ServiceNow (NOW) Earnings Date & Reports

Key Takeaways

• ServiceNow posted non-GAAP earnings of $0.90 per share, beating the consensus estimate of $0.86 by roughly 4.7%.
• Total revenue rose 24% year over year to $3.99 billion, topping analyst expectations of about $3.92 billion.
• Subscription revenue, the company's core business, climbed 24.5% to $3.88 billion, driven by strong AI and workflow demand.
• ServiceNow raised its full-year 2026 subscription revenue guidance, reflecting confidence in sustained enterprise spending.
• The company's AI annual contract value (ACV) crossed $1 billion, a key milestone in its artificial intelligence push.

Earnings Context and Why It Matters

ServiceNow's quarterly results matter because the company has positioned itself as a primary beneficiary of enterprise AI adoption, weaving automation into IT, customer, and employee workflows. Its July 2026 report offered a fresh read on whether corporate technology budgets are translating AI enthusiasm into actual spending. Coming off several quarters of high-teens-to-mid-20s subscription growth, investors were watching closely to see whether momentum could persist despite broader economic uncertainty. The results also carried weight for the software sector as a whole, since ServiceNow's performance often serves as a barometer for enterprise software demand and the pace at which businesses are deploying AI-driven solutions at scale.

Reported Results

For its second quarter of fiscal 2026, ServiceNow reported non-GAAP earnings of $0.90 per share, an 11.1% increase year over year and ahead of the $0.86 consensus estimate. Total revenue reached $3.99 billion, up 24% year over year and above the roughly $3.92 billion analysts had projected.

Subscription revenue, which accounts for the overwhelming majority of the business, grew 24.5% to $3.88 billion, or 23% in constant currency. Professional services and other revenue advanced 8.5% to $110 million. On the demand side, current remaining performance obligations (cRPO), a measure of contracted revenue expected to be recognized within 12 months, rose 21% year over year to $13.20 billion. Total remaining performance obligations (RPO) increased 21% to $29 billion.

The company highlighted notable AI traction, with ServiceNow AI annual contract value crossing $1 billion and net new AI ACV growing more than 40% sequentially. Large-deal momentum was also strong: ServiceNow recorded 123 transactions exceeding $1 million in net new ACV, up nearly 40% year over year, and ended the quarter with 658 customers generating more than $5 million in annual contract value.

Non-GAAP operating margin held at 29.5%, above guidance, while free cash flow rose to $634 million from $535 million a year earlier, representing a 16% free cash flow margin.

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Market Reaction and Investor Sentiment

ServiceNow shares rose roughly 4.7% in after-hours trading following the release, reversing a decline during the regular session. The positive reaction reflected investor approval of the top-and-bottom-line beat, the raised full-year subscription outlook, and evidence that AI-related demand is translating into measurable contract value. Sentiment was further supported by the company's commentary around accelerating agentic AI deployments and longer customer commitments. Still, some observers noted softer near-term guidance for the third quarter and a slight contraction in subscription gross margin as areas to monitor, keeping the response measured rather than exuberant.

Forward Outlook and Key Factors to Monitor

Looking ahead, ServiceNow raised its full-year 2026 subscription revenue guidance to a range of $15.76 billion to $15.78 billion, up from the prior $15.735 billion to $15.775 billion, implying roughly 21% growth in constant currency. For the third quarter, management guided subscription revenue between $3.975 billion and $3.980 billion, or about 20.5% year-over-year growth, while targeting a non-GAAP operating margin of 31%.

Investors will want to watch several factors in the coming quarters. First, the durability of AI-related demand, particularly whether ServiceNow can sustain its rapid growth in AI annual contract value and agentic AI adoption. Second, margin trends, given the modest year-over-year decline in subscription gross margin reported in the quarter.

Third, the pace of large-deal activity and customer expansions, which signal enterprise confidence and budget commitment. Finally, the company's ability to maintain its renewal rate and convert its substantial remaining performance obligations into recognized revenue will remain a key indicator of long-term momentum.

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