ServiceNow NYSE: NOW reported stronger-than-expected second-quarter 2026 results, with executives pointing to broad demand across artificial intelligence, cybersecurity, IT operations, customer relationship management and employee workflows.
Chairman and Chief Executive Officer Bill McDermott said the company delivered “a stunning Q2 print,” citing subscription revenue growth of 23% in constant currency, current remaining performance obligations, or cRPO, growth of 21.5% in constant currency and a non-GAAP operating margin of 29.5%. He said each of those metrics exceeded the company’s guidance.
ServiceNow also reported 123 deals greater than $1 million in net new annual contract value, up 40% year over year. McDermott said ServiceNow AI annual contract value exceeded $1 billion and remains on pace to surpass the company’s target of $1.5 billion by the end of 2026.
AI Demand Continues to Build
McDermott and President and Chief Financial Officer Gina Mastantuono both emphasized that AI adoption is becoming a larger driver of ServiceNow’s business. Mastantuono said ServiceNow AI net new ACV growth accelerated sequentially and grew more than 40% quarter over quarter. She added that deals including five or more ServiceNow AI products increased 5.5 times year over year, helping drive a tripling of million-dollar-plus deals.
The company said the number of customers with agentic AI in production has increased ninefold over the last nine months. Mastantuono said ServiceNow is already tracking ahead of its target for AI to reach 30% of ACV by 2030.
President, Chief Product Officer and Chief Operating Officer Amit Zavery discussed the company’s level 1 IT service management automation, saying more than 40 customers are already using the product. He said the AI specialists are closing about 80% to 85% of service requests without human interaction, reducing some request resolution times from two days to about 20 minutes.
“It’s end-to-end service request completion, not just giving you the information, but actioning on those requests as well,” Zavery said.
Cybersecurity Becomes a Central Theme
McDermott repeatedly framed cybersecurity as a major growth area for ServiceNow, saying the company already has a “$1 billion-plus cybersecurity business” and is the “eighth-largest cybersecurity business in the enterprise.” He said ServiceNow is building what he described as an integrated end-to-end security platform spanning cyber risk and compliance, incident response, exposure management, identity and access security and vulnerability detection.
Executives highlighted the company’s acquisitions of Armis and Veza as important additions to that strategy. McDermott said Veza maps access across human, machine and AI identities, while Armis tracks connected devices in real time. He said the combination strengthens ServiceNow’s AI Control Tower, which is designed to give enterprises visibility, governance and security across AI systems.
Zavery said the company is addressing both pre-breach and post-breach cybersecurity workflows, including vulnerability management, exposure management and security operations center processes. However, he said ServiceNow does not plan to participate in every area of the cybersecurity market.
“Where we have strength, where we have opportunity, and it builds on top of what we did with CMDB, what we did with our post-breach stuff, and now adding the AppSec, as well as the pre-breach things,” Zavery said.
Revenue, RPO and Customer Metrics
Mastantuono said second-quarter subscription revenue was $3.877 billion, up 23% year over year in constant currency and 150 basis points above the high end of guidance. Remaining performance obligations ended the quarter at approximately $29 billion, representing 22% year-over-year constant currency growth. Current RPO was $13.2 billion, up 21.5% in constant currency and 200 basis points above guidance.
ServiceNow’s renewal rate was 98% in the quarter. Mastantuono said the company ended the period with 658 customers generating more than $5 million in ACV, with 32 additional customers crossing the $20 million threshold compared with last year.
She said demand was broad across workflows:
- Technology workflows had 50 deals above $1 million, including nine above $5 million.
- ITSM appeared in 15 of the top 20 deals, while ITOM appeared in 18 of the top 20 deals.
- Security and risk solutions were in 16 of the top 20 deals.
- CRM and industry workflows were also in 16 of the top 20 deals.
- Core business workflows were in 12 of the top 20 deals, supported by demand for ServiceNow EmployeeWorks.
Mastantuono said business and consumer services led industry growth, with net new ACV growing more than sixfold year over year. Education grew more than 125%, while telecommunications and media grew nearly 40%. Manufacturing also posted strong growth, she said.
CRM, Employee Workflows and AI Control Tower
McDermott said ServiceNow’s CRM business has reached $2 billion in ACV, and net new ACV growth in CRM accelerated both year over year and quarter over quarter. He said ServiceNow is increasingly being positioned by partners as an “operational CRM platform.”
He cited customer examples including a large airline using ServiceNow’s voice AI CRM agents to handle 5 million annual customer service voice calls in its first year of production. He also pointed to examples in quoting, loan origination and field operations.
On employee workflows, McDermott described EmployeeWorks as a strategic entry point for enterprise employee experiences, combining Moveworks conversational AI with ServiceNow workflows across HR, IT and workplace services. Mastantuono said EmployeeWorks deal volume grew more than 150% quarter over quarter.
The company also said AI Control Tower is gaining traction. Zavery said more than 500 customers are already live using AI Control Tower within the first six months of launch. McDermott cited customers including Maybank, Tech Mahindra, NTT Data and a Fortune 50 healthcare and retail distributor as examples of organizations using ServiceNow for AI governance and workflow transformation.
Guidance Raised for 2026
ServiceNow raised its full-year 2026 subscription revenue guidance by $15 million at the midpoint, to a range of $15.755 billion to $15.770 billion, representing 21% year-over-year growth in constant currency. Mastantuono said the company expects subscription gross margin of 81%, operating margin of 31.5% and free cash flow margin of 35% for the year.
For the third quarter, ServiceNow expects subscription revenue of $3.975 billion to $3.980 billion, representing 20% year-over-year constant currency growth. The company also expects cRPO growth of 20% in constant currency and an operating margin of 31%.
Mastantuono said some second-quarter upside came from strong U.S. federal demand, which shifted certain on-premises revenue from the third quarter into the second quarter. She said the timing shift did not account for all of the quarter’s outperformance, noting strong net new ACV as well.
Asked about sales cycles, McDermott said he has not seen a negative impact. “If I’ve seen any change, it’s on the positive,” he said, adding that ServiceNow’s relevance is increasing in C-suite discussions around AI, workflow automation and cybersecurity.
About ServiceNow (NYSE:NOW)
ServiceNow NYSE: NOW is a cloud computing company that builds enterprise software to manage digital workflows and automate business processes. Its offerings are designed to replace manual work and legacy systems with cloud-based, service-oriented applications that support IT operations, customer service, human resources, security response and other enterprise functions.
The company's flagship product family is the Now Platform, a suite of subscription software and platform services that includes IT Service Management (ITSM), IT Operations Management (ITOM), IT Business Management (ITBM), Customer Service Management (CSM), HR Service Delivery, Security Operations and Asset Management.
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