Strong Top-Line Revenue Growth
Revenue grew 22.1% YoY to $3.77B in Q1 2026 from $3.09B in Q1 2025, reflecting continued enterprise demand for ServiceNow's platform and workflow automation solutions.
Source: 10-Q Income Statement
Computed from published fixed rules, not a model's judgement — though one input, the count of high-severity risks, comes from the AI analysis below.
Not investment advice and not a price target: it scores the quarter's fundamentals, not the stock. Full methodology →
AI Takeaway
ServiceNow delivered strong Q1 2026 revenue growth of 22.1% YoY to $3.77B, but margin compression and a massive $2.23B share buyback drove cash lower and kept net income growth to just 2.0%.
Revenue
$3.77B
+22.09% YoY
EPS (Diluted)
$0.45
+2.27% YoY
Gross Margin
75.1%
-3.9 pts YoY
Operating Income
$503M
+11.53% YoY
Source: SEC XBRL
ServiceNow (NOW) reported Q1 FY2026 revenue of $3.77B, up 22.1% year over year. Operating margin was 13.3%, down 1.3 points from 14.6% a year earlier. Operating cash flow was $1.67B, down 0.4% year over year. NOW's fiscal Q1 FY2026 corresponds to calendar Q1 2026.
Last 4 quarters: 3 beats
| Quarter | Actual EPS (USD) | Consensus (USD) | Result |
|---|---|---|---|
| Jun 2026 | 0.90 | 0.86 | Beat +4.3% |
| Mar 2026This filing | 0.97 | 0.97 | Miss -0.3% |
| Dec 2025 | 0.92 | 0.89 | Beat +3.2% |
| Sep 2025 | 0.96 | 0.86 | Beat +11.8% |
Adjusted (non-GAAP) EPS of $0.97 versus the $0.97 analyst consensus — a -0.3% miss for Mar 2026. Analyst consensus is quoted on the adjusted (non-GAAP) basis the street uses. GAAP diluted EPS for this quarter was $0.45.
Compiled by AI from this SEC filing
Revenue grew 22.1% YoY to $3.77B in Q1 2026 from $3.09B in Q1 2025, reflecting continued enterprise demand for ServiceNow's platform and workflow automation solutions.
Source: 10-Q Income Statement
Gross margin declined 385 basis points YoY to 75.1% from 78.9%, as Cost of Revenue surged 44.4% YoY to $940M — significantly outpacing revenue growth — indicating rising infrastructure, cloud delivery, or AI-related costs.
Source: 10-Q Income Statement
R&D expense increased 17.1% YoY to $823M, representing approximately 21.8% of revenue, signaling continued heavy investment in product innovation, likely including AI and platform capabilities.
Source: 10-Q Income Statement
ServiceNow repurchased $2.23B in shares during Q1 2026, a 646.6% increase from $298M in Q1 2025, which substantially drove financing cash outflows of -$2.24B and reduced cash & equivalents by 19.8% YoY to $2.70B.
Source: 10-Q Cash Flow Statement
Current ratio fell to 0.84 (below 1.0), with current liabilities rising 20.9% YoY to $9.98B while current assets declined 9.0% YoY to $8.44B, suggesting near-term liquidity is tighter than the prior year period.
Source: 10-Q Balance Sheet
Compiled by AI from this SEC filing · 1 high, 4 medium, 0 low
Cost of Revenue grew 44.4% YoY versus revenue growth of 22.1%, compressing gross margin by ~385 bps to 75.1%. If cost pressures from cloud infrastructure, AI compute, or professional services continue to outpace revenue growth, profitability could be further impacted.
Source: 10-Q Income Statement
The current ratio stands at 0.84, meaning current liabilities of $9.98B exceed current assets of $8.44B. This is partly structural (deferred revenue is a large current liability), but the deterioration from prior periods warrants monitoring, especially given the large cash outflow from buybacks.
Source: 10-Q Balance Sheet
The $2.23B share buyback in a single quarter represents an unusually large capital deployment, reducing cash by nearly $667M YoY to $2.70B. Sustained buybacks at this pace could constrain financial flexibility for acquisitions or unexpected operational needs.
Source: 10-Q Cash Flow Statement
Operating income grew only 11.5% YoY to $503M despite 22.1% revenue growth, and operating margin contracted 126 bps to 13.3%. This suggests operating expenses are scaling faster than revenue, reducing the benefit of scale.
Source: 10-Q Income Statement
Net income grew just 2.0% YoY to $469M despite 22.1% revenue growth, indicating that cost increases, higher D&A (up 61.3% YoY to $258M), and other below-the-line items are significantly diluting earnings growth.
Source: 10-Q Income Statement & Cash Flow Statement
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Revenue $B | 3.77 $B | 3.09 $B | +22.09% |
Cost of Revenue $M | 940.00 $M | 651.00 $M | +44.39% |
Gross Profit $B | 2.83 $B | 2.44 $B | +16.13% |
Operating Income $M | 503.00 $M | 451.00 $M | +11.53% |
Net Income $M | 469.00 $M | 460.00 $M | +1.96% |
EPS (Basic) $ | 0.45 $ | 0.44 $ | +2.27% |
EPS (Diluted) $ | 0.45 $ | 0.44 $ | +2.27% |
R&D Expense $M | 823.00 $M | 703.00 $M | +17.07% |
Answers draw on this SEC filing and the data on this page
ServiceNow's Q2 FY2026 revenue grew 24% year-over-year to $3.987B, but operating margin compressed sharply to 4.1% (from 11.1%) and net income fell 22.6% to $298M, driven primarily by higher amortization of acquired intangibles, elevated stock-based compensation, and a professional services gross loss.
ServiceNow (NOW) delivered strong FY2025 results with revenue growing 20.9% to $13.28B and operating cash flow surging 27.6% to $5.44B, while operating margin expanded 130 bps to 13.7% despite a slight gross margin compression.
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