ServiceNow, Inc.

Q2 subscription revenues were $3.877 billion, up 23% year over year in constant currency and 150 basis points above the high end of guidance. Current RPO was $13.2 billion, up 21.5% year over year in constant currency and 200 basis points above guidance; total RPO ended at approximately $29 billion, up 22% year over year in constant currency. Non-GAAP operating margin was 29.5%, 300 basis points above guidance, and free cash flow margin was 16%. For 2026, ServiceNow raised subscription revenue guidance by $15 million at the midpoint to $15.770 billion, implying 21% constant-currency growth; it guided subscription gross margin to 81%, operating margin to 31.5%, and free cash flow margin to 35%. For Q3, it expects subscription revenues of $3.975 billion-$3.980 billion, constant-currency growth of 20%, CRPO growth of 20%, and operating margin of 31%.

Bill McDermott framed the quarter as proof that ServiceNow is winning where AI meets enterprise workflow, security, and governance. He repeatedly stressed that the company is “in the bull’s eye” of AI and cybersecurity, and said the AI control tower is becoming mission-critical for customers who want governed, secure automation rather than pilots. His tone was highly confident and expansive, pointing to new AI-native products, a larger cybersecurity footprint, and the belief that ServiceNow will continue taking share across the enterprise stack.

Gina Mastantuono described Q2 as an outstanding quarter with broad-based demand and operating leverage. She cited subscription revenue of $3.877 billion, RPO of about $29 billion, current RPO of $13.2 billion, non-GAAP operating margin of 29.5%, and free cash flow margin of 16%. She said the full-year raise reflects net new ACV outperformance, but noted part of the Q2 beat came from timing as some U.S. federal on-prem revenue shifted from Q3 into Q2. She also said subscription gross margin guidance of 81% reflects more hyperscaler usage and accelerating AI adoption, while the company remains disciplined on margins and capital allocation.

Analysts pressed on AI monetization, Level 1 ITSM, federal timing, pricing pressure, sales headcount, gross margin tradeoffs, and whether AI/hardware spending is lengthening sales cycles. Management said Level 1 ITSM is accelerating, with 40-plus customers using it and close to 80% to 85% of service requests being resolved without human interaction, while AI ACV has already crossed $1 billion and pricing uplift on Pro Plus SKUs remains above 30%. On the guidance raise, Gina said the Q2 federal outperformance was partly timing, not all on-prem, and that the company raised the full-year guide on net new ACV overachievement but stayed prudent for the back half. On sales headcount, she said growth came from multiple factors including M&A and the security ramp, and Bill added that he has not seen sales-cycle deterioration from hardware/AI budget pressure.