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.
Is now the time to buy ServiceNow? Find out by accessing our full research report, it’s free.
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.
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. 
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.
ONE MORE THING: The $21 AI Application Stock Wall Street Forgot. While Wall Street obsesses over who’s building AI, one company is already using it to print money. And nobody’s paying attention.
AI chip stocks trade at ridiculous valuations. This company processes a trillion consumer signals monthly using AI and trades at a third of the price. The gap won’t last. The institutions will figure it out. You need to see this first. Read the FREE Report Before They Notice.
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. 
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. 
Key Takeaways from ServiceNow’s Q1 Results
RPO (remaining performance obligations), cRPO, revenue, and adjusted operating income all beat, although not by large magnitudes. The company also raised full-year guidance for subscription revenue (including FX-neutral growth) and slightly raised guidance for subscription gross margin, operating margin, and free cash flow margin. On the other hand, billings missed. Overall, while this was not a good enough quarter to quell fears that ServiceNow will be hurt by advancements in AI technology. The stock traded down 15% to $87.94 immediately following the results.
ServiceNow didn’t show it’s best hand this quarter, but does that create an opportunity to buy the stock right now? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).
