ServiceNow (NOW) Financials

ServiceNow’s recent financial statements show strong top-line growth and a rapidly expanding balance sheet, but the second quarter of 2026 also introduced a sharp increase in acquisition spending, debt and goodwill. The company remains profitable, although operating profitability and cash generation were weaker in Q2 2026 than in the first quarter.

• Revenue growth remains robust. Q2 2026 revenue increased to $3.99 billion from $3.22 billion in the restated Q2 2025 results, a gain of approximately 24%. Revenue has risen in every comparable quarter provided, from $1.83 billion in Q3 2022 to nearly $4.0 billion in Q2 2026.
• Gross profit continues to expand in dollar terms. Gross profit reached $2.82 billion in Q2 2026, up from $2.49 billion a year earlier and $1.43 billion in Q3 2022. This indicates that ServiceNow is continuing to scale its subscription and software operations.
• ServiceNow remains consistently profitable. Net income increased from $150 million in Q1 2023 to $298 million in Q2 2026. Q2 2026 earnings per share were reported at $0.29, while Q1 2026 EPS was $0.45. The data includes restated historical periods, so investors should use caution when comparing older EPS figures.
• Long-term recurring revenue indicators are strengthening. Current deferred revenue increased to $8.06 billion in Q2 2026 from $6.80 billion in Q2 2025 and $4.61 billion in Q2 2023. Deferred revenue represents contracted revenue that has not yet been recognized and can support future reported sales.
• The company has built substantial equity and asset value. Total assets rose to $31.67 billion in Q2 2026 from $22.05 billion in Q2 2025 and $13.30 billion at the end of 2022. Total equity also increased to $12.52 billion from $10.93 billion over the same year-over-year period.
• Operating cash flow has generally been strong but volatile. Total operating cash flow was $587 million in Q2 2026, down from $1.67 billion in Q1 2026 but below the $716 million reported in Q2 2025. The Q2 2026 cash flow statement also shows negative $283 million from continuing operating activities, creating a notable difference from total operating cash flow that investors should review in the company’s filing.
• Share repurchases have supported per-share value, but equity issuance continues. ServiceNow repurchased $2.23 billion of common stock in Q1 2026, following repurchases of $597 million in Q4 2025 and $584 million in Q3 2025. However, the company also issued equity, including $153 million in Q1 2026, which can partially offset the reduction in shares from buybacks.
• Operating margins have deteriorated recently. Q2 2026 operating income fell to $162 million from $358 million in Q2 2025, even as revenue grew 24%. The operating margin declined to approximately 4.1% from 11.1%. Gross margin also narrowed to about 70.7% from 77.5%, while marketing and research expenses increased substantially.
• Acquisition spending significantly increased financial risk. ServiceNow spent $7.45 billion on acquisitions in Q2 2026, compared with $58 million in Q2 2025 and $1.33 billion in Q1 2026. The spending contributed to a $6.65 billion investing cash outflow and appears to have driven goodwill to $9.84 billion and intangible assets to $3.78 billion, compared with $4.54 billion and $1.48 billion, respectively, in Q1 2026.
• Liquidity declined while debt increased. Cash and equivalents plus short-term investments fell to $4.66 billion in Q2 2026 from $6.13 billion in Q2 2025. At the same time, total debt, including short- and long-term debt, rose to approximately $7.52 billion from $1.49 billion in Q1 2026. The quarter’s $5.87 billion financing inflow helped fund the acquisition, but higher leverage and lower liquid assets leave less financial flexibility.

Overall, ServiceNow’s multi-year growth profile remains compelling, supported by rising revenue, deferred revenue and total assets. However, the latest quarter marks a shift toward more aggressive acquisition-led expansion. Investors should monitor whether the acquired businesses improve revenue growth and margins enough to justify the increase in goodwill, debt and near-term pressure on cash flow.