ServiceNow, Inc. Q2 FY26 Results — Earnings Call Analysis
Published 29 May 2026 | Software | Market Cap: ₹1.1L Cr
- ServiceNow expects significant growth driven by AI integration into their platform, shifting from experimentation to full-scale deployment. - **Subscription Revenue Growth**: Raised 2026 subscription revenue guidance to $15.735-$15.775 billion, representing 20.5%-21% YoY growth on a constant currency basis.
From ServiceNow, Inc.'s Q2 FY26 earnings-call transcript · updated 29 May 2026.
Price
₹108.73
Market Cap
₹1.1L Cr
P/E Ratio
59.5
Revenue Rank
Margin Rank
How does ServiceNow, Inc. rank in Software?
Compare ServiceNow, Inc. against every Software company this quarter on revenue, margins and earnings-call signals.
📊 Revenue & Sales Performance
Rank 2- →ServiceNow expects significant growth driven by AI integration into their platform, shifting from experimentation to full-scale deployment.
- →The 2026 AI revenue target has increased from $1 billion to $1.5 billion, indicating accelerated AI-driven revenue growth.
- →Q1 saw a 19% year-over-year constant currency growth in subscription revenues ($3.671 billion), exceeding guidance.
- →Net new ACV growth accelerated to over 50% year-over-year in Q1, including the largest net new logo deal of over $15 million.
- →16 deals greater than $5 million closed in Q1, including 5 deals over $10 million; 630 customers generating over $5 million in ACV.
- →Moveworks integration rapidly expanded EmployeeWorks, driving significant revenue with 6 deals above $1 million in net new ACV shortly after launch.
- →AI Control Tower and RaptorDB Pro show strong momentum with increasing deal sizes and high growth in deal volume (80% YoY for RaptorDB Pro).
- →Overall, the company anticipates accelerating revenue growth and margin expansion fueled by AI and strategic acquisitions.
📈 Profitability & Margins
Rank 1- →**Subscription Revenue Growth**: Raised 2026 subscription revenue guidance to $15.735-$15.775 billion, representing 20.5%-21% YoY growth on a constant currency basis.
- →**AI Revenue Target**: Now Assist AI revenue target increased from $1 billion to $1.5 billion for 2026, showing accelerated AI-driven growth.
- →**Operating Margin**: Expected operating margin for 2026 is 31.5%, incorporating some near-term headwinds from Armis acquisition.
- →**Free Cash Flow Margin**: Projected free cash flow margin of 35% for 2026, with normalization expected by 2027 and beyond due to AI efficiencies and platform leverage.
- →**Q2 Guidance**: Subscription revenues anticipated between $3.815-$3.820 billion, growing 21%-21.5% YoY constant currency; operating margin expected at 26.5%.
- →**Long-Term Growth**: Focus on sustained and predictable growth, aiming for revenue reacceleration above 20% on a $15 billion base. Terminal value emphasis on growth, margin expansion, and AI integration.
🏗️ Capital Expenditure Plans
Yes- →The transcript does not explicitly mention specific current or future capital expenditures (capex) plans.
- →Strategic investments highlighted include acquisitions like Armis, Veza, and Moveworks, aimed at expanding AI capabilities and platform innovation.
- →The company focuses heavily on integrating these acquisitions to drive innovation and growth, rather than acquiring for short-term revenue.
- →Investment emphasis is on expanding AI-native platforms, workflow orchestration, security, and data fabric on a unified platform.
- →They are prioritizing platform consolidation by eliminating point solutions and leveraging platforms like ServiceNow.
- →AI and enterprise-wide deployment are driving budget reallocation within customer spending.
- →Integration of new companies and their technology into the ServiceNow ecosystem is a key strategic focus for effective growth.
- →Overall, the strategic investment is centered around AI-driven innovation, platform enhancement, and ecosystem expansion rather than traditional capex.
💰 Fundraising & Capital Structure
No information- →The company executed a $2 billion accelerated share repurchase in Q1, buying back approximately 20.2 million shares.
- →As of the end of Q1, approximately $4.2 billion of share repurchase authorization remains.
- →There is no mention of any new fundraising through debt or equity in the provided text.
- →The focus is on returning capital to shareholders via share repurchases rather than raising new capital.
- →The company expresses confidence in its strong balance sheet and cash flow, highlighting free cash flow margin of 44% in Q1.
- →No plans for additional debt or equity issuance were disclosed in these excerpts.
📋 Order Book & Pipeline
Yes- →Q1 RPO (Remaining Performance Obligations) ended at approximately $27.7 billion, representing 23.5% YoY constant currency growth.
- →Current RPO was $12.64 billion, representing 21% YoY constant currency growth, beating guidance by 100 basis points.
- →Q2 cRPO growth expected at 19.5% constant currency, including a 125 basis point contribution from Armis.
- →Customers are showing broad-based demand with strong deal sizes: 16 deals over $5 million in Q1, 5 deals over $10 million, and largest net new logo deal over $15 million.
- →AI-related products and new offerings like Now Assist and AI Control Tower are driving increased order sizes and deal velocity.
- →Overall, the orderbook and pending orders depict strong growth momentum and robust enterprise spending despite geopolitical headwinds.
Key Metrics
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Frequently Asked Questions
What were ServiceNow, Inc. Q2 FY26 results?
- ServiceNow expects significant growth driven by AI integration into their platform, shifting from experimentation to full-scale deployment. - **Subscription Revenue Growth**: Raised 2026 subscription revenue guidance to $15.735-$15.775 billion, representing 20.5%-21% YoY growth on a constant currency basis.
What is ServiceNow, Inc. share price analysis?
ServiceNow, Inc. currently shows a moderate growth signal based on ranking data. The stock trades at a P/E of 59.5 with a market cap of $112,101. Investors should review the full earnings analysis for detailed insights.
Is ServiceNow, Inc. planning capital expenditure?
- The transcript does not explicitly mention specific current or future capital expenditures (capex) plans.
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This analysis is AI-generated based on publicly available earnings data and concall transcripts. This is not investment advice. Please consult a SEBI-registered advisor before making investment decisions.