Analyst(s): Keith Kirkpatrick
Publication Date: April 24, 2026
ServiceNow’s Q1 FY 2026 results show continued demand for AI-enabled workflows and early traction in new AI-first product packaging. Management positioned recent acquisitions and AI commercialization changes as a setup for larger multi-product deployments.
What is Covered in This Article:
- ServiceNow’s Q1 FY 2026 financial results
- AI monetization and packaging shifts
- Security expansion via acquisitions
- Commercial traction in new workflows
- Guidance and Final Thoughts
The News: ServiceNow (NYSE: NOW) announced financial results for Q1 FY 2026. Total revenue was $3.8 billion, up 22% year-on-year (YoY), versus Wall Street consensus of $3.7 billion. Subscription revenue was $3.7 billion, up 22% YoY. Professional services and other revenue was $99 million, up 18.5% YoY. Non-GAAP income from operations was $1.2 billion (Q1 FY 2025: $953 million) with a 32% operating margin (Q1 FY 2025: 31%). Non-GAAP net income was $1.0 billion (Q1 FY 2025: $846 million) and non-GAAP diluted earnings per share was $0.97, up from $0.81 in Q1 FY 2025.
“ServiceNow’s first quarter performance beat the high end of our guidance once again,” said ServiceNow Chairman and CEO Bill McDermott. “With this foundation, our AI growth is far exceeding even our own expectations, reinforcing our position as one of the fastest growing enterprise software companies ever.”
ServiceNow Q1 FY 2026 Results Raise Full-Year Subscription Outlook
Analyst Take: ServiceNow used Q1 FY 2026 to tighten the linkage between AI adoption and platform expansion, while keeping a disciplined view of near-term deal timing. Management pointed to higher AI annual contract value targets, larger multi-product deals, and accelerating new logo annual contract value. The company also pushed deeper into security and identity as AI expands the asset and access surface area. The near-term question is whether investors accept mid-term margin pressure from acquisitions as the price for a broader security and AI footprint.
AI Commercialization Moves Toward Embedded Packaging
ServiceNow made AI capabilities available across commercial tiers and set a clearer boundary for what it will count as AI annual contract value. Management said it will continue to track only the incremental contribution tied to AI capabilities under the new packaging approach. The company reported that customers spending more than $1 million in annual contract value on Now Assist grew more than 130% YoY, and deals with three or more Now Assist products grew nearly 70% YoY.
Management also said 50% of net new business now comes from non-seat-based pricing, including tokens and other assets. These shifts aim to reduce friction for initial AI adoption while still preserving a measurable expansion path tied to usage. The pricing model change raises the bar for ServiceNow to show durable attach and consumption expansion rather than one-time packaging uplift, but this focus should help it demonstrate that it is creating value from AI, a key concern of investors.
Security and Identity Becomes a Core Expansion Vector
ServiceNow closed the acquisitions of Veza and Armis and positioned them as foundational components of a unified security stack tied to its platform. Management described Armis as extending visibility across IT, OT, IoT, and medical devices, while Veza adds identity governance through access graph technology. The company said Armis already serves nine out of ten Fortune 10 companies and about 40% of the Fortune 100.
Management also linked these assets to its existing security business as the action layer that turns detection into workflow execution. The company guided to near-term margin headwinds from Armis integration and described those pressures as temporary. The acquisition strategy raises competitive pressure on point security vendors as buyers look for fewer control points for asset, identity, and workflow response.
Workflow Breadth and Multi-Product Selling Remain the Operating Model
Management reported broad-based demand across workflows, with technology workflows showing 33 deals over $1 million and several over $5 million. Service operations and IT asset management appeared frequently in top deals, and security and risk also showed up in a majority of large transactions. CRM and industry workflows were present in 16 of the top 20 deals, supported by CPQ and sales and order management strength. These two categories signal that ServiceNow’s platform messaging is resonating with customers.
Management said 17 of the top 20 deals included seven or more products, reinforcing the multi-product platform motion. New logo annual contract value growth accelerated to over 50% YoY, including the company’s largest net new logo deal at more than $15 million. The multi-product motion creates switching costs and account control, but it increases execution risk if implementation pace slows in complex enterprises.
Guidance and Final Thoughts
ServiceNow guided Q2 FY 2026 subscription revenue of $3.815 billion to $3.820 billion, representing 21% to 21.5% YoY growth on a constant currency (cc) basis, and guided Q2 FY 2026 cRPO growth of 19.5% on a cc basis. For FY 2026, the company raised subscription revenue guidance to $15.7 billion to $15.8 billion, representing 20.5% to 21% YoY growth on a cc basis, and guided to a subscription gross margin of 81.5%, operating margin of 31.5%, and free cash flow margin of 35%.
Management said Q1 FY 2026 subscription revenue growth included an approximately 75 basis point headwind from delayed closings of several large on-premise deals in the Middle East, and that FY 2026 guidance reflects a prudent view of ongoing geopolitical headwinds on deal timing.
See the full press release on ServiceNow’s Q1 FY 2026 financial results on the company website.
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Author Information
Keith Kirkpatrick is VP & Research Director, Enterprise Software & Digital Workflows for The Futurum Group. Keith has over 25 years of experience in research, marketing, and consulting-based fields.
He has authored in-depth reports and market forecast studies covering artificial intelligence, biometrics, data analytics, robotics, high performance computing, and quantum computing, with a specific focus on the use of these technologies within large enterprise organizations and SMBs. He has also established strong working relationships with the international technology vendor community and is a frequent speaker at industry conferences and events.
In his career as a financial and technology journalist he has written for national and trade publications, including BusinessWeek, CNBC.com, Investment Dealers’ Digest, The Red Herring, The Communications of the ACM, and Mobile Computing & Communications, among others.
He is a member of the Association of Independent Information Professionals (AIIP).
Keith holds dual Bachelor of Arts degrees in Magazine Journalism and Sociology from Syracuse University.
