ServiceNow kicked off its 2026 earnings season with a strong first quarter, beating its own guidance across every major metric and raising its full-year outlook – yet the results were met with a roughly 13 percent drop in after-hours trading, reflecting lingering investor uncertainty about the pace of the company's AI-driven growth.
Subscription revenue came in at $3.67 billion, up 22 percent year on year, above the high end of guidance.
Current remaining performance obligations – contracted revenue expected to be recognised in the next 12 months – grew 21 percent in constant currency to $12.64 billion, a 100 basis point beat.
Full-year subscription revenue guidance was raised to between $15.74 billion and $15.78 billion, implying growth of roughly 22-22.5 percent.
AI Is the Central Narrative
CEO Bill McDermott used the call to lay out five areas of what he called "hyper-growth" for the business: core IT, AI security, AI-native CRM, the employee experience front door, and Workflow Data Fabric.
His argument across all five was consistent – that ServiceNow's 22 years of enterprise workflow data, its Context Engine, and its position as the operational backbone of large enterprises gives it an advantage that AI model providers cannot replicate.
The platform has processed 95 billion workflows and more than 7 trillion transactions, he said, and that accumulated context is what makes AI decisions trustworthy and auditable at enterprise scale.
Now Assist, the company's core AI product, continues to outperform.
The number of customers spending more than $1 million in annual contract value grew over 130 percent year on year.
McDermott also disclosed – ahead of a planned Financial Analyst Day announcement – that the company's AI ACV target for 2026 has been raised from $1 billion to at least $1.5 billion.
Acquisitions Taking Shape
Three acquisitions featured prominently throughout the call.
Moveworks, the conversational AI company acquired earlier this year, was rebranded and integrated with ServiceNow's employee experience products to launch EmployeeWorks in February – a unified AI front door that connects natural language requests to governed workflows across enterprise systems.
In its first full quarter inside ServiceNow, Moveworks closed more seven-figure deals than it had in the entirety of the prior year.
Armis, the cybersecurity asset visibility company acquired for roughly $8 billion and closed ahead of schedule, gives ServiceNow what McDermott described as a complete end-to-end security stack – combining Armis's real-time device discovery with Veza's identity governance and ServiceNow's existing security and workflow capabilities.
Armis is already deployed across nine out of ten Fortune 10 companies, and McDermott was explicit that the security opportunity is one of the largest he has seen in his time at the company.
Both acquisitions bring near-term margin headwinds, and ServiceNow CFO Gina Mastantuono was clear that full normalisation is not expected until 2027.
