margin at 31.5%, and free cash flow margin at 35%.

• FX headwinds expected to impact Q3 2026 CRPO by $35 million.

• AI expected to reach 30% of ACV by 2030, with current adoption tracking ahead of target.