ServiceNow Inc. reported first‑quarter 2026 revenue of $3.77 billion, up 22% year‑over‑year, and subscription revenue of $3.67 billion, also a 22% increase. The figures surpassed consensus estimates of $3.75 billion for total revenue and $3.65 billion for subscription revenue, reflecting strong demand for the company’s AI‑enabled platform and continued expansion of its workflow automation suite.
Adjusted earnings per share were $0.97, matching the consensus estimate of $0.95. The company’s ability to keep earnings in line with expectations was driven by disciplined cost management and a favorable mix of high‑margin AI‑related contracts, which offset the impact of integration costs from the recently closed Armis acquisition.
ServiceNow raised its full‑year subscription‑revenue outlook to $15.735 billion–$15.775 billion, up from the prior guidance of $15.53 billion–$15.57 billion. The company also revised its operating‑margin guidance to 31.5% for 2026, a 50‑basis‑point decline from the 32% target previously set, and its free‑cash‑flow‑margin guidance to 35%, down 100 basis points from the 36% forecast. Management cited a 75‑basis‑point headwind to subscription‑revenue growth from delayed closures of large on‑premise deals in the Middle East and a 200‑basis‑point headwind to free‑cash‑flow margin from the Armis integration as the primary reasons for the margin adjustments. The company reaffirmed its AI‑related annual recurring revenue target of $1.5 billion for the year.
Bill McDermott, Chairman and CEO, said, "ServiceNow’s first‑quarter performance beat the high end of our guidance once again. Since our founding, we’ve built our platform around the work customers need to accomplish. Today, they rely on ServiceNow to be their AI control tower for business reinvention." Gina Mastantuono, President and CFO, added, "We now expect subscription gross margin of 81.5% and operating margin of 31.5% and free cash flow margin of 35%." She also noted that the early close of the Armis acquisition "meaningfully expands our TAM and accelerates our subscription revenue growth trajectory."
Investors reacted to the guidance revisions, focusing on the lowered margin targets and the 75‑basis‑point subscription‑revenue headwind from Middle East deal delays. Despite the margin adjustments, the company’s strong AI momentum and raised revenue outlook reinforced confidence in its long‑term growth trajectory.
Prior quarter comparisons highlight the acceleration of subscription revenue growth: Q1 2025 subscription revenue was $3,005 million, and Q4 2025 was $3,466 million, both showing year‑over‑year increases of 19% and 21% respectively. The company also reported 16 transactions over $5 million in net new annual contract value, an 80% year‑over‑year rise, underscoring robust demand for its high‑margin AI and security offerings. In Q1 2026, free‑cash‑flow margin reached 44%, but the guidance of 35% reflects the expected impact of the Armis integration and the Middle East headwind.
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