Q2 2026 ServiceNow Inc Earnings Call Transcript
Key Points
- ServiceNow Inc (NOW) reported a strong Q2 with subscription revenue growth of 23% in constant currency, exceeding the high end of their guidance.
- The company achieved a best-in-class renewal rate of 98%, highlighting the durability of customer relationships.
- ServiceNow's AI Annual Contract Value (ACV) surpassed $1 billion, with net new ACV growth accelerating sequentially by over 40% quarter over quarter.
- The company is experiencing strong demand across various workflows, with significant deals in technology, security, and CRM workflows.
- ServiceNow's strategic partnerships and AI Control Tower are driving growth in the cybersecurity sector, positioning the company as a leader in enterprise AI and cybersecurity solutions.
- Despite strong Q2 performance, the full-year subscription revenue guidance was only modestly raised, indicating potential conservatism or market uncertainties.
- There is short-term pressure on gross margins due to increased hyperscaler partnerships and accelerating AI adoption.
- The company faces competitive pressure in the AI and cybersecurity markets, with the need to differentiate its offerings from established players.
- ServiceNow's pricing strategy, which includes a hybrid model of license and usage, may face challenges in maintaining customer satisfaction amidst evolving market dynamics.
- The rapid expansion in sales and marketing headcount, partly due to M&A, could impact operating margins if not managed effectively.
Good afternoon, and thank you for joining ServiceNow's second-quarter 2026 earnings conference call. Joining me are Bill McDermott, our Chairman and Chief Executive Officer; Gina Mastantuono, our President and Chief Financial Officer; and Amit Zavery, President, Chief Product Officer and Chief Operating Officer.
During today's call, we will review our second quarter results and discuss our guidance for the third quarter and full year 2026. Before we get started, we want to emphasize that the information discussed on this call, including our guidance, is based on information as of today and contains forward-looking statements that involve risks, uncertainties and assumptions. We undertake no duty or obligation to update such statements as a result of new information or future events.
Please refer to today's earnings press release and our SEC filings, including our most recent 10-Q and 10-K for factors that may cause actual results to differ materially from our forward-looking statements. We'd also
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