NOW US S&P 500Russell 1000 Earnings call
ServiceNow (NOW) · Q2 2026 results and valuation
Share price: $102.76 · 2026-11-11
ServiceNow provides a cloud-based platform that helps public and private organizations automate workflows, integrate systems, and manage artificial intelligence. The company offers software and services to streamline business processes and improve productivity across various industries and departments. Source: 10-K annual report (2026-01-29)
Results Q2 2026 vs Q1 2026 · previous quarter · published 22 Jul 2026 and 22 Apr 2026
Net income down 36.5% on the previous quarter. Management sounded cautious, in its script and in answers to analysts.
1 · Numbers
−36.5%
Net income vs Q1 2026
Outlook given
Net income 298.0M vs 469.0M
Revenue +5.8%
Against the same quarter last year (Q2 2025) it is −22.6%, so it is not just seasonal.
2 · How management spoke
Cautious
Among the least upbeat of all company calls
Answers to analysts: upbeat, in line with the script.
Similar to last call.
3 · What stood out
ServiceNow AI annual contract value exceeded $1 billion, with net new ACV growth accelerating over 40% quarter-over-quarter.
Valuation
Is ServiceNow undervalued?
Reverse DCF. Free cash flow from the last full fiscal year (2025-12-31), grown for 10 years, discounted back, plus a terminal value. “Implied growth” is the rate the current price assumes.
At 20.0% growth a year (3-year revenue growth), the model's fair value is $217.11 a share — the stock trades 53% below it. Today's price assumes 9.9% growth a year.
Current price
$102.76
close of 2026-11-11
Market implies growth of iThe yearly free-cash-flow growth, for the next 10 years, that today’s share price already assumes. If you believe the company grows faster than this, the stock is cheap under this model; slower, and it is expensive.
+9.9% for 10 yrs
Fair value / share
$217.11
Buy below
$162.83
Price vs fair value
Undervalued 53%
Price vs buy-below price
Undervalued 37%
Management expects
Revenue +23% · from the Q2 2026 report: “Subscription revenue growth reached 23% in constant currency, exceeding the high end of guidance by 1.5 points.”
A guidance figure for revenue, usually one year ahead, not a 10-year free-cash-flow rate.
Read between the lines
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Guidance
Non-GAAP operating margin was 29.5%, which was 300 basis points above guidance due to revenue outperformance and timing of spending in marketing.
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Guidance
Subscription revenue growth reached 23% in constant currency, exceeding the high end of guidance by 1.5 points.
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Guidance
ServiceNow AI ACV surpassed $1 billion, keeping the company on track to beat its target of $1.5 billion ACV by the end of 2026.
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Key theme
ServiceNow AI continued to outperform expectations in Q2 with ACV crossing over $1 billion and net new ACV growth accelerating sequentially, growing over 40% quarter-over-quarter.
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Figure
The company raised its 2026 midpoint subscription revenue forecast by $15 million to $15.770 billion, representing 21% year-over-year growth on a constant currency basis.
Source quote
“For 2026, we are raising our subscription revenues by $15 million at the midpoint from $15.755 billion to $15.770 billion, representing 21% year-over-year growth on a constant currency basis.”
4 more
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Guidance
The company is tracking ahead of its target for AI to reach 30% of ACV in 2030.
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Figure
The company aims to achieve the rule of 60 by 2030 by focusing on best-in-class top line growth and best-in-class margins.
Source quote
“As Bill said, we will remain as disciplined as ever on driving that only best-in-class top line growth but best-in-class margins well on our way to the rule of 60 by 2030.”
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Figure
RPO ended the quarter at approximately $29 billion, representing 22% year-over-year constant currency growth and an increase in average customer contract duration.
Source quote
“RPO ended the quarter at approximately $29 billion, representing 22% year-over-year constant currency growth with an increase in average customer contract duration.”
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Figure
The renewal rate was 98% in Q2, which underscores the durability of customer relationships.
Source quote
“Our renewal rate was a best-in-class 98% in Q2, underscoring the durability of our customer relationships.”
Tone
How upbeat the language was, compared with other companiesiTone counts positive minus negative finance words, adjusted for length. Executives mostly speak positively, so the labels compare each call with every company's latest call: “typical” is the middle third, “very upbeat” the top tenth, “cautious” the bottom tenth.. Dot: Q2 2026. Ring: Q1 2026.
Script and answers carried a similar tone, so the script's message held up under questioning.
Sentences that drove the tone
“We are serious about growth, growth on the top line, expanding the margin profile of the company and winning share everywhere we go in this AI revolution, especially cyber.”
“Employee Works or AI front door for the enterprise workforce continued to build strong momentum with deal volume growing over 150% quarter-over-quarter.”
“IDC forecast spending on AI software is going to grow 53% this year, 17% faster than AI hardware whichever chip wins, whichever lab wins, which ever price per token regime...”
Full figures
USD · SEC EDGAR XBRL (10-Q, period end 2026-06-30)
| Metric | Q2 2026period end 2026-06-30 | Q1 2026period end 2026-03-31 | Change | Q2 2025 | YoY |
|---|---|---|---|---|---|
| Revenue | 3.99B | 3.77B | +5.8% | 3.21B | +24.0% |
| Gross profit | 2.82B | 2.83B | −0.4% | 2.49B | +13.1% |
| Operating income | 162.0M | 503.0M | −67.8% | 358.0M | −54.7% |
| Net income | 298.0M | 469.0M | −36.5% | 385.0M | −22.6% |
| EPS | 0.29 | 0.45 | −35.6% | 0.37 | −21.6% |
| P/E today 73.4 | 62.0 | 62.2 | −0.2 | 12-mo loss | — |
Topics
Most discussed now
- Current RPO was $13.2 billion, representing 21.5% year-over-year constant currency growth.
- Once the agentic use cases get started, ServiceNow is seeing a tremendous amount of interest in doing more and that's why...
- With respect to gross margin guidance, as ServiceNow ramps and the increasing hyperscaler is that it is ramping quicker than planned,...
- I talked about cyber physical security, which ServiceNow alreadies have.
- New Where ServiceNow has strength, where it has opportunity and it builds on top of what it did with CMDB, what...
Faded since Q1 2026
- Fading AI, native packaging and pricing on ServiceNow's fully autonomous platform, its AI at ServiceNow, a world-class team with a proven...
- Fading Core business workflows had 13 deals in the top 20 with 12 over 1 million.
- Fading I put together along with ServiceNow's great team here, an agentic business, white paper, that has cleared things up for...
- Fading ServiceNow feels very good and strong that it continues to have strong organic growth on top of these great acquisitions...
Latest announcements
Official filings, newest first. Summaries are generated from each filing and its attachment; every figure is checked against the source.
- Results of operations · SEC 8-K
- Results of operations · SEC 8-K
ServiceNow filed its financial results for the three months ended June 30, 2026, as disclosed in the press release dated July 22, 2026.
- Director or officer change; Shareholder vote results · SEC 8-K
Shareholders approved an amendment to the 2021 Equity Incentive Plan to increase the available share reserve by 38,000,000 shares.
- Material agreement; New financial obligation; Other events · SEC 8-K
ServiceNow filed an opinion regarding the legality of its new notes with interest rates ranging from 4.250% to 6.300% and maturities extending to 2056.
- Material agreement; Results of operations; New financial obligation · SEC 8-K
ServiceNow entered into a Credit Agreement for a $4 billion unsecured term loan maturing on October 16, 2026, to finance the acquisition of Armis Security Ltd.
- Material agreement; New financial obligation · SEC 8-K
ServiceNow, Inc. entered into a Credit Agreement on April 1, 2026, providing for a $3 billion unsecured revolving credit facility maturing on April 1, 2031.
- Regulation FD disclosure · SEC 8-K
ServiceNow, Inc. reported that several executives terminated their Rule 10b5-1 trading plans and William R. McDermott entered into a share purchase agreement for $3 million of common stock.
- Director or officer change · SEC 8-K
Ms. Fontaine executed the company's standard form of indemnification agreement for officers, which was previously filed as Exhibit 10.1 to the 2015 Annual Report.
Catalyst calendar
management-stated targets — from the latest earnings call; plans, not promises.
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by the end of 2026
target of $1.5 billion ACV
Source quote
“ServiceNow AI ACV exceeded expectations again surpassing $1 billion, keeping us on track to beat our target of $1.5 billion ACV by the end of 2026.”
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in the next 4 years
40 billion connected devices in the world
Source quote
“We'll have 40 billion connected devices in the world in the next 4 years.”
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this year
execution of over 2 billion service CRM cases
Source quote
“We're on track to execute over 2 billion service CRM cases this year, in addition, partners are increasingly positioning ServiceNow as an operational CRM platform, opening executive conversations across the C-suite.”
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very shortly
big announcement regarding a business model evolution
Source quote
“For example, we have a big announcement coming very shortly, a business model evolution that expands our TAM with AI native products.”
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in the weeks to come
bringing net new AI native products to market
Source quote
“This is the first of many net new AI native products we'll be bringing to market in the weeks to come.”