Key Takeaways
- ServiceNow exceeded Q2 2026 projections with adjusted earnings per share of $0.90 compared to analyst expectations of $0.86, while revenue reached $3.99B versus the anticipated $3.93B
- Subscription revenues increased 23% on a year-over-year basis in constant currency terms, reaching $3.877B
- The company’s AI-related annual contract value crossed the $1B threshold, outpacing internal projections
- Management elevated full-year subscription revenue projections to a range of $15.755Bā$15.770B
- Shares declined 6.47% to $95.46 during regular market hours, before rebounding 4.75% to $99.99 in extended trading
ServiceNow delivered better-than-anticipated results for its second quarter of 2026, surpassing both revenue and earnings projections. However, investors sent shares tumbling during regular trading hours before the stock mounted a partial recovery in the after-hours session.
SERVICENOW $NOW Q2ā26 EARNINGS HIGHLIGHTS
š¹ Subscription: $3.88B; +24.5% YoY, +23% cc
š¹ Total Revenue: $3.99B (Est. $3.92B) š¢; +24% YoY, +22.5% cc
š¹ Adj. EPS: $0.90 (Est. $0.86) š¢
š¹ cRPO: $13.20B (Est. ~$13.03B) š¢; +21% YoY, +21.5% ccQ3 Guide:
š¹ Subscription:ā¦ pic.twitter.com/7sgK7CjWS0ā Wall St Engine (@wallstengine) July 22, 2026
The enterprise software provider posted adjusted earnings of $0.90 per share, topping the Street’s consensus estimate of $0.86. Total revenue hit $3.99 billion, surpassing analyst forecasts of $3.93 billion. The company’s subscription business generated $3.877 billion, representing a 23% increase year-over-year when measured in constant currency.
Regular trading concluded with shares at $95.46, marking a 6.47% decline from the previous close of $102.06. Following the earnings announcement, the stock rallied 4.75% in after-hours activity to reach $99.99 ā though this still left it approximately 2% beneath the prior session’s closing level.
The company’s non-GAAP operating margin registered 29.5%, exceeding its own guidance by 300 basis points. The quarter’s free cash flow margin stood at 16%.
Total remaining performance obligations reached $29 billion, climbing 22% in constant currency. Current RPO registered $13.2 billion, reflecting growth of 21.5%.
Artificial Intelligence Growth Accelerates
The company’s AI-related annual contract value surpassed $1 billion during the quarter, positioning ServiceNow ahead of schedule toward its year-end 2026 target of $1.5 billion. Leadership indicated the firm remains on course to achieve 30% of total ACV from AI offerings by 2030.
Recently introduced AI solutions include Level 1 ITSM AI specialists, which are currently managing 80% to 85% of service requests autonomously. The company’s AI-native product offerings command premium pricing of 20% to 30%.
ServiceNow also showcased its AI Control Tower solution, which manages governance across AI agents, and emphasized enhanced partnerships with Microsoft, NVIDIA and Accenture.
CEO Bill McDermott stated the company sits “in the bullseye of AI, cybersecurity, workflow orchestration, integration, and automation.” CFO Gina Mastantuono emphasized that clients are purchasing “resolutions,” not tokens.
Outlook Elevated With Measured Optimism
ServiceNow increased its full-year 2026 subscription revenue forecast to $15.755Bā$15.770B, representing 21% growth in constant currency. Full-year operating margin guidance remains unchanged at 31.5%, while free cash flow margin is projected at 35%.
Third-quarter subscription revenue is expected to land between $3.975B and $3.980B, up 20% in constant currency, with an operating margin of 31%.
Leadership noted that a portion of Q2’s outperformance resulted from U.S. federal government contracts that accelerated revenue recognition from Q3. Management clarified this wasn’t the complete picture, highlighting that net new ACV significantly exceeded internal plans.
Margin headwinds from hyperscaler collaborations and AI consumption patterns remain areas of focus. With a price-to-earnings ratio of 57 and PEG ratio of 4.34, the valuation provides limited cushion for execution missteps.
Jefferies analyst Samad Samana increased his price target on NOW to $140 from $135 after the release, maintaining a Buy recommendation. He highlighted strong performance in constant currency cRPO, subscription revenues, and operating margins, and suggested the Q3 cRPO guidance demonstrates fundamental business resilience.
NOW’s 52-week trading range spans from $81.24 to $210.20.
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