Review|NOW 2Q26: Pull-Forward Expected, Restrained Full-Year Guide

NOW's 2Q26 was a beat across the board: cRPO grew 21.5% YoY cc, 200bps above guidance; subscription revenue grew 23% YoY cc, 150bps above the high end of guidance; OPM of 29.5% came in 300bps above guidance. This is consistent with our preview call: early renewals ahead of the July 1 pricing cutover created a pull-forward tailwind into 2Q, compounded by recovering Federal demand; management also confirmed that roughly half of the beat came from on-prem revenue recognized early. The full-year raise, however, was restrained: the subscription revenue guide moved up only $15m at the midpoint, well below the $31m 2Q beat, leaving the implied 4Q exit rate below street expectations. The 2Q beat validates the pull forward; the restrained guide validates the other half of our call, which is that full-year visibility remains limited. On AI, AI ACV crossed $1bn as expected, and the narrative is shifting from Now Assist to AI-native SKUs and AI Control Tower, but monetization still leans on bundled pricing; the real usage inflection will need the 4Q renewal season to prove out.

A Broad Beat, But the Raise Falls Short of the Beat

• 2Q26 results:
  • cRPO grew 21.5% YoY cc (organic ~19.3% vs. guidance of ~17.3%), 200bps above guidance; cRPO balance of $13.2bn; total RPO of ~$29bn grew 22% YoY cc, with average contract duration continuing to lengthen.
  • Subscription revenue of $3,848m grew 23.0% YoY cc (guidance: 21.0-21.5%); OPM of 29.5% beat guidance by 300bps, mainly on revenue upside and marketing spend timing; FCFm of 16% came in slightly below consensus of 17%.
  • Bookings were equally strong: 123 deals with over $1m in net new ACV (+40% YoY); calculated billings grew 21% YoY, a 200bps improvement from 19% in 1Q; renewal rate of 98%.