NOW · Q2 FY2026
ServiceNow, Inc. Q2 FY2026 earnings analysis
By SageNoodle ResearchBearish
| Metric | Actual | Estimate | Result |
|---|---|---|---|
| Revenue | $3.99B | $3.21B (yr ago) | Beat |
| EPS | $0.29 | $0.37 (yr ago) | Miss |
| Free Cash Flow | $0.47B | $0.53B (yr ago) | Miss |
| Gross Margin | 70.7% | 77.5% (yr ago) | Miss |
| Operating Margin | 4.1% | 11.1% (yr ago) | Miss |
What changed
Revenue increased 24.2% year over year to $3.99B, but the improvement did not reach the bottom line. Gross margin contracted 680 basis points, operating margin fell 700 basis points, EPS declined 21.6%, and free cash flow decreased 11.3%.
Impact on the investment thesis
There was no prior SageNoodle fair value to revise. We initiate fair value at $133 per share; the quarter supports the revenue-growth case but materially weakens the margin evidence, leaving the shares fairly valued at $131.17.