Enterprise workflow automation company ServiceNow (NYSE:NOW) reported Q1 CY2026 results topping the market’s revenue expectations , with sales up 22.1% year on year to $3.77 billion. Its non-GAAP profit of $0.97 per share was in line with analysts’ consensus estimates.
ServiceNow (NOW) Q1 CY2026 Highlights:
- Revenue: $3.77 billion vs analyst estimates of $3.75 billion (22.1% year-on-year growth, 0.6% beat)
- Subscription Revenue: $3.67 billion vs analyst estimates of $3.65 billion (19% constant-FX growth, slight beat)
- Adjusted EPS: $0.97 vs analyst estimates of $0.97 (in line)
- Adjusted Operating Income: $1.20 billion vs analyst estimates of $1.18 billion (31.8% margin, 1.6% beat)
- The company provided subscription revenue guidance for the full year of $15.76 billion at the midpoint (raised from previous, beat)
- The company raised full-year constant-currency revenue growth + slightly raised full-year guidance for subscription gross profit, operating margin, and free cash flow maergin
- Operating Margin: 13.3%, down from 14.6% in the same quarter last year
- Free Cash Flow Margin: 44.2%, down from 57% in the previous quarter
- RPO: $27.7 billion vs analyst estimates of $27.4 billion (beat)
- cRPO: $12.64 billion vs analyst estimates of $12.38 billion (beat)
- Billings: $3.49 billion at quarter end, up 18.8% year on year (miss)
- Market Capitalization: $103.8 billion
“ServiceNow’s first quarter performance beat the high end of our guidance once again,” said ServiceNow Chairman and CEO Bill McDermott.
Company Overview
Built on a single code base that processes more than 80 billion workflows and 6.5 trillion transactions annually, ServiceNow (NYSE:NOW) provides a cloud-based platform that helps organizations automate and digitize workflows across departments, from IT and HR to customer service and security.
Revenue Growth
A company’s long-term sales performance is one signal of its overall quality. Any business can have short-term success, but a top-tier one grows for years. Over the last five years, ServiceNow grew its sales at a solid 23.6% compounded annual growth rate. Its growth surpassed the average software company and shows its offerings resonate with customers, a great starting point for our analysis.
ServiceNow Quarterly Revenue
We at StockStory place the most emphasis on long-term growth, but within software, a half-decade historical view may miss recent innovations or disruptive industry trends. ServiceNow’s annualized revenue growth of 21.4% over the last two years is below its five-year trend, but we still think the results suggest healthy demand.
ServiceNow Year-On-Year Revenue Growth
This quarter, ServiceNow reported robust year-on-year revenue growth of 22.1%, and its $3.77 billion of revenue topped Wall Street estimates by 0.6%.
Looking ahead, sell-side analysts expect revenue to grow 19.6% over the next 12 months, a slight deceleration versus the last two years. We still think its growth trajectory is attractive given its scale and suggests the market sees success for its products and services.
Billings
Billings is a non-GAAP metric that is often called “cash revenue” because it shows how much money the company has collected from customers in a certain period. This is different from revenue, which must be recognized in pieces over the length of a contract.
ServiceNow’s billings punched in at $3.49 billion in Q1, and over the last four quarters, its growth was impressive as it averaged 19.7% year-on-year increases. This alternate topline metric grew slower than total sales, meaning the company recognizes revenue faster than it collects cash – a headwind for its liquidity that could also signal a slowdown in future revenue growth.
ServiceNow Billings
Customer Acquisition Efficiency
The customer acquisition cost (CAC) payback period measures the months a company needs to recoup the money spent on acquiring a new customer. This metric helps assess how quickly a business can break even on its sales and marketing investments.
ServiceNow is very efficient at acquiring new customers, and its CAC payback period checked in at 25.8 months this quarter. The company’s rapid recovery of its customer acquisition costs indicates it has a highly differentiated product offering and a strong brand reputation due to its scale. These dynamics give ServiceNow more resources to pursue new product initiatives while maintaining the flexibility to increase its sales and marketing investments.