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An enterprise software maker whose AI platform connects systems and automates everyday workflows — IT help desks, HR, finance, security, and customer service — for big companies and government agencies, with tools like Now Assist for AI agents. Founded by Fred Luddy in 2004 after his prior company collapsed, he built the platform alone from home on a single laptop. It was first called Glidesoft — reportedly inspired by a pilot announcing a plane was "gliding" in — before being renamed ServiceNow to reflect delivering services now.
Q2 FY2026 GAAP operating income fell 55% to $162M on $219M acquisition intangible amortization
Acquisition costs cut Q2 by more than half. rose 24% to $4.0B and subscription fell to 73% from 80% as rose to $219M from $25M. The company is growing but its reported earnings now carry the weight of recent deals.
Key takeaways
dropped 55% to $162M as rose 31% to $655M and of purchased intangibles rose to $219M from $25M a year earlier.
Total rose 24% to $4.0B, driven by a 25% increase in subscription revenue to $3.9B from new and existing customer purchases.
Subscription declined to 73% from 80% a year ago, pressured by higher cloud and personnel costs and a $153M increase in .
Section summaries
Management's Discussion and Analysis
Subscription revenue grew 25% YoY to $3.9B in Q2 FY2026, while GAAP operating income fell 55% to $162M on higher acquisition-related costs.
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Total revenues rose 24% to $4.0B, driven by a 25% increase in subscription revenues from new and existing customer purchases.
Subscription declined to 73% from 80% a year ago, pressured by higher cloud service costs, personnel expenses, and a $153M increase in of acquired intangibles.
grew 21% to $29.0B and customers with over $5M in annual contract value expanded to 658 from 533.
The company issued $4.0B in fixed-rate and set up a $3.0B , ending with $6.7B in cash and marketable securities.
rose 14% to $2.3B for the first half after adjusting for $297M in , while decreased 6% to $2.3B.
What changed
Q2 FY2026 subscription fell to 73% from 78% in Q1 FY2026 and 80% a year earlier, extending the decline flagged in the FY2025 10-K where management expected a slight decrease from infrastructure and regulated-market costs.
growth held near the ~22% pace flagged to watch: Q2 rose 24% to $4.0B versus Q2 FY2025's 22.4% and Q1 FY2026's 22.1%, not resuming the longer-run decline below prior years.
grew 21% to $29.0B, below the 25% rise to $27.7B in Q1 FY2026, after FY2025 closed at $28.2B up 27%.
The Department of Justice investigation into U.S. government contracting practices carried over from the FY2025 10-K remained a stated risk with no resolution reported.
risk from the more than doubled $3.6B after Moveworks and Logik.io was carried forward; Q2's $219M intangible reflects those acquisitions' ongoing cost.
The company issued $4.0B in in May 2026 and added a $3.0B , materially changing the balance sheet from the $1.491B and $2.702B cash at Q2 FY2026 quarter-end in the table.
What to watch
Q3 FY2026 subscription after it fell to 73% to see if cloud, personnel, and intangible costs pull it lower.
Q3 FY2026 after the 55% drop to $162M and whether of purchased intangibles stays near $219M.
Resolution of the Department of Justice investigation into U.S. government contracting practices.
Pace of deployment under the new $3.0B and use of the $4.0B proceeds.
dropped 55% to $162M, as rose 31% to $655M and surged to $219M from $25M.
decreased 6% to $2.3B for the first half, while rose 14% to $2.3B after adjusting for $297M in business combination costs.
grew 21% to $29.0B, and the number of customers with over $5M in expanded to 658 from 533.
The company issued $4.0B in senior notes and established a $3.0B , ending the quarter with $6.7B in cash and marketable securities.
We are party to certain litigation and other legal proceedings. While legal proceedings are inherently unpredictable and subject to uncertainties, we do not believe that the ultimate resolution of any such proceedings, whether taken individually or in the aggregate, is likely to…
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We are party to certain litigation and other legal proceedings. While legal proceedings are inherently unpredictable and subject to uncertainties, we do not believe that the ultimate resolution of any such proceedings, whether taken individually or in the aggregate, is likely to have a material adverse effect on our business, financial position, results of operations or cash flows.
For additional information regarding legal proceedings, see Note 17 “Commitments and Contingencies” in the notes to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q.
The Company’s business, financial condition, results of operations and stock price can be affected by a number of factors, whether currently known or unknown, including those described under the section “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the…
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The Company’s business, financial condition, results of operations and stock price can be affected by a number of factors, whether currently known or unknown, including those described under the section “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025, which was filed with the SEC on January 29, 2026. When any one or more of these risks materialize from time to time, the Company’s business, financial condition, results of operations and stock price can be materially adversely affected. There have been no material changes to the Company’s risk factors since our Annual Report on Form 10-K.
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