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NOW
FY2026 Q1
Raised
ServiceNow, Inc. earnings call
Buzzberg read
Now Assist on track to exceed $1 billion target, potentially $1.5 billion
ServiceNow reported a strong Q1 with subscription revenue growing 19% y/y, beating guidance across the board. Management raised full-year revenue guidance, increased the AI (NowAssist) revenue target to $1.5B (from $1B), and highlighted accelerating momentum from acquisitions (Armis, Moveworks, Vesa) and AI platform adoption. The stock declined after hours despite the beat and raise, likely due to cautious Q2 CRPO guide and uncertainties around organic growth perceptions. Q1 subscription revenue $3.671B (+19% cc), above guidance; operating margin 32% (beat by 50bps); FCF margin 44%.
Buzzberg read Now Assist on track to exceed $1 billion target, potentially $1.5 billion ServiceNow reported a strong Q1 with subscription revenue growing 19% y/y, beating guidance across the board. Management raised full-year revenue guidance, increased the AI (NowAssist) revenue target to $1.5B (from $1B), and highlighted accelerating momentum from acquisitions (Armis, Moveworks, Vesa) and AI platform adoption. The stock declined after hours despite the beat and raise, likely due to cautious Q2 CRPO guide and uncertainties around organic growth perceptions. Q1 subscription revenue $3.671B (+19% cc), above guidance; operating margin 32% (beat by 50bps); FCF margin 44%. Read full analysisCollapse analysis
ServiceNow reported a strong Q1 with subscription revenue growing 19% y/y, beating guidance across the board. Management raised full-year revenue guidance, increased the AI (NowAssist) revenue target to $1.5B (from $1B), and highlighted accelerating momentum from acquisitions (Armis, Moveworks, Vesa) and AI platform adoption. The stock declined after hours despite the beat and raise, likely due to cautious Q2 CRPO guide and uncertainties around organic growth perceptions. Q1 subscription revenue $3.671B (+19% cc), above guidance; operating margin 32% (beat by 50bps); FCF margin 44%.
- Full-year subscription revenue guidance raised to $15.735-15.775B (includes ~125bps from Armis); Q2 guide for subscription revenue $3.815-3.820B.
- NowAssist AI revenue target raised to $1.5B for FY2026 (from $1B), with 50% of net new business now under non-seat-based pricing.
- Acquisitions integrating rapidly: Moveworks deals in Q1 exceeded its entire 2025; Armis closed early with 9 of top 10 Fortune 10 companies as customers.
Revenue$3.77B+6% QoQ
EPS$0.97+5% QoQ
Gross margin75.07%Reported
Operating margin13.34%Reported
6 grounded callouts
What matters now
The highest-signal changes from the call.
Pricing
50% of net new business from non-seat-based pricing
Guidance
Armis acquisition closed early, expected to contribute 125 bps to revenue growth
Show 3 more callouts
Product
ServiceNow's AI Control Tower differentiates with unique context engine
M&A Integration
Moveworks integration shows strong early traction with quintupled growth
AI Adoption
Autonomous workforce resolving 90% of employee IT requests at ServiceNow
Reported period
Actuals
| Metric | Reported | Change |
|---|---|---|
| Revenue | $3.77B | +6% QoQ |
| EPS | $0.97 | +5% QoQ |
| Gross margin | 75.07% | Reported |
| Operating margin | 13.34% | Reported |
| Free cash flow | $1.529B | -24% QoQ |
| Capex | $0.141B | Reported |
Forward-looking
Forward guidance
| Metric | Period | Range | Midpoint | Status |
|---|---|---|---|---|
| Free cash flow | FY2026 | 35% | 35% | Maintained |
| Operating margin | FY2026 | 31.5% | 31.5% | Maintained |
| Operating margin | FY2026 Q2 | 26.5% | 26.5% | Initiated |
| RevenueAI | FY2026 | $1.5B | $1.5B | Raised |
| Revenue | FY2026 | $15.735B–$15.775B | $15.755B | Raised |
| Revenue | FY2026 Q2 | 19.5% | 19.5% | Initiated |
| Revenue | FY2026 Q2 | $3.815B–$3.82B | $3.8175B | Initiated |
AI, capex & demand read
Management read
Upbeat Confident
Management consistently delivers strong results and raises guidance, framing challenges like the Middle East conflict as minor timing issues while emphasizing 'beat and raise' and long-term dominance.
Management AI read
Management is highly optimistic about AI-driven demand, citing Now Assist's performance surpassing expectations with a trajectory to exceed $1 billion target for 2026, now potentially reaching $1.5 billion. They highlight AI-native packaging and pricing, a hybrid model with 50% of net new business from non-seat-based pricing, and the AI Control Tower's differentiation. They also emphasize the comp
Investment and capacity
The transcript does not include specific discussion of capital expenditures or infrastructure investment beyond the context of AI-driven demand and operational efficiencies. No forward-looking capex guidance is provided.
all 5 named companies below
Companiesreturns since call
Customers
Customers
Bill McDermott
Robinhood is a successful mid-market deployment case study for ServiceNow's ESM Foundation, showing strong ROI and potential for expansion.
Evidence
“Robinhood is deflecting 70% of employee requests before human intervention. They've already eliminated 2,200 hours of manual effort monthly.”
Partners
OPENAI
Partners
Bill McDermott
ServiceNow acts as an enterprise gateway for OpenAI, deepening the partnership and expanding OpenAI's enterprise footprint.
Evidence
“OpenAI native voice and text models are integrated directly into the ServiceNow AI platform, and they're using us as a gateway into the enterprise.”
Partners
Bill McDermott
ServiceNow continues to partner with CrowdStrike in security, despite building its own security stack, indicating coexistence rather than displacement.
Evidence
“We integrate with all of them. In fact, great ones like CrowdStrike, my friend George and Nikesh and all these guys, they're terrific.”
Partners
Bill McDermott
ServiceNow is building a telecom-specific AI solution with major carriers, potentially driving future revenue from the telecom sector.
Evidence
“ServiceNow, NTT, Docomo, and StarHub are developing the industry's first inter-carrier autonomous roaming resolution model on the ServiceNow AI platform.”
External signals
Supply-chain alpha · 3returns since call
Moveworks closed more deals in Q1 2026 than it did in all of 2025, driving a 5x year-over-year increase in employee works business now combined with ServiceNow.
Evidence
“Moveworks closed seven figure deals in Q1. They closed more deals than they did the entire year last year.”
50% of net new business now comes from non-seat-based pricing (tokens, infrastructure, connectors), indicating a structural shift toward consumption/pay-as-you-go models.
Evidence
“50% of net new business now comes from a non-seat-based pricing model, including tokens and other assets such as infrastructure, hardware, and connectors.”
Armis already counts 9 of the top 10 Fortune 10 companies as customers, providing a ready-made distribution channel for ServiceNow's security platform.
Evidence
“Nine out of ten Fortune 10 companies already rely on Armis. We're excited to deploy it throughout the top 2,000 and beyond.”
Methodology & coverage
Management-only analysis. All 5 validated company mentions are shown. Reported actuals and forward guidance are kept separate. Public evidence is limited to eight short attributed quotes. AI-generated analysis can be incomplete or wrong; verify important claims against the original source.