AI interpretation based on checked source excerpts. Issuer assertions and evidence limitations remain explicit.
Policy quality-scores-2: six equally weighted categories. The overall score requires full coverage. Missing inputs are not zero. Qualitative grades are sourced interpretations, not probabilities. 5/6 · 18/10/2026
Moat69
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
structural advantage · 3/4 · Integration and configuration requirements, sustained renewals and non-cancellable commitments together support strong evidence of switching costs. Replacement costs are inferred from the operating structure rather than directly quantified.
durability · 3/4 · Annual 98% renewals across 2021–2025 and typical three-year contracts demonstrate persistence. The first-quarter 2026 dip and rapidly evolving competition prevent an exceptional grade.
customer dependency · 3/4 · Complex integrated deployments, strong actual renewals and substantial contracted obligations indicate customer reliance. Renewals omit most contraction, so they do not prove unchanged spending or universal mission-critical dependence.
erosion resilience · 2/4 · Renewals remain strong and paid AI adoption shows adaptation, balanced against low entry barriers, bundling and integration dependence. These risks are possibilities rather than demonstrated widespread displacement, while resilience through a full AI transition remains unproven.
Pricing power63
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
realized pricing · 2/4 · Now Assist is offered at additional cost and reported 2025 ACV exceeded $600 million, supporting realized paid monetization. This does not establish comparable-product price increases or reveal discounts and cannibalization. The 2026 ACV forecast is excluded from demonstrated outcomes.
retention · 3/4 · Actual renewal history demonstrates strong repeat demand, including 98% for the first half of 2026 despite a 97% first-quarter result. This ACV-based attrition measure excludes price changes and most contraction; it is not net revenue retention.
margin resilience · 3/4 · GAAP operating income increased from $1.364 billion in 2024 to $1.824 billion in 2025 alongside reported subscription growth, supporting operating resilience. The 31% non-GAAP margin excludes substantial compensation and other costs; neither the margin nor its improvement establishes pricing as the cause. Current 2026 margin evidence is limited.
contractual freedom · 2/4 · Generally non-cancellable subscription terms protect agreed revenue, but typical multi-year arrangements do not establish unilateral repricing rights. Public-sector termination rights and price-protection provisions constrain freedom. Evidence supports a mixed contractual position rather than unrestricted control of terms.
Predictability100
Five consecutive annual periods. Equal weights: nondeclining revenue frequency; revenue-growth volatility (5–40pp); positive FCF frequency; FCF-margin volatility (3–20pp). Stability indicator, not a growth forecast.
- Nondeclining revenue years (%)
- 100.00
- Revenue growth volatility (pp)
- 1.06
- Positive FCF years (%)
- 100.00
- FCF margin volatility (pp)
- 1.66
Financial strength80
Equal-weight grades: debt/FCF (1–8x), net debt/earnings before interest and tax (0–5x), interest service (1–12x), current ratio (0.75–2x). Earnings use reported operating income, or reported pretax profit plus reported interest expense when operating income is unavailable. Interest service uses earnings/interest expense; if unavailable, it uses reported operating cash flow/cash interest paid, without relabeling cash paid as accrued expense. Nonpositive cash flow/earnings score 0 for their service component; reported zero interest with a positive numerator scores 100. Net cash scores 100 for net leverage. Missing disclosures remain unavailable. General nonfinancial-company rubric, not a credit rating; exceptional and nonoperating gains are not normalized out. IFRS finance-cost and cash-flow classifications retain their reported scope.
- debtFcfGrade
- 100.00
- netDebtEbitGrade
- 100.00
- interestCoverageGrade
- 100.00
- currentRatioGrade
- 20.21
- Debt / FCF (x)
- 0.33
- Net debt / operating income (x)
- -1.23
- Current ratio (x)
- 1.00
- cashInterestPaid
- 22.00
- cashInterestCoverage
- 247.45
Capital allocation—
Missing required inputs: operatingReturn. Three-year equal-weight indicators: pretax return on average invested capital (0–25%; equity + debt − cash, each year and its prior year), share-count growth (0–5%, lower better), share-based cost/revenue (2–20%, lower better), consolidated FCF/net income (0–1x). Return uses reported operating income or, if unavailable, EBIT calculated from reported pretax profit plus reported interest expense; exceptional/nonoperating gains are not normalized out. Share-based cost uses the reported cash-flow add-back or, if absent, separately reported recognized compensation expense; the latter never becomes an FCF adjustment. Nonpositive net income scores 0 for cash conversion; absent income/FCF stays unavailable. Nonpositive invested capital has no defined return and remains unavailable. Does not establish acquisition quality or buyback timing.
- 3-year average dilution (%)
- 0.97
- 3-year average SBC / revenue (%)
- 16.17
- cashConversionGrade
- 100.00
Management63
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
capital discipline · 2/4 · Strong 2025 cash generation and repurchases exceeding employee-plan issuance in the first half of 2026 support discipline. Against this, Armis required $7.6 billion cash, debt increased materially, substantial purchase commitments remain, and first-half operating cash flow declined with acquisition-related costs. Acquisition returns and repurchase value creation are not established.
incentive alignment · 3/4 · Implemented three-year performance periods and cliff vesting, a 60% performance-based LTI mix, ownership guidelines and hedging restrictions support strong alignment mechanisms. Actual performance-award vesting is disclosed. Time-based awards and further approved equity capacity create dilution exposure; ownership balances and guideline compliance are unverified.
execution · 3/4 · Reported subscription growth, improved GAAP operating income, sustained renewals and paid AI adoption demonstrate strong operating execution. These are operating outcomes rather than proof of management's exclusive contribution. Lower first-half 2026 cash flow and unproven acquisition synergies limit the assessment.
governance · 2/4 · Independent committees, implemented compensation responses and removal of supermajority voting provisions are concrete safeguards. The board also found actual hiring-related policy violations involving the former President and COO; departure and cooperation demonstrate corrective action, while the government investigation remains unresolved. This supports a mixed grade, without assuming legal guilt or a future sanction.
Evidence
These customers tend to require considerable time evaluating our portfolio of products and testing our platform prior to making a purchasing decision, require multiple levels of review and approval from a broader set of buyers and stakeholders, and demand more configuration, integration services and features, particularly when switching from legacy on-premises solutions.
Risk Factors / enterprise evaluation, configuration and integration requirements · Filed 29/01/2026
Building on this foundation, our platform’s architecture, developed over years of iteration with customer feedback, allows organizations to deploy AI-enhanced workflows without replacing their existing technology infrastructure or disrupting established processes.
Business / platform integration with existing infrastructure; issuer description · Filed 29/01/2026
Subscription services arrangements typically have a three-year duration, and we have experienced a renewal rate of 98% for each of the years ended December 31, 2023, 2022 and 2021.
MD&A / contract duration and annual renewal rates for 2021–2023 · Filed 25/01/2024
Our renewal rate was 98% for each of the years ended December 31, 2025, 2024 and 2023.
MD&A / annual renewal rates for 2023–2025 · Filed 29/01/2026
Our renewal rate was 98% for each of the three and six months ended June 30, 2026 and 2025.
MD&A / second-quarter and first-half 2026 renewal rates · Filed 23/07/2026
Subscription services arrangements typically have a three-year duration, and we have experienced a renewal rate of 98% over the last three years.
MD&A / typical subscription duration · Filed 23/07/2026
As of June 30, 2026, the total non-cancellable RPO under our contracts with customers was $29.0 billion and we expect to recognize revenues on approximately 46% of these RPO over the following 12 months.
Note 10 / non-cancellable RPO at June 30, 2026 · Filed 23/07/2026
Our contracts are generally non-cancellable during the subscription term, though a customer can terminate for breach if we materially fail to perform.
MD&A / non-cancellation and termination for material failure to perform · Filed 23/07/2026
Our renewal rate was 97% and 98% for the three months ended March 31, 2026 and 2025, respectively.
MD&A / first-quarter 2026 renewal rate decline · Filed 23/04/2026
Our attrition rate for a period is equal to the ACV from customers lost during the period, divided by the sum of (i) the total ACV from all customers that renewed during the period, excluding changes in price or users, and (ii) the total ACV from all customers lost during the period.
MD&A / renewal calculation excludes price and user changes · Filed 23/07/2026
Further, our renewal rate does not reflect increased or decreased purchases from our customers to the extent such customers are not lost customers or lapsed renewals.
MD&A / renewal metric excludes most purchase expansion and contraction · Filed 23/07/2026
As our business expands and the industries in which we operate continue to evolve, we compete with a broad range of solutions and alternative approaches, including: •enterprise application software vendors, both cloud-based and on-premises, such as Microsoft, Oracle, SAP, Salesforce and Workday; •new technologies and entrants, including point-solutions and platform solutions, particularly those related to AI; •custom-developed and in-house solutions; •technology consulting firms; •systems integrators; and •software resellers.
Business / named competitors and alternative approaches · Filed 29/01/2026
“Systems of record” operators may attempt to create technology solutions or other mechanisms that would prevent our systems from integrating with theirs.
Risk Factors / potential restrictions on systems integration · Filed 29/01/2026
They may create pricing pressures by reducing the price of competing products, services or subscriptions or bundling their offerings, causing our offerings to appear relatively more expensive.
Risk Factors / potential competitor price reductions and bundling · Filed 29/01/2026
Our business is highly competitive, rapidly evolving and fragmented, and subject to disruptive technologies with low barriers to entry, to shifting customer needs and to frequent introductions of new products and services.
Business / fragmented competition, disruption and low entry barriers · Filed 30/01/2025
As an AI platform for business transformation, the Now Platform has embedded Now Assist, our AI solution available for certain products at an additional cost, to help enhance user productivity and efficiency, thereby accelerating our customers’ return on investment in the Now Platform.
Business / Now Assist offered at additional cost · Filed 30/01/2025
In 2025, sales of our Now Assist product, our AI powered workflows, exceeded $600 million in annual contract value and is on track to exceed $1 billion in 2026.
Proxy / reported 2025 Now Assist ACV and separate 2026 forecast · Filed 06/04/2026
GAAP to Non-GAAP Reconciliation (in millions) Year ended Year ended % Growth Income from Operations December 31, 2025 December 31, 2024 Y/Y GAAP income from operations 1,824 1,364 Stock-based compensation 1,955 1,746 Amortization of purchased intangibles 120 94 Business combination and other related costs 109 33 Impairment of assets 30 — Severance costs 74 — Legal settlements — 17 Contract termination costs 37 — Non-GAAP income from operations 4,150 3,255 27% B-2 APPENDIX B Year ended Operating Margin December 31, 2025 GAAP operating margin 13.5% Stock-based compensation as % of total revenues 14.5% Amortization of purchased intangibles as % of total revenues 1% Business combination and other related costs as % of total revenues 1% Impairment of assets as % of total revenues —% Severance costs as % of total revenues 0.5% Legal settlements as % of total revenues —% Contract termination costs as % of total revenues 0.5% Non-GAAP operating margin 31% Year ended Year ended % Growth Free Cash Flow December 31, 2025 December 31, 2024 Y/Y GAAP net cash provided by operating activities 5,444 4,267 Purchases of property and equipment (868) (852) Business combination and other related costs 60 23 Cash paid for legal settlements — 17 Non-GAAP free cash flow 4,636 3,455 34% Year ended Free Cash Flow Margin December 31, 2025 GAAP net cash provided by operating activities as % of total revenues 41% Purchases of property and equipment as % of total revenues (6.5)% Business combination and other related costs as % of total revenues 0.5% Cash paid for legal settlements as % of total revenues —% Non-GAAP free cash flow margin 35% Numbers rounded for presentation purposes and may not foot.
Appendix B / GAAP operating income, cash generation and non-GAAP reconciliation · Filed 06/04/2026
Our public sector customers may have contractual, statutory or regulatory rights to terminate current contracts with us or our third-party distributors or resellers for convenience or due to a default, though such risk may be assumed by such third-party distributor or reseller.
Risk Factors / public-sector termination rights · Filed 30/01/2025
These may also include rights with respect to price protection, refund and setoff, performance of services in languages other than English, the accuracy of information provided to the government, contractor compliance with supplier diversity policies, constraints on sales practices and other obligations that are particular to government contracts.
Risk Factors / government price protection and other contractual constraints · Filed 30/01/2025
(“Armis”), a cyber-exposure management and cyber-physical security solutions provider, for preliminary purchase price consideration of approximately $7.6 billion, settled in cash.
Note 5 / completed Armis cash acquisition consideration · Filed 23/07/2026
18 Table of Contents (11) Debt The following table summarizes the carrying value of our outstanding debt (in millions, except percentages): Effective Interest Rate June 30, 2026 December 31, 2025 Long-Term Debt Senior notes issued August 2020: 1.40% notes due September 2030 1.53% $ 1,500 $ 1,500 Senior notes issued May 2026: 4.25% notes due May 2028 4.68% 750 — 4.70% notes due August 2031 5.00% 600 — 5.05% notes due May 2033 5.36% 650 — 5.40% notes due May 2036 5.68% 1,250 — 6.30% notes due May 2056 6.57% 750 — Total senior notes $ 5,500 $ 1,500 Unamortized debt discount and issuance costs (65) (9) Total carrying value of long-term debt $ 5,435 $ 1,491 Short-Term Debt Commercial paper $ 2,100 $ — Unamortized debt discount (18) — Total carrying value of short-term debt $ 2,082 $ — Total interest expense recognized related to our outstanding debt was $66 million and $6 million for the three months ended June 30, 2026 and 2025, respectively, and $72 million and $12 million for the six months ended June 30, 2026 and 2025, respectively.
Note 11 / outstanding debt and interest expense · Filed 23/07/2026
Six Months Ended June 30, 2026 2025 (dollars in millions) Net cash provided by operating activities $ 2,257 $ 2,393 Net cash used in investing activities $ (7,105) $ (640) Net cash provided by (used in) financing activities $ 3,638 $ (944) Net (decrease) increase in cash, cash equivalents and restricted cash $ (1,215) $ 823 43 Table of Contents Operating Activities Net cash provided by operating activities was $2,257 million for the six months ended June 30, 2026 compared to $2,393 million for the six months ended June 30, 2025.
MD&A / first-half operating, investing and financing cash flows · Filed 23/07/2026
The net decrease in operating cash flows was primarily due to higher business combination and related costs to support business growth.
MD&A / explanation of operating cash flow decline · Filed 23/07/2026
During the three months ended March 31, 2026, the Company completed the ASR transaction with 18.5 million shares of common stock repurchased at an average price of $107.97 per share.
Note 13 / completed accelerated share repurchase · Filed 23/07/2026
During the six months ended June 30, 2026, the Company repurchased an additional 1.6 million shares of its common stock for $225 million in open market transactions.
Note 13 / additional completed open-market repurchases · Filed 23/07/2026
During the six months ended June 30, 2026 and 2025, we issued a total of 6.7 million and 6.2 million shares, respectively, from stock option exercises, vesting of RSUs, net of employee payroll taxes, and purchases from the employee stock purchase plan (“ESPP”).
Note 13 / actual employee-plan share issuance · Filed 23/07/2026
Non-cancellable purchase commitments for business operations total $7.9 billion as of December 31, 2025, which are due primarily over the next five years.
MD&A / non-cancellable operating purchase commitments · Filed 29/01/2026
We contacted 56% of outstanding shares We engaged 43% of outstanding shares 2026 PROXY STATEMENT 55 COMPENSATION DISCUSSION AND ANALYSIS Executive Compensation Program Structure Over the past two years, the Compensation Committee has made several changes to our executive compensation program in response to feedback from our shareholders, including: •Eliminating overlapping metrics by removing the NNACV metric from our Long-Term Incentive Plan •Lengthening the Long-Term Incentive Plan performance period to 3 years from 1 year •Extending the PRSU vesting period to 3-year cliff vesting from 3-year ratable vesting •Committing to not grant any one-time equity awards to any NEO holding a 2021 PSO Award with an ongoing performance period We also made changes to other aspects of our executive compensation program, including, among other things, revising the non-financial component of the annual cash incentive to provide the opportunity for both a 10% upward or downward modification to the payout.
Compensation Discussion and Analysis / implemented incentive changes · Filed 06/04/2026
Equity Mix 2025 LTI awards consist of 60% PRSUs and 40% time-based RSUs.
Compensation Discussion and Analysis / actual 2025 LTI award mix · Filed 06/04/2026
74 COMPENSATION DISCUSSION AND ANALYSIS Compensation Governance To ensure our executive compensation program is effective in aligning our NEO interests with those of our shareholders, we adhere to the following best compensation governance practices: What We Do What We Do Not Do Pay for performance Make a significant percentage of total annual compensation at-risk Award a majority of LTI awards as PRSUs Denominate and settle all LTI awards in equity Use rigorous performance goals Use both absolute and relative metrics Incorporate operational and cultural goals aligned with key Company priorities Regularly engage with shareholders Maintain robust stock ownership guidelines for executive officers and directors Require multi-year vesting for all equity awards Conduct annual compensation risk assessments Review peer group annually Conduct annual say on pay vote Maintain a “clawback” policy Engage an independent compensation advisor Maintain a fully independent Compensation Committee Manage our equity burn rate and stock-based compensation Offer pension plans Provide guaranteed annual cash incentives Offer excessive executive perquisites Provide Section 280G tax gross-ups Approve single-year vesting on equity awards Offer “single-trigger” change in control payments or acceleration of equity awards Discount stock options or reprice underwater options Allow hedging or pledging Stock Ownership Guidelines Our Compensation Committee has adopted stock ownership guidelines to align the interests of our executive officers and non-employee directors with the interests of our shareholders and to promote accountability and long-term value creation.
Compensation governance / ownership guidelines, hedging restrictions and clawback policy · Filed 06/04/2026
As of June 30, 2026, the first four tranches were vested based on achievement of both the performance and market conditions.
Note 14 / achieved performance-award vesting as of June 30, 2026 · Filed 23/07/2026
The 2021 Plan, as amended and restated, was approved by the shareholders on June 1, 2023 and May 21, 2026 to increase shares available for future grants by approximately 50 million and 38 million shares, respectively.
Note 14 / shareholder approval of equity-plan increases, including May 2026 · Filed 23/07/2026
•Independent committees. All ServiceNow Board committees are comprised entirely of independent directors.
Governance / independent board committees · Filed 06/04/2026
118 PROPOSAL 6: SHAREHOLDER PROPOSAL REGARDING SHAREHOLDER RIGHT TO ACT BY WRITTEN CONSENT •No Supermajority Voting Provisions: In response to shareholder feedback, at the 2025 annual shareholders meeting, the Board and shareholders approved amendments to our Restated Certificate of Incorporation which eliminated any supermajority voting provisions.
Governance / completed elimination of supermajority voting provisions · Filed 06/04/2026
As a result of the investigation, the Company’s board of directors determined that the Company’s President and Chief Operating Officer and the hired individual violated Company policy regarding a possible conflict relating to such individual’s hiring.
Note 17 / board finding of hiring-related policy violations · Filed 23/07/2026
On July 24, 2024, the Company and its President and Chief Operating Officer came to a mutual agreement that he would resign from all positions with the Company, effective immediately.
Note 17 / President and COO departure effective July 24, 2024 · Filed 23/07/2026
The Company has informed the Department of Justice, the Department of Defense Office of Inspector General and the Army Suspension and Debarment Office of the investigation and is continuing to cooperate with the Department of Justice, which has commenced its own investigation and required the Company to deliver certain documents in connection with these matters.
Note 17 / continuing government investigation and cooperation · Filed 23/07/2026
Goodwill, which is not deductible for income tax purposes, is primarily attributed to the expected synergies from integrating Armis’ and Veza’s technologies into our product portfolio and expanded market opportunities.
Note 5 / acquisition goodwill attributed to expected synergies · Filed 23/07/2026
Strong Growth and Profitability Growth Profitability 21% 98% $13.3B 31% 35% $4.6B Subscription Revenues Growth Y/Y Industry Renewal Rate 7 Years in a Row(1) Total Revenues Non-GAAP Operating Margin(2) Free Cash Flow Margin(2) Free Cash Flow (“FCF”)(2) Subscription Revenues Total Revenues Growth Y/Y (3) Non-GAAP Operating Income Growth Y/Y (2) (3) FCF Growth Y/Y (3) Numbers rounded for presentation purposes.
Proxy / reported 2025 subscription growth and operating highlights · Filed 06/04/2026
As our renewal rate is impacted by the timing of renewals, which could occur in advance of, or subsequent to the original contract end date, period-to-period comparison of renewal rates may not be meaningful.
MD&A / renewal-timing comparability limitation · Filed 23/07/2026
