ServiceNow raises 2026 outlook as Q2 subscription revenue grows 24.5%

ServiceNow reported second-quarter 2026 results showing 24% year-over-year revenue growth and raised its full-year subscription revenue outlook.

Revenue and earnings

In a July 2026 earnings release published by ServiceNow’s newsroom and investor relations site, the company said total revenue for the second quarter was $3.987 billion, up 24% from a year earlier. Subscription revenue was $3.877 billion, up 24.5% year over year, or 23% in constant currency.

ServiceNow reported GAAP net income per diluted share of $0.29, compared with $0.38 a year earlier. On a non-GAAP basis, diluted earnings per share were $0.90, compared with $0.81 in the prior-year period, according to the company’s release.

The company also reported a non-GAAP operating margin of 29.5% for the quarter. GAAP operating income was $162 million, or 4% of revenue, compared with $358 million, or 11% of revenue, a year earlier. ServiceNow’s release attributes differences between GAAP and non-GAAP results to exclusions such as stock-based compensation and acquisition-related expenses, among other adjustments.

Backlog and customer commitments

ServiceNow said current remaining performance obligations, a measure of contracted revenue expected to be recognized over the next 12 months, reached $13.20 billion, up 21% year over year. Total remaining performance obligations were $29.0 billion, also up 21%.

The company said it closed 123 transactions with more than $1 million in net new annual contract value during the quarter. ServiceNow also reported 658 customers with more than $5 million in annual contract value.

Chief executive Bill McDermott said in the company’s earnings materials that results reflected “longer customer commitments” and demand through partners. That framing is consistent with the company’s reported growth in remaining performance obligations, though those figures represent contracted future revenue rather than revenue already recognized.

AI products and annual contract value

ServiceNow said ServiceNow AI surpassed $1 billion in annual contract value. The company also said “agentic” AI deployments increased ninefold over nine months.

In the same release, ServiceNow pointed to several AI-related product updates, including ServiceNow Otto, described by the company as a unified AI experience; an expanded AI Control Tower; and Action Fabric. ServiceNow said Anthropic became the first design partner for Action Fabric, with the goal of connecting Claude into ServiceNow workflows.

The announcement adds financial context to ServiceNow’s AI strategy, but the company’s release does not break out AI revenue as a separate line item in its income statement. The $1 billion figure is presented as annual contract value, not recognized quarterly revenue.

Guidance moves higher

ServiceNow raised its full-year 2026 subscription revenue guidance to a range of $15.76 billion to $15.78 billion, which it said represents about 21% growth in constant currency.

For the third quarter, ServiceNow guided for subscription revenue of $3.975 billion to $3.980 billion, representing about 20.5% growth. The company also guided for a third-quarter non-GAAP operating margin of 31%.

For the full year, ServiceNow projected a non-GAAP operating margin of 31.5% and a free cash flow margin of 35%.

Cash flow and items to watch

ServiceNow reported $587 million in net cash provided by operating activities for the quarter, down from $716 million a year earlier. Free cash flow was $634 million, representing a 16% margin, compared with a 16.5% margin in the year-earlier period.

The company also noted that second-quarter results included strong U.S. federal demand that pulled some on-premise revenue forward from the third quarter into the second quarter. That timing effect is relevant when comparing quarterly results and guidance.

ServiceNow’s earnings release was also made available through its investor relations materials, and the company’s filings can be tracked through the U.S. Securities and Exchange Commission’s EDGAR system under ServiceNow’s public-company records.

Overall, the quarter showed continued subscription growth, an increased full-year revenue outlook, and larger contracted obligations, while GAAP profitability and operating cash flow were weaker than the prior-year period.