Q2 FY2026 Earnings Recap

ServiceNow, Inc. (NOW)

Reported Jul 22nd 2026

News Summary

  • ServiceNow’s Q2 2026 earnings featured strong top-line growth, margin outperformance vs guidance, raised full‑year subscription guidance, notable AI and security acquisitions, and a positive stock reaction, while some coverage flagged slightly light elements of the revenue outlook and pulled‑forward federal deals.

Financial Highlights

MetricQ3 '24Q4 '24Q1 '25Q2 '25Q3 '25Q4 '25Q1 '26Q2 '26
Revenue$2.8B$3.0B$3.1B$3.2B$3.4B$3.6B$3.8B$4.0B
Rev Growth (YoY)22.2%21.3%18.6%22.4%21.8%20.7%22.1%▲ 24.0%
Gross Margin79.1%78.7%78.9%77.5%77.3%76.6%75.1%▼ 70.7%
Operating Margin14.9%12.6%14.6%11.1%16.8%12.4%13.3%▼ 4.1%
EV/Sales66.1x73.8x53.0x66.0x56.1x44.5x28.6x27.2x

Earnings Call Highlights

ServiceNow's Q2 2026 call was defined by a confident, almost triumphalist management posture, with CEO Bill McDermott repeatedly invoking the phrase 'we are who we said we were' to signal that AI monetization has moved from promise to proof. The dominant theme was the convergence of AI workflow orchestration and cybersecurity, with management positioning ServiceNow as the indispensable governance and control layer sitting above all AI infrastructure, models, and agents regardless of which chip or lab wins. Analysts were broadly constructive, with questions probing the durability of AI pricing, deal cycle health, and gross margin pressure rather than expressing skepticism about demand. The tone was notably bullish on agentic AI adoption inflecting now, not in the future, with concrete metrics backing the claim. The only friction came from modest full-year guidance raises relative to the Q2 beat, which management attributed to on-prem timing pull-forward and deliberate conservatism.

  • ServiceNow's AI ACV crossed $1 billion in Q2, with net new ACV growing over 40% quarter-over-quarter, and the company is already tracking ahead of its target for AI to reach 30% of total ACV by 2030, a significant acceleration of the monetization timeline.
  • Customers with agentic AI in production grew 9x over the last 9 months, and the percentage of renewal customers purchasing agentic AI for the first time doubled both quarter-over-quarter and year-over-year, signaling a genuine adoption inflection rather than pilot activity.
  • McDermott explicitly framed ServiceNow as hardware-agnostic infrastructure: 'whichever chip wins, whichever lab wins, whichever price per token regime prevails, the enterprise needs one governed layer of record' — a direct signal that ServiceNow sees itself capturing AI software spend regardless of the underlying silicon or model winner.
  • The Level 1 ITSM AI specialist, now in production with 40-plus customers, is resolving 80-85% of service requests without human interaction and compressing resolution time from two days to 20 minutes, with Amit Zavery noting this drives meaningful consumption growth as full end-to-end task completion burns more assists.
  • A new AI-native product targeting the Fortune 500,000 — a conversational, no-ticket service desk with a product-led go-to-market motion — is in beta and approaching general availability, representing ServiceNow's first explicit move to expand TAM downmarket with AI-native SKUs rather than traditional enterprise licensing.

Sources

Generated by Earnings Bot on 2026-07-23 14:06 UTC.