ServiceNow’s first quarter results were met with a significant negative market reaction, despite revenue exceeding Wall Street’s expectations. Management attributed performance to strong demand for its AI-native platform, notable expansion in large enterprise deals, and successful integration of recent acquisitions such as Moveworks. CEO Bill McDermott emphasized that “AI is the biggest tailwind ServiceNow has ever experienced,” citing rapid adoption of Now Assist and substantial growth in multi-product deals as key contributors to quarterly momentum. However, management acknowledged delayed on-premise deal closings in the Middle East due to geopolitical conflict, which affected recognized revenue timing and contributed to margin compression.
Is now the time to buy NOW? Find out in our full research report (it’s free for active Edge members).
ServiceNow (NOW) Q1 CY2026 Highlights:
- Revenue: $3.77 billion vs analyst estimates of $3.75 billion (22.1% year-on-year growth, 0.6% beat)
- Adjusted EPS: $0.97 vs analyst estimates of $0.97 (in line)
- Adjusted Operating Income: $1.20 billion vs analyst estimates of $1.18 billion (31.8% margin, 1.6% beat)
- The company provided subscription revenue guidance for the full year of $15.76 billion at the midpoint
- Operating Margin: 13.3%, down from 14.6% in the same quarter last year
- Annual Recurring Revenue: $14.68 billion (22.2% year-on-year growth, beat)
- Billings: $3.49 billion at quarter end, up 18.8% year on year
- Market Capitalization: $93.32 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From ServiceNow’s Q1 Earnings Call
- Mark Murphy (JPMorgan) asked about the impact of delayed Middle East on-premise deals. CEO Bill McDermott explained that delays were tied to regional conflict, but emphasized these were timing issues and not expected to have lasting effects on the business.
- Brad Zelnick (Deutsche Bank) inquired about ServiceNow’s AI control tower differentiation in a crowded space. President and Chief Product Officer Amit Zavery highlighted the unique “context engine” and platform openness as key competitive advantages.
- Gabriela Borges (Goldman Sachs) questioned potential pricing pressure on core offerings as customers invest more in AI modules. McDermott responded that AI innovation is reinvigorating the core platform and leading to greater cross-sell opportunities, not margin dilution.
- Keith Weiss (Morgan Stanley) sought clarity on organic versus inorganic growth and the timing of AI-driven acceleration. CFO Gina Mastantuono clarified that small M&A contributions did not materially affect Q1 results and that AI revenue guidance was raised significantly.
- Michael Turrin (Wells Fargo) asked about customer feedback on recent M&A and ramp time for new products. McDermott and Mastantuono said customer response has been positive, with strong early results from Moveworks and a prudent approach to integrating new acquisitions into guidance.
Catalysts in Upcoming Quarters
Looking ahead, the StockStory team will be monitoring (1) the pace of AI-native product adoption and enterprise-wide deployments, (2) successful integration and revenue contribution from Armis, Moveworks, and Veza, and (3) margin trends as the company balances ongoing investment with operational efficiency. We will also watch for updates on ServiceNow’s hybrid pricing model and its impact on large customer retention and expansion.
ServiceNow currently trades at $90.51, down from $103.07 just before the earnings. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free).
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