2026 07 22 Earnings NOW Q2 Fy2026
NOW Q2 beat: subscription rev +23% cc, cRPO +21.5% cc, op margin 29.5%; FY sub-rev guide raised to $15.77B (+21%). AI ACV crossed $1B toward $1.5B; McDermott directly rebuts seat compression — '50% of net-new business is already non-seat-based.'
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ServiceNow beat and raised on its 2026-07-22 (AMC) Q2 call. The load-bearing causal claim for this project: CEO Bill McDermott directly addressed seat compression — the core risk in agentic-ai-seat-erosion-to-saas-rerate — arguing the model is already migrating off seats faster than agents erode them: "Are we worried about seat compression? Not at all. Our addressable user base is growing and 50% of our net new business is already non-seat-based." The hybrid (license + usage) pricing structure and 20–30% AI-SKU uplifts are the mechanism by which agentic AI adds ACV rather than cannibalizing seats. AI ACV crossed $1B, on track to $1.5B by end-2026; agentic-AI production customers up 9x in nine months; AI net-new ACV +40% QoQ.
Fetch note (fidelity: partial). Captured via
WebFetchagainst the Benzinga full-transcript page; the tool returned speaker-labeled key excerpts + verbatim quotes, not the complete word-for-word Q&A. The load-bearing management causal claims and guidance numbers below are verbatim as returned. A fuller transcript (Motley Fool had only Q1 at fetch time; Q4inc webcast + Seeking Alpha/Benzinga host the full text) can be re-pulled if a step needs Q&A detail. Treat management statements as claims with an interest behind them, corroborated like any source.
Transcript (speaker-labeled key excerpts — verbatim quotes)
Bill McDermott (Chairman & CEO): Subscription revenue grew "23% in constant currency, 1.5 points above the high end of our guidance." Current RPO (cRPO) grew "21.5% in constant currency, more than 2 points above our guidance." Operating margin was "29.5%, 3 points above our guidance." "123 deals greater than a million in net new ACV, up 40% year over year."
Bill McDermott (on seat compression / AI pricing): "Are we worried about seat compression? Not at all. Our addressable user base is growing and 50% of our net new business is already non-seat-based."
Gina Mastantuono (President & CFO): Q2 subscription revenues were "$3.877 billion, growing 23% year over year in constant currency." Total RPO "approximately 29 billion, representing 22% year-over-year constant currency growth." Full-year subscription revenue guidance raised to "15.770 billion, representing 21% year-over-year growth." "Non-GAAP operating margin was 29.5%, 300 basis points above our guidance."
Gina Mastantuono (on new AI SKUs): the pricing "uplifts are in line with what we talked about, being 20% to 30%."
AI ACV performance (management remarks): AI ACV crossed "a billion," "well on our way to the 1.5 billion" target by year-end 2026. Agentic-AI production customers "increased 9x over the last nine months." AI net-new ACV "accelerating sequentially, growing over 40% quarter over quarter."
Amit Zavery (President, COO & CPO — on consumption vs seat pricing): described the "hybrid pricing structure which we introduced, where it's a combination of license and usage."
Q&A participants (firms): analysts from Goldman Sachs, Wells Fargo, Bank of America, J.P. Morgan, Citi, and RBC Capital Markets probed guidance mechanics, AI adoption, cybersecurity integration, and competitive positioning. (Full Q&A text at the source URL / the Q4inc webcast: https://events.q4inc.com/attendee/794729192 .)