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NOW · Q2 2026
Archived report (Q2 2026). Latest deep dive →
The quarter in brief
Revenue growth stayed strong at +24% driven by subscription demand, but GAAP operating income collapsed 55% and net income fell 23% as acquisition-related amortization, integration costs and a spike in the effective tax rate outweighed underlying momentum, masking a healthier non-GAAP operating margin story.
Net Income
$298M
down 23% y/y
Total Revenue
$3,987M
up 24% y/y
Operating Income
$162M
down 55% y/y
Gross Profit
$2,818M
up 13% y/y
All figures in $M.
| Line item | Amount and change |
|---|---|
| Subscription | $3,877 · +25% |
| Professional Services & Other | $110 · +8% |
| Total Revenue | $3,987 · +24% |
| Cost of Revenue | $1,169 · +61% |
| Gross Profit | $2,818 · +13% · 71% margin |
| Sales & Marketing | $1,372 · +22% |
| R&D | $915 · +25% |
| G&A | $369 · +36% |
| Operating Income | $162 · −55% · 4.1% margin |
| Interest Income | $70 · −40% |
| Other Income, net* | $206 · vs −$3 · incl. $273M unrealized gains on strategic investments* |
| Pre-tax Income | $438 · −7% |
| Income Tax | $140 · +63% · 32% effective rate vs 18% |
| Net Income | $298 · −23% · $0.29 diluted EPS |
Verdict: Revenue growth stayed strong at +24% driven by subscription demand, but GAAP operating income collapsed 55% and net income fell 23% as acquisition-related amortization, integration costs and a spike in the effective tax rate outweighed underlying momentum, masking a healthier non-GAAP operating margin story.
OCF $2,257M (6mo, -6% y/y) · Free cash flow $2,299M (6mo, +14%) · $225M open-market buybacks in Q2 + $2.0B ASR in Q1 · No dividend · RPO $29.0B +21% y/y · 658 customers with ACV >$5M
Source and notation
* marks non-cash / ≈ estimated. Source: ServiceNow, Inc. press release / 10-Q (SEC EDGAR).
Open as an image: NOW, Q2 2026 (PNG) ↗ · for sharing and presentations · free to reuse, CC BY 4.0
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Chart: “NOW Q2 2026: where the revenue went” by Who Reports Today, https://whoreportstoday.com/t/now/q2-2026. Licensed under CC BY 4.0.
<figure> <a href="https://whoreportstoday.com/t/now/q2-2026"><img src="https://whoreportstoday.com/t/now/q2-2026/sankey.png" alt="NOW Q2 2026: where the revenue went" loading="lazy" style="max-width:100%;height:auto"></a> <figcaption>Source: <a href="https://whoreportstoday.com/t/now/q2-2026">Who Reports Today</a>, licensed under <a href="https://creativecommons.org/licenses/by/4.0/">CC BY 4.0</a></figcaption> </figure>
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<a href="https://whoreportstoday.com/t/now/q2-2026">NOW Q2 2026 earnings chart (Who Reports Today)</a>
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- GAAP operating income fell 55% y/y mainly due to $219M intangible amortization (vs $25M prior year) and $75M acquisition-related costs from the Armis/Veza deals closed in Q2
- Non-GAAP operating income actually rose 23% to $1,173M, showing the GAAP hit is largely non-cash/one-off, not a core margin deterioration
- Effective tax rate jumped to 32% from 18%, adding ~$54M of extra tax drag versus the prior-year rate, a major driver of the net income decline
- Other income swung to +$206M from -$3M, driven by $273M of unrealized gains on strategic investments, partially offset by $66M higher interest expense from new debt issued to fund Armis
- Professional services now runs at a 26% gross loss as ServiceNow invests in partner ecosystem spend to accelerate customer value realization on newer AI products
- Balance sheet transformed post-quarter: $8.8B of cash used for Armis (~$7.6B) and Veza (~$1.2B) acquisitions, funded via $4.0B senior notes, $4.0B term loan (repaid) and $2.1B commercial paper, pushing debt from $1.5B to $7.5B
What distorts the picture in this report and what to watch beyond the headlines.
NOW — ServiceNow is a technology company that provides cloud-based platforms for digital workflow automation across enterprise operations.
It helps organizations manage IT, customer service, human resources, and other business processes efficiently.
Heads-up
- net income fell 23% y/y in Q2 2026
Net income for Q2 2026: $298M, −23% y/y. In the report's figures: costs grew faster than revenue: cost of revenue +61% y/y, g&a +36% y/y, income tax +63% y/y. Based on the Q2 2026 report.
Company filings on SEC EDGAR ↗More reports: NTAP · Q1 FY2027 · NVDA · Q2 FY2027 · NXPI · Q3 2026 · ON · Q2 2026 · ORCL · Q1 FY2027 · P · Q2 FY2027 · PANW · Q4 FY2026 · PLTR · Q2 2026 · PTC · Q3 FY2026 · Q · Q2 2026 · all reports