ServiceNow, Inc.

NOW · NYSE · USD

Analysis

Last 4 earnings calls · through Q2 FY2026

ServiceNow's growth is speeding up rather than slowing, and it is buying its way deeper into AI and security before the revenue from either fully arrives. Management beats its own guidance most quarters, then trims the margin target that pays for the growth.

  • Guidance keeps getting beaten, and the beats are getting bigger.

    Management guided 2026 to 20% growth and keeps beating it: Q2 FY2026 subscription revenue grew 23% in constant currency, ahead of the top of the range. Each quarter of overdelivery makes the AI pitch read as fact rather than marketing. How much of the Q2 FY2026 beat was on-prem revenue pulled forward?

  • The new products, not the old ones, are doing the accelerating.

    Half of net new business now comes from outside seat licences, AI bookings passed $1 billion, and the security business it bought is its fastest-growing large line. That makes the next wave of usage revenue visible rather than promised. How much of the AI bookings target is usage revenue rather than subscription?

  • The costs of the AI build land before the revenue it earns.

    Gross margin has fallen from about 80% to 71% as more computing moves to rented cloud capacity, and management has cut its subscription gross-margin target in every guide since. The cost of running AI lands now, the usage revenue later. How much of the gross-margin drop is rented capacity versus AI inference cost?

Bullish
  • AI lifts core platform
    The bull case is that AI products sell faster than planned and pull the wider platform into each deal, so AI raises revenue per customer rather than replacing the core.
  • Consumption pricing on AI usage
    Because a large share of new business now carries usage-based pricing, the bull argues that growing AI consumption adds revenue automatically once customers put agents into production.
  • Renewal base and large customers
    Renewal rates stay near total and the count of very large customers keeps climbing, which the bull case treats as evidence that the installed base will keep expanding.
Bearish
  • Hyperscaler hosting costs
    The bear case is that running more workloads on hyperscalers and paying for AI inference lowers gross margin, and management has now guided that margin down in two straight quarters.
  • Acquisition spending and debt
    Three acquisitions in a year turned net cash into net debt and added integration cost, which the bear says offsets the efficiency gains management credits to internal AI use.
  • Competition for AI budgets
    Foundation model providers and established security vendors are chasing the same enterprise AI budgets, so the bear argues ServiceNow must keep spending to hold its position.
See the full bull & bear case
PoliticiansInstitutionsInsiders
PoliticianTransactionAmountTradedFiled
Donald Trump
Republican · Executive
Sale≥$1KAug 24Oct 8
Donald Trump
Republican · Executive
Purchase≥$15KAug 17Oct 8
Donald Trump
Republican · Executive
Purchase≥$1KAug 10Oct 8
Donald Trump
Republican · Executive
Purchase≥$100KJul 27Sep 22
Donald Trump
Republican · Executive
Purchase≥$1KJul 24Sep 22

Congressional trading data provided by QuiverQuant

See all
Product segmentsGeography
FY2025 · USD

How ServiceNow turned $13.3B of revenue into $1.8B of operating income.

Revenue
License and Service$12.9B
Technology Service$395.0M▲ 16.86% YoY
Total revenue$13.3B
Gross profit$10.3B77.5%
Operating income$1.8B13.7%
See all