ServiceNow, Inc. is expected to release its Q3 2026 10-Q filing in the upcoming earnings season. Last quarter: 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.
Drawn from management commentary in the Q2 2026 10-Q:
Remaining performance obligations (RPO) reached $29.0 billion as of June 30, 2026, up 21% year-over-year, with current RPO (cRPO, revenue expected in next 12 months) representing 46% of the total. The number of customers with annual contract value (ACV) greater than $5 million grew to 658 from 533 a year earlier, and the renewal rate held steady at 98%.
Total gross profit percentage fell to 71% for the quarter (from 77% a year ago), with subscription gross margin declining to 73% from 80% and professional services swinging to a 26% gross loss from a 3% gross profit. Management attributes this to $153M higher amortization of acquired intangibles, increased data center/cloud costs, and rising personnel costs, and expects subscription gross margin to continue declining for full-year 2026.
Total stock-based compensation increased 31% YoY to $655M (16% of revenue), driven by new grants and acquisition-related awards. R&D expense rose 25% to $915M and G&A rose 36% to $369M, partly due to $61M higher outside services tied to recent acquisitions.
Revenue
$3.99B
++24.01% YoY
EPS (Basic)
$0.29
-21.62% YoY
Gross Margin
70.7%
-6.80% YoY
Operating Income
$162M
-54.75% YoY
Add NOW to your watchlist to get the AI analysis in your inbox within minutes of the 10-Q filing.