Key Stats — ServiceNow (NOW) Q1 2026
- Current price: ~$85
- Q1 2026 total revenue: $3.77B, +22% YoY
- Q1 2026 subscription revenue: $3.671B, +19% YoY constant currency (above high-end guidance)
- Q1 2026 adjusted EPS: $0.97, +20% YoY
- Q1 2026 non-GAAP operating margin: 32% (50bps above guidance)
- Q1 2026 free cash flow margin: 44%
- FY2026 subscription revenue guidance: $15.735B–$15.775B (~21% constant currency growth)
- FY2026 non-GAAP operating margin guidance: 31.5%
- TIKR model price target: ~$193
- Implied upside over ~5 years: +128%
ServiceNow Q1 2026 Earnings Breakdown
ServiceNow stock posted Q1 2026 subscription revenue of $3.671B, up 19% year-over-year in constant currency and above the high end of guidance.
Adjusted EPS came in at $0.97, up 20% year-over-year.
Current RPO reached $12.64B, growing 21% in constant currency, a 100 basis point beat versus guidance.
Now Assist, ServiceNow’s AI product suite, is tracking toward $1.5B in 2026 ACV, according to Chairman and CEO Bill McDermott on the Q1 earnings call, up from a prior target of $1B.
The number of customers spending $1M or more on Now Assist grew over 130% year-over-year in Q1, with deals including three or more Now Assist products rising nearly 70% year-over-year.
EmployeeWorks, the rebranded product combining Moveworks’ conversational AI with ServiceNow’s employee portal, grew 5x year-over-year and closed more deals in Q1 than Moveworks closed in all of 2025, according to McDermott on the Q1 earnings call.
New logo ACV growth accelerated to over 50% year-over-year, including what management described as ServiceNow’s largest net new logo deal ever at over $15M.
ServiceNow executed a $2B accelerated share repurchase in Q1, buying back approximately 20.2 million shares, double the total repurchased in all of 2025.
Management raised full-year subscription revenue guidance by $205M at the midpoint to $15.735B–$15.775B, representing 20.5%–21% constant currency growth, with 125 basis points of that increase attributed to the early close of the Armis acquisition.
Q2 subscription revenue is guided to $3.815B–$3.820B, representing 21%–21.5% constant currency growth, including 125 basis points from Armis.
A 75 basis point headwind from delayed on-premise deals in the Middle East due to regional conflict weighed on Q1 subscription revenue, according to President and CFO Gina Mastantuono on the Q1 earnings call; several of those deals have already closed in Q2.
ServiceNow Stock: What the Financials Show
The Q1 income statement shows a gross margin compression story running alongside consistent revenue acceleration, with GAAP operating income coming in below recent quarterly peaks.
Total revenue reached $3.77B in Q1 2026, up 22% year-over-year, holding in line with the 22% growth rates posted in Q2 and Q3 2025.
Gross margin compressed to 75% in Q1 2026, down from 77% in Q4 2025, 77% in Q3 2025, and 78% in Q2 2025.
The Q1 2025 gross margin comparison is 79%, meaning the year-over-year compression is approximately 400 basis points over four quarters.
GAAP operating income came in at $500M in Q1 2026, below the $590M posted in Q4 2025 and $570M in Q3 2025.
GAAP operating margin was 13% in Q1 2026 versus 17% in Q4 2025, though management reported a non-GAAP operating margin of 32%, 50 basis points above guidance, according to Mastantuono on the Q1 earnings call.
The gap between GAAP and non-GAAP operating margin reflects stock-based compensation and acquisition-related costs; the non-GAAP figure is the cleaner signal for platform operating leverage.
ServiceNow Stock: Valuation Model Take
The TIKR model places a price target of ~$193 on ServiceNow stock, implying 127.5% upside from the April 23 close of ~$85.
The mid-case assumptions underlying that target model revenue growth at a 16.6% CAGR through 2030 and a net income margin of 27.8%, modestly above the 26.4% net income margin reported over the trailing year.
The Q1 results reinforce the revenue side of that model: the organic guide held flat after one quarter on a $15B revenue base, the Now Assist ACV target moved to $1.5B ahead of schedule, and the largest new logo deal in company history closed in Q1.
Near-term Armis integration costs introduce a 75 basis point operating margin headwind in FY2026, but management has committed to margin normalization by 2027, and the structural leverage thesis remains intact.
At roughly half the model’s mid-case target price, ServiceNow stock offers a significant discount to fair value if the AI consumption flywheel develops on the timeline management is projecting.
The central tension: ServiceNow stock fell 18% on a quarter where it beat every guidance metric and raised the full-year outlook, and whether that selloff is a mispricing or a rational re-rating is the only question that matters right now.
Bull Case
- The organic full-year guide held flat after Q1 on a $15B revenue base, which is consistent with how management has always guided: Mastantuono noted ServiceNow rarely raises the full-year after the smallest quarter, and the company has a long track record of conservative guidance followed by beats
- Now Assist ACV is already tracking toward $1.5B in 2026, up 50% from the original $1B target, with the number of $1M-plus Now Assist customers growing over 130% year-over-year — the AI consumption inflection is building in the underlying metrics even if it hasn’t moved the headline guide
- The largest net new logo deal in company history ($15M-plus) closed in Q1, new logo ACV grew over 50% year-over-year, and the renewal rate held at 97%, signaling no demand erosion at the customer level
- Armis adds 125 basis points to FY2026 subscription revenue growth and enters the ServiceNow distribution machine with 9 of the Fortune 10 already as customers; the near-term margin headwind of 75 basis points is a known, bounded cost with management committed to full normalization by 2027
Bear Case
- The market is pricing the absence of organic guidance acceleration: excluding Armis, the full-year subscription revenue guide did not move after a quarter where Now Assist supposedly jumped $500M in ACV trajectory, raising the question of whether the AI signal is real or a labeling change tied to the new AI-native packaging
- GAAP gross margin has compressed in each of the past four quarters, falling from 79% in Q1 2025 to 75% in Q1 2026, and the Armis integration adds cost before it adds scale, meaning margin pressure has at least two more quarters of runway before it reverses
- 50% of net new business now comes from non-seat-based pricing including tokens and consumption, a structural shift that introduces revenue variability ServiceNow has not historically carried, and management deferred the full consumption trajectory explanation to the May 4 Financial Analyst Day
- The stock traded at a significant premium to software peers entering Q1 on the expectation that AI would drive visible re-acceleration in 2026; with no organic guide raise and the long-range plan still unpublished, the multiple compression may not be finished
Should You Invest in ServiceNow, Inc.?
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