Summary
ServiceNow, Inc. (NOW) reported its first quarter 2026 results, showcasing continued strong revenue growth, albeit with a slight deceleration in gross profit margin. Total revenues for the quarter reached $3.77 billion, a 22% increase year-over-year, driven by a 22% rise in subscription revenues to $3.67 billion. This indicates robust demand for ServiceNow's platform and workflow solutions. However, the cost of subscription revenues increased by 46%, leading to a decrease in the subscription gross profit margin from 81% to 78%. This was attributed to increased headcount, higher cloud service costs, and amortization from recent acquisitions. The company demonstrated a strong commitment to shareholder returns through an aggressive share repurchase program, repurchasing $2.23 billion in the quarter, significantly more than the $398 million repurchased in the prior year's quarter. Notably, the company also announced a significant $7.8 billion acquisition of Armis Security Ltd. shortly after the quarter's end, signaling a strategic move to expand its cybersecurity offerings. While operating expenses grew, the company's net income remained strong at $469 million. Investors should monitor the integration of recent and announced acquisitions and the impact of rising costs on profitability margins.
Financial Highlights
52 data points| Revenue | $3.77B |
| Cost of Revenue | $940.00M |
| Gross Profit | $2.83B |
| R&D Expenses | $823.00M |
| Operating Expenses | $2.33B |
| Operating Income | $503.00M |
| Net Income | $469.00M |
| EPS (Basic) | $0.45 |
| EPS (Diluted) | $0.45 |
| Shares Outstanding (Basic) | 1.04B |
| Shares Outstanding (Diluted) | 1.04B |
Key Highlights
- 1Total revenues grew 22% year-over-year to $3.77 billion, with subscription revenues up 22% to $3.67 billion.
- 2Subscription gross profit margin decreased from 81% to 78%, primarily due to increased cost of revenues related to cloud services and acquisitions.
- 3Operating expenses increased, with Sales & Marketing up 15%, R&D up 17%, and G&A up 26% year-over-year.
- 4Net income was $469 million, a slight increase from $460 million in the prior year's quarter.
- 5Remaining Performance Obligations (RPO) reached $27.7 billion, with 46% expected to be recognized in the next 12 months (cRPO).
- 6The company aggressively repurchased $2.23 billion of its common stock in the quarter, a substantial increase from the prior year.
- 7ServiceNow announced the acquisition of Armis Security Ltd. for approximately $7.8 billion in cash shortly after the quarter end, signaling a major expansion into cybersecurity.