ServiceNow (NYSE:NOW) reported first-quarter financial results on Wednesday. The transcript from the company's first-quarter earnings call has been provided below.
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View the webcast at https://events.q4inc.com/attendee/481376230
Summary
ServiceNow reported strong Q1 2026 results with subscription revenue growth of 19% in constant currency, exceeding guidance.
The company highlighted a significant AI-driven expansion, with the AI control tower positioned at the center of a $600 billion total addressable market.
Recent acquisitions, including Armis, VESA, and Moveworks, are expected to enhance ServiceNow's AI capabilities, particularly in AI security and employee experience.
ServiceNow raised its full-year 2026 subscription revenue guidance by $205 million, with a growth forecast of 20.5% to 21% year over year.
Management emphasized the company's focus on accelerating revenue growth, margin expansion, and AI-driven innovation, with a bullish outlook on the impact of AI on its business model.
Full Transcript
Tiffany (Conference Operator)
Hello and thank you for standing by. My name is Tiffany and I will be your conference operator today. At this time I would like to welcome everyone to the first quarter 2026 ServiceNow earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during that time, simply press Star then be number one on your telephone keypad. I would now like to turn the call over to Darren Yip, Vice President of Investor Relations and Market Insights. Darren, please go ahead.
Darren Yip (Vice President of Investor Relations and Market Insights)
Good afternoon and thank you for joining ServiceNow's first quarter 2026 earnings conference call. Joining me are Bill McDermott, our chairman and Chief Executive Officer, Gina Mastantuno, our President and Chief Financial Officer, and Amit Zaveri, President, Chief Product Officer and Chief Operating Officer. During today's call, we will review our first quarter 2026 results and discuss our guidance for the second quarter and full year 2026. Before we get started, we want to emphasize that the information discussed on this call, including our guidance, is based on information as of today and contains forward-looking looking statements that involve risks, uncertainties and assumptions. We undertake no duty or obligation to update such statements as a result of any new information or future events. Please refer to today's earnings press release and our SEC filings, including our most recent 10Q and 10K for factors that may cause actual results to differ materially from our forward looking statements. We'd also like to point out that we present non GAAP measures in addition to, and not as a substitute for financial measures calculated in accordance with GAAP. Unless otherwise noted, all financial measures and related growth rates we discuss today are non GAAP except for revenues, remaining performance obligations are RPO, current RPO and cash and investments. To see the reconciliation between these non GAAP and GAAP measures, please refer to our press release and investor presentation which are both posted on our [email protected] A replay of today's call will also be posted on our website.
Bill McDermott (Chairman and Chief Executive Officer)
With that, I'll turn the call over to Bill. Thank you very much Darren and welcome everybody to today's call. There's a lot of noise out there, so let's get straight to the point. Here's the ServiceNow update with the AI control tower for business reinvention in the center of a growing 600 billion plus total addressable market, we have a 28 billion RPO business that's growing at 23.5% year over year, the most open enterprise platform that protects customer choice. With active users on our platform continuing to grow thousands of partnerships around the platform, expanding daily AI native packaging and pricing on our fully autonomous platform. A lot no sidecar AI at ServiceNow a world class team with a proven track record of building truly global businesses at scale. Our first quarter results are consistent with a company of this stature once again exceeding our guidance metrics across the board. Subscription revenue grew 19% in constant currency above the high end of our guidance CRPO. Constant currency was a robust 21% growth, one point above our guidance. Operating margin was 32%, a half a point above our guidance and free cash flow margin was 44%. We had 16 deals greater than 5 million in NNACV and 5 deals greater than 10 million in NNACV. Now Assist NNACV to date continues to outperform even our expectations. The number of customers spending a million plus grew over 130% year over year. Deals over a million grew more than 30% year on year. In Q1 Moveworks closed seven figure deals. In Q1 they closed more deals than they did the entire year. Last year now has merged with our Employee Experience business and rebranded as Employee Works. So Bhavan Shah, the former CEO of Move Works now runs the whole show there and that business grew 5x year over year. So we have a great story in Move Works coming into service now. Our sales CRM NNACV grew more than 5x year over year. That's quintupled with deal count growing over 80% year over year. With a surface area so broad, our goals for ServiceNow are clear here. They are fast time to value for our customers. Revenue growth, acceleration, margin expansion, reduced stock based compensation and outperforming our own rule of 55 plus standard. To say we're excited for Knowledge and Financial Analyst Day on May 4th in Las Vegas would be an understatement. We have a lot to share with you and the Board of Directors are very proud of ServiceNow and the way it's performing. And the company is on track for our best year ever. Since our last print, speculation about enterprise AI has persisted. And that's okay. That's what earnings calls are for. To clear things up. My answer is always the same. There has never been a tailwind for ServiceNow like AI since Fred Luddy started the company. We've always focused our platform on the jobs our customers needed. Done. Let me bring this to life for you in five hyper growth areas. The first Our core IT business. There has never been a more compelling moment to be the CIO's system of record. We're often described as the ERP for IT. When an enterprise fully deploys ServiceNow, it's not just software, it's an end to end operating system. And today an average Fortune 500 company has 100 million lines of custom code to manage their business. And this excludes the code in other systems of record where there are billions and billions of lines of code. As code volume increases 20x by 2030, the complexity of managing this explosion of code will increase exponentially. The volume of tickets generated by this complexity will also explode. In this scenario, the number of tickets hitting an ITSM system will increase by 50x compared to today. The biggest IT buyer in the enterprise was, is and will continue to be the cio. This remit will substantially expand by the complexity of the agentic business. ServiceNow's relevance grows in direct correlation with the expansion of innovation across the AI ecosystem. Think of us as the workhorse for workflow. The second is AI security. We're thrilled that the ARMIS acquisition closed earlier than expected, which as you'll hear from Gina, gives us some nice acceleration in full year subscription revenue growth. Yevgeny Divora, the excellent CEO of Armis, will run our security business building on ServiceNow's outstanding foundation. And here's the problem. Companies employing agents with zero visibility therefore they're unable to see the unmanaged IoT OT and medical devices lacking unified access control with no coordinated way to remediate vulnerabilities before they become breaches. Today's ServiceNow addresses this challenge holistically. As the asset intelligence foundation for the AI control tower, ARMIS solves visibility real time agentless discovery of every asset it ot IoT medical devices shadow it, a continuously updated map that traditional tools can never achieve. 9 out of 10 Fortune 10 companies already rely on Armis. We're excited to deploy it throughout the top 2000 and beyond. Zeza solves the Identity Governance Patented access graph technology maps access across people, machines and AI agents in real time dynamic context Aware permissions that are governed continuously, not set once and forgotten. This is the active directory for AI agent identities. This business will continue to be run by the excellent CEO of Tarun Thakar. ServiceNow is the biggest piece of the puzzle. Our existing billion dollar plus security business ties everything together as the action layer for the CISO. Armis asset visibility plus VAESA's identity governance plus ServiceNow's business context CMDB equals a unified end to end security stack that could see, decide and act across the entire technology footprint. Nothing else in the market does this. Nothing With Mythos as one example, security activity is skyrocketing. The actions run through this platform alerts, tickets, actions, resolutions, they're all revenue drivers for ServiceNow. Enterprises can't afford experiments in today's risk environment. They need ServiceNow as the strategic defense shield for the enterprise. The third is AI native CRM. We say AI control tower for business reinvention because there's no more immediate need for reinvention than legacy CRM. You know it's a little ironic that a category promising a 360 degree view of the customer has left most enterprises spinning around in circles. Best run businesses need a dramatically different and better way. Customers tell the story better than we can. A multi market European telco faced 85 plus fragmented applications, no standard quoting process and a CPQ setup where introducing a single new product took three months. ServiceNow sales CRM with CPQ collapsed this to one week. A global power technology leader across 190 countries has gone live with phase three of its ServiceNow deployment replacing legacy CPQ. Using AI driven blueprint automation, the company is reducing new product introduction time from six months to six weeks. A regional Latin American bank is live with ServiceNow building a full front office experience for relationship managers. Agenic AI is scanning portfolios and auto generating leads using Propensity Logic Tide to their data lake. Because legacy CRM represents such a significant expense line for enterprises, the demand for an AI alternative is immediate. ServiceNow is not only bringing a technology superior solution, we help customers swap out legacy SaaS, vendors and go live fast with AI. The fourth area is AI native front door and the employee experience. As people use more of their AI tools like ChatGPT, enterprise leaders urgently want their employees to enjoy a clean conversational experience. ServiceNow introduced employee works combining Moveworks, conversational AI and enterprise search with ServiceNow's Unified Portal and and autonomous agentic AI workflows. This is available in teams, Slack or any browser to turn natural language requests into governed multi system execution for nearly 200 million employees so far. We launched midway through Q1 and it's already closed many deals above a million. You'll also see some exciting new experiences and and we will announce this in a big way at Financial Analyst Day in Vegas. As more employees converge on our conversational experience, ServiceNow will deliver intelligence from any source putting AI to work for people. The fifth area is Workflow Data fabric. We all know that AI is only as valuable as the data itself. Enterprises are frantically organizing and cleansing data from Countless disparate sources. Workflow data fabric connects data across systems. It adds business context via a unified data catalog and applies policy based governance controls. With ServiceNow, AI understands how an enterprise actually works so they can take trusted action. I explain the five areas for one good reason. All of them have the capacity to to eclipse the size and growth trajectory of ServiceNow as it stands today itself. And for years, we've strengthened a common platform architecture for these businesses and for others we're incubating to harness enterprise AI. ServiceNow has thousands of system connections, a live knowledge graph and real enterprise context. We accommodate any model aligned to customers, policies, permissions and rules. And every decision. And ServiceNow is auditable, end to end. Our platform delivers workflow execution across it, hr, CRM and security. It's not recommendations, it's outcomes that matter. Our AI control tower provides real time visibility across every agent and every workflow. Because governance has to be foundational, not retrofitted. This architecture is a big reason why we recently announced the entire ServiceNow portfolio is AI. Native AI, data security and governance are now built into every product and package, not a separate purchase. This is a deliberate break from from sidecar AI. We're not bolting intelligence onto disconnected systems. We're combining context with execution on a single platform. ServiceNow's context engine is the differentiated capability. Here it learns from every decision ever made in a company, grounding each AI agent action in live context, approval chains, asset dependencies, identity relationships and business rules. We've now trained over 95 billion annual workflows and more than 7 trillion transactions. And our 22 years at the center of the world's most sophisticated enterprises is really showing up because it brings unmatched intelligence to every decision. And this compounds with every workflow we run, making the platform smarter over time. In fact, in every millisecond, for example, it knows which asset is tied to a compliance process, which approval chain applies to a given cost threshold, and which vendor's history should inform how a request should be handled. So when people ask, what's the difference between ServiceNow AI and the foundation models? And you can boil it down to one word, context. I read that one of our customers referred to ServiceNow this way. The control tower is the quarterback. It figures out which agent or LLM to use. Merge that with a quote from the hall of Fame coach Bill Walsh. Chaos is the quarterback's natural environment, Ladies and gentlemen. There's plenty of chaos in today's enterprises. You have hyperscalers, systems of record, foundation models, data lakes, homegrown tools and agents coming at you from everywhere. That's why our platform is totally open. We integrate with all of them. Because ServiceNow is the only enterprise AI platform that converts that chaos to control, we would not trade positions with anyone. Let me give you a quick overview of a couple of announcements we just recently rolled out. ServiceNow launched autonomous workforce teams of AI specialists with the defined roles that execute enterprise work end to end with built in governance, auditability and human escalation. Our own deployment in ServiceNow is resolving 90% of employee IT requests, with the specialist resolving assigned cases 99% faster than human agents. That's an AI specialist. In the AI native platform announcement, you might have missed Build Agent which gives us developer openness, another meaningful unlock Developers can build from any integrated developer environment, Claude Code, Cursor, Codex, Windsurf and deploy them directly to ServiceNow. This expands the addressable builder community significantly. Build Agent Skills isn't just a developer tool, it's the on ramp to an ecosystem where every custom agent is automatically governed, data connected and workflow integrated from the moment it deploys. With Enterprise Service Management foundation we are expanding our opportunity in the mid market as well with deployment in weeks not months. This is the direct expansion of our addressable customer base. One early example is Robinhood. Robinhood is deflecting 70% of employee requests before human intervention. They've already eliminated 2200 hours of manual effort monthly and the success just continues. I know many are interested in the progress of our hybrid business model, especially with regard to consumption pricing. You'll be happy to know that 50% of net new business now comes from a non seat based pricing model including tokens and other assets such as infrastructure, hardware and connectors. Our hybrid pricing model gives customers the best of both worlds, predictable foundational seat licenses combined with usage based scalability. It's the freedom to scale AI adoption without a friction that the customers love. We continue to see the hockey stick taking shape. One example is British engineering and technology company. 45,000 employees, 50 countries. They're using ServiceNow autonomous workflows, employee self service and it's jumped the usability and the outcome by 3x. With 38,000 tickets now deflected, resolution time is down by two entire days. A leading online travel company is using ServiceNow Agentic AI to deliver 11 million autonomous AI resolutions annually. For HR and IT alone, they freed employees to focus on strategic work processes that once took days, now take minutes. The results are transformational. Over 230% ROI, 45,000 hours back to their people and millions saved annually. These and many stories like them validate our hybrid thesis. As the business value emerges, refresh upgrades follows. We'll have more on this at fad. We really can't wait. We're seeing continued meaningful acceleration in the partner ecosystem. There is deep technical collaboration between ServiceNow engineers and OpenAI technical advisors. OpenAI native voice and text models are integrated directly into the ServiceNow AI platform and they're using us as a gateway into the enterprise. If you think about it, ServiceNow AI specialists are working side by side with Google Gemini AI agents. They're doing this across 5G networks, retail and IT operations with zero data movement and zero gaps in governance. Claude models are also deeply integrated into ServiceNow AI platform for developers and employees. ServiceNow, NTT, Docomo and StarHub are developing the industry's first intercarrier autonomous roaming resolution model on the ServiceNow AI platform. ServiceNow and Cohesity announced a partnership to deliver agent resilience by combining ServiceNow's AI agent control tower with Cohesity's immutable point in time data recovery. ServiceNow and Carahsoft expanded our partnership to extend ServiceNow AI platform availability. This opens all Carahsoft's commercial channels in addition to its established government network of 10,000 plus resellers. There's so much to talk about. I want to leave some for Q and A, but a colleague today reminded me of something Warren Buffett often quotes from Benjamin Graham. In the short run, markets are voting machines and right now uncertainty is winning the vote. But don't worry, in the long run they are weighing machines. And I'll tell you, I'll get on that scale with that ServiceNow brand on my chest. Any day we look at it, we studied it, we dare anyone to bring a better solution to the market than ServiceNow. We are the rules and the rails of business. When you're faced with these results, trust what you see. You have every reason to believe your own eyes. Don't fall for the parlor trick that one touch button can replace 22 years of excellence. This is not a company that shrinks from challenges. It rises to every opportunity. To all our shareholders, thank you for your continued belief in ServiceNow. We will never let you down. I'll leave you with this. There's a perfect correlation between Enterprise AI from any source and ServiceNow's expansion. We're letting it rip. Whether it's built or bought, ServiceNow will unlock more value out of every dollar spent on AI in the enterprise. That's a guarantee. There are a lot of things AI can do for your business and we love them all. There's also a lot of things AI can do to your business and we want to protect you. We have comported this in how we've composed this company organically and with the integration of Moveworks, VESA and Armis. Our platform has gone from land and expand to control and compound AI that thinks workflows that act all production grade enterprise scaled ServiceNow is the AI defining enterprise software company of the 21st century. We're just getting started. I'll hand things over to our President, Chief Financial Officer Gina Mastantuno. Gina, over to you.
Gina Mastantuno (President and Chief Financial Officer)
Thank you Bill Q1 was another quarter of outstanding execution. The team delivered strong results beating the high end of our guidance across all top line and profitability metrics. Now ASSIST continues to see incredible demand which has had a nice pull effect and driven out performances across emerging products like AI Control Tower and Raptor DB Pro. Q1 subscription revenues are 3.671 billion, growing 19% year over year in constant currency and above the high end of our guidance. This includes about a 75 basis point headwind from delayed closings of several large on premise deals in the Middle east due to the ongoing conflict in the region. RPO ended the quarter at approximately 27.7 billion representing 23.5% year over year constant currency growth. Current RPO was 12.64 billion representing 21% year over year constant currency growth a 100 basis point beat versus our guidance. Across our workflows we saw broad based demand. Technology workflows had 33 deals over a million including 5 over 5 million. ServiceOps and ITAM were each in 17 of our top 20 deals and security and risk was in 15. CRM and industry workflows were in 16 of our top 20 deals with 16 over a million driven by strength in CPQ and Sales and Order management. Core business workflows had 13 deals in the top 20 with 12 over a million and creative workflows had 16 deals in the top 20 with 11 over a million dollars. From an industry perspective, Transportation and Logistics continued to lead the way with net new ACV growing over 280% year over year. Financial services posted impressive growth surpassing 65%, followed by energy and utilities growing at 45% year over year. Telecom and Media also delivered robust growth in the quarter and US public sector outperformed in Q1, closing 10 deals over a million dollars. Our renewal rate inclusive of Moveworks was a strong 97% in the quarter. We ended Q1 with 630 customers generating over 5 million in ACV. Furthermore, we had 5 more customers cross the 50 million threshold versus last year. We closed 16 deals greater than 5 million in net new ACV in the quarter, including 5 deals over 10 million. The power of our Better Together platform model was evident as 17 of our top 20 deals included seven or more products. Our strategic focus on landing the right new customers also continues to see success. New Logo ACV growth accelerated to over 50% year over year in Q1 which included our largest net New Logo deal ever at over 15 million. Now assist continues to outperform expectations, putting it on a trajectory to exceed our billion dollar target for 2026 in Q1 deals including three or more NowAssist products grew nearly 70% year over year including 36 deals with five or more products. The signal is clear customers are moving past experimentation into full scale enterprise wide AI investment. We'll provide further details about these trends next month in Las Vegas. I would note that with our new AI native packages are now Assist ACV Target will continue to capture only the incremental contribution from our AI capabilities. Turning to Moveworks, we took their great conversational AI and enterprise search capabilities, integrated them with Employee Pro in under three weeks and drove it through our incredible go to market distribution network, launching EmployeeWorks as a unified AI front door in February. The results speak for themselves. As Bill mentioned, we've already closed six deals above a million in net new ACV were just getting started. AI Control Tower also continues to build momentum with average deal sizes more than doubling quarter over quarter in Q1. Customers recognize that as AI agents grow in capability, a governed platform to run them isn't optional, it's essential. With the proliferation of AI across the enterprise, we're also seeing increasing adoption of Raptor DB Pro. Deal volume grew 80% year over year in Q1 and included five deals over a million. Turning to profitability, non GAAP operating margin was 32%, 50 basis points above our guidance. Driven by AI OPEX efficiencies, our free cash flow margin was 44%. In Q1 we executed a $2 billion accelerated share repurchase and bought back approximately 20.2 million shares, double the amount we repurchased in all of 2025. As of the end of the quarter we had approximately 4.2 billion of authorization remaining. Together, these results continue to demonstrate our ability to drive a strong balance of world class growth, profitability and shareholder value. Moving to our outlook, I'm thrilled to announce the early close of our acquisition of Armis, which which will significantly expand our TAM and accelerate our subscription revenue growth. While we expect some near term headwinds to margins as we integrate the business this year, strong AI efficiencies internally from now on now and our underlying platform leverage will normalize our operating and free cash flow margin expansion trajectory in 2027 and beyond. Our guidance captures that momentum while taking a prudent view of the geopolitical environment, particularly the conflict in the Middle east and its potential impact to deal timing. With that in mind for 2026 we are raising our subscription revenues by 205 million at the midpoint to 15.735 billion to 15.775 billion representing 20.5 to 21% year over year growth on a constant currency basis. This includes a 125 basis point contribution from Armis. We now expect subscription gross margin of 81.5% and operating margin of 31.5% which included 25 basis point and 75 basis points headwind from Armis, respectively. We expect free cash flow margin of 35%. This includes a 200 basis point headwind from ARMIS and GAAP diluted weighted average outstanding shares of 1.04 billion. For Q2, we expect subscription revenues between 3.815 billion and 3.82 billion representing 21 to 21.5% year over year growth on a constant currency basis. We expect Crpo growth of 19.5% on a constant currency basis. Both subscription revenue and CRPO include 125 basis point contribution from Armis. We expect an operating margin of 26.5% which includes a 125 basis point headwind from Armis and we expect 1.04 billion GAAP diluted weighted average outstanding shares for the quarter. In conclusion, Q1 was another proof point of what this business is built to do. We exceeded the high end of our top line and profitability guidance metrics, continued to grow free cash flow and return substantial capital to shareholders, all while accelerating platform innovation that will define the next decade of enterprise reinvention for an AI enterprise. I've had a front row seat to one of the most remarkable growth trajectories in enterprise software, and I'll tell you what we are building right now. The combination of agentic AI workflow, orchestration, security and data fabric all on one platform. This is the chapter that makes everything else look like the Preamble. You're all invited to hear more about it at our upcoming Financial Analyst Day on May 4, which will be webcast on our Investor Relations website. Finally, Bill and I would like to thank all of our employees for their continued hard work and dedication. I also want to extend a big welcome to the Armis and Vasa teams to the ServiceNow family. With that, I'll open it up for Q and A.
Tiffany (Conference Operator)
At this time, if you would like to ask a question, press star then number one on your telephone keypad. To withdraw your question, simply press star one. Again, we kindly ask that you limit yourself to one question for today's call. We will pause for just a moment to compile the Q and A roster. Your first question comes from the line of Mark Murphy with JP Morgan. Please go ahead.
Mark Murphy (Equity Analyst at JP Morgan)
Thank you so much. So Bill, you had mentioned 90 days ago that the global business was performing well and at that time it had included the Middle east during Q4. Can you double click on what exactly you saw during Q1amidst the conflict in Iran? I'm just curious, you know, are the deferrals related to governments or sovereign backed or private sector entities? You mentioned these were on PREM and were they AI or non AI? And then just finally, do you think that these would snap back relatively quickly if the conflict is resolved here during Q2?
Bill McDermott (Chairman and Chief Executive Officer)
Yeah. First of all, Mark, thank you very much for the question. And let me first of all begin the answer with we just beat and raised. So it was a beat and raised, not an excuse that there happens to be a conflict or war in Iran. We're not making any excuses. Our results are great. What we did explain is that there is a slight impact to the guide in going forward in Q2 as a result of the war. Because you have to remember when you're dealing with a sovereign cloud in the Middle East, everything that happens in the Middle East is recognized as on-premise revenue. So it's not linear or ratable. It happens all at once. So when there's a delay, it has a natural impact. And we just mentioned that as a statement of fact. That impacts slightly the guide. But I want to be clear, like everything is activated properly. The conversations are going on, people are back in their offices now and and we don't have any long term matter for the shareholders to be concerned with.
Gina Mastantuno (President and Chief Financial Officer)
And Mark, I would just add, right, that we kept the full year guide, we didn't reduce it for any potential conflicts. Right. So it was a few on premise deals that slipped in the quarter. And you know, on prem is a larger impact to revenue. But we feel very confident in the results. We feel very confident in the guidelines.
Mark Murphy (Equity Analyst at JP Morgan)
And thank you for that, Gina. And just as a quick follow up, it's great to see the very clear AI traction that the business is carrying. Can you just comment on with the pricing changes and AI less, I think Bill's term was not a sidecar and embedded natively. With the shift to the foundation and advanced and prime tiers, how will you measure and kind of derive that now Assist AI revenue stream just going forward under the new methodology, Is it simple and straightforward or do you have to make some new assumptions?
Bill McDermott (Chairman and Chief Executive Officer)
Yeah. I'm going to give you one headliner, Mark, out of respect for your great company and you personally that you might find interesting. Gina will be mad at me because it's something we were hoping for for Thad, but in the circumstances we operate in, I think disclosure is a good thing. You know, we had a goal to be a billion on our AI commitment this year, as you know, and I think we might have understated that a little bit. We're already talking about a billion and a half now and it's on a run. So to specifically answer your question, I think it's appropriate for Amit to give you some G2 on how we structured it and why we know it's a winner. Amit. Thanks, Bill.
Amit Zaveri (President, Chief Product Officer and Chief Operating Officer)
Hey, Mark. So the way we're thinking about this and we've announced our pricing capabilities is that AI capabilities are in each of the SKUs now. And what we did with Pro plus, which was a higher end SKU with assist, are now available also for the foundation and advanced queues. So all of our products now have AI built in and the incremental assist part of it is what's going to be counted as our AI revenue. So it's pretty straightforward, very easy to measure, easy to track. There's no confusion there. And we're very clear that it's only going to be the AI part which will count towards the AI revenue that we discuss going forward.
Gina Mastantuno (President and Chief Financial Officer)
So to be very clear, Mark, where we have the exact same methodology and we will continue to capture only the incremental contribution from the AI capabilities. And so that 1.5 billion that bill talked about, we're measuring the exact same way as we always measured. We're just hitting our goals a lot quicker than we ever thought we would.
Mark Murphy (Equity Analyst at JP Morgan)
Okay, great to hear about a $500 million increase on that number. Thank you so much. Thank you, Mark.
Tiffany (Conference Operator)
Your next question comes from the line of Brad Selnick with Deutsche Bank. Please go ahead.
Brad Selnick (Equity Analyst at Deutsche Bank)
Great. Thanks so much for taking the question, Bill. We've been really impressed hearing from early adopters of Control Tower and how strategic have seen for enabling the deployment of magentic apps. But we also realized that agentic orchestration is emerging as a very noisy and competitive space. How do you see ServiceNow's differentiation evolving from here amidst all the noise?
Bill McDermott (Chairman and Chief Executive Officer)
Yeah, I'll start and then Amit, by all means, feel free to join in. We have data and that data has been built over 22 years in this quote unquote, ERP for it or that system of record. And as you know, we've expanded the boundaries end to end of what this platform can do. So think now about 95 billion workflows and more than 7 trillion transactions getting trained at sub second speed for everything that happens in an enterprise to that data. So the context and the context engine that we have built to be that AI control tower for business reinvention, managing the humans and the agents and coalescing that in this unbelievable platform is what gives us the context advantage that nobody can match. And I just want to give you one sidecar. Yesterday we had the board of directors in and we had one of the really great CIOs in the world. And she basically said, you know, we are the control rail for all the key business processes that run through her global corporation. And she said that she would never even think about it. But if you think about the fractional cost that ServiceNow is to her IT budget, she would never even think about addressing that line item because it's so important. But if you did, it would have to be at least 10 times more expensive to even try to fix or change it. So there you have it. And Ahmed, please give some color on the differentiation.
Amit Zaveri (President, Chief Product Officer and Chief Operating Officer)
Thanks, Bill. So, hey Brad, the way we think about this is that one we're going beyond just orchestration. There's a lot of context, as Bill mentioned. And we introduced something called context engine, which tracks not what a decision was, what the decision was made, but why it was done. So it brings in a lot of information from the workflows and the environment and the systems we've been running for many, many years already. Second, we also building out this idea of autonomous workforce. You have a full AI specialist which do the full task which humans do today, and replaces that with end to end capabilities. So you don't have to worry about orchestration, AI agent management, figuring out how to integrate them and do the whole heavy lift of security, compliance and control around it. Right? With AI control tower, you have the full visibility across an enterprise wide, while we give you the full capability of doing the actioning end to end. Which is way different than just saying Take pieces of technologies and build it yourself and figure out a way to orchestrate it. We do provide an orchestration engine which is very, very comparable to everybody else and very differentiated with the context data. But we also up leveling that with a solution and outcome driven mindset. So it changes the game for a lot of our customers because they don't have to worry about the heavy lift they have to do otherwise.
Brad Selnick (Equity Analyst at Deutsche Bank)
Thank you guys, very, very helpful.
Bill McDermott (Chairman and Chief Executive Officer)
Thanks, Brad.
Tiffany (Conference Operator)
Your next question comes from the line of Gabriella Borges with Goldman Sachs.
Gabriella Borges (Equity Analyst at Goldman Sachs)
Please go ahead. Hi, good afternoon. Thank you. Bill, Ahmet and Gina. I appreciate all of the detail on the new products. What I wanted to ask you about is the risk that customers start to negotiate you down on the more classic products with the ServiceNow stack in order to essentially free up budget for some of the new products. I'd love to hear a perspective on how you're navigating some of those conversations when customers say we're getting so much value from the AI part of the stack which means while the classic part of the stack may actually be less valuable to us, therefore give us more of a discount on that. Would love your perspective. Thank you.
Bill McDermott (Chairman and Chief Executive Officer)
Yeah, thank you. Gabriella. One thing I can tell you, from being in the industry for quite some time and running another global corporation that was the biggest in the world, one thing that I've learned is when you innovate on the platform, whatever the platform is, it reinvigorates the core. And when you do smart M&A, it also double down, reinvigorates the core. And if you look at any company of size, scale and significance, that's always true. So no, we're not getting negotiated down on the core. Actually, we're redoubling our focus on it because that system of record for it, where we started and founded the company, has now become more important than ever. So there's a higher appreciation for it because of AI, because it's the pivot point by which we extend to all the other functions of a company. It's also the pivot point to our workflow data fabric and the context engine that Amit just discussed. So there is no great autonomous AI platform end to end. There is no great control tower, there is no great workflow data fabric, and there is no great integration layer that ties into the hyperscalers, the language models, the systems of record without that unbelievable core that Fred Luddy built into the company 22 years ago. And from that, that beginning of strength, everything else has been built. So actually I see the core having A major resurgence as a result of AI. And remember what I said in the script, it's all about also this increase in code and this increase in AI activity. And I'll finish it with Armis. Armis is going to be our Instagram and I'll tell you why. The number three economy in the world is cybercrime. It's a trillion a month. We now have a situation where on the IT and the OT landscape of every major corporation, we are managing the agents and the humans and we are managing the landscape of the threat actors. And if you think about a single intrusion from an AI agent will cost a commercial customer 5 million bucks and a public sector customer 10. You have to look to ServiceNow quickly and you'll need that core to illuminate the power of Armis. So those are issues that have not even happened yet. We just got Armis on Monday, so you're looking at a tailwind here that has. I've never seen it. So get ready for major revenue acceleration.
Amit Zaveri (President, Chief Product Officer and Chief Operating Officer)
Yeah, if I can add to what Bill mentioned about the stack. So we have redone everything in our platform to be AI-native, Gabriella. So everything which we do in terms of how we orchestrate, how we manage workflows, how we bring resolution and action out of it, as well as all the things we do with data, it's all been rewritten with AI-native mindset. So that is available today. So existing customers are getting that capability as part of the upgrades. They don't have to do anything and our platform becomes that AI-native for all of our customers. So now there's not really a pressure in terms of any of the discussions. They all want to modernize and they're getting it very, very quickly and simply and they're getting the benefit of all the new innovations we're bringing into a platform and all the customers get that instantly as we deliver this AI-native products.
Tiffany (Conference Operator)
Thank you, Peter. Your next question comes from the line of Peter Weed with Alliance Bernstein.
Peter Weed (Equity Analyst at Alliance Bernstein)
Please go ahead. Thank you and appreciate all the detail on the latest releases. I guess I've got a follow up there. You announced the autonomous workforce in February, which was really exciting. Including the GA of the level one service desk coming here in quarter two along with employeeworks. Help us kind of understand that long term strategy and vision and how does that complement the existing now assist products? Maybe, you know, narrowing in on like one example here can kind of help us understand the richness of where you're going.
Amit Zaveri (President, Chief Product Officer and Chief Operating Officer)
Yes, Peter, thanks for that question. So our vision here is pretty ambitious and Kind of game changer in the market. What we're doing with an autonomous workforce is to really provide an end to end resolution for different functions company run inside their enterprise today. So taking this example of Level 1 support engineer today a lot of tickets get deflected. Of course when somebody has an issue or question they ask for and we help that with our employee works where we give them self service and help them resolve that issue. A customer or employee might have. But some things they do need require help and they usually go to human to get that thing resolved. And what we're doing is taking that thing and the burden away from human and putting that into this level one support specialist, AI specialist, which will now understand the intent and the question and figure out how to resolve it based on the exact learning they've had for many of the data we provide behind the scenes and then get that resolution in a very short amount of time. Typically a human requires around two days based on the case volume to resolve it. We are now able to do that in less than 20 minutes. So the employee or customer is getting their information quickly, quickly and the issue resolved immediately without having to wait on a human agent to really do this. And that changes the game for every enterprise. Right? Because now you're reducing the workload on the employees themselves. You're getting them moving on with the job very fast as well as now we are just taking away also the human labor cost which now we can also monetize beyond what we used to charge for just the issue management before. So it opens up and expands our TAM considerably. Plus it becomes much more value driven than just being able to provide you software. So that's really the vision we have. And we have around 20 different roles like this been delivered by May. You'll see that at our knowledge event. And all the discussions we were having with customers and quite a few of them are live right now and they're seeing this immediate value add by taking this kind of a technology without having to build all the AI underpinnings, doing all the security work, the compliance work and training the models and doing the spare part work and then worrying about upgrades and maintenance, those kinds of things. We take all that pain point while giving the outcome of AI completely out of the box in our products today. So that's really the vision. It's really playing out very well and very, very bullish about what we can do here based on the context and information we've had, which you can't just do with the large language model or any of the Technology by itself, given our historical experience in this thing, we are able to bring that knowledge and resolve it for our customers.
Bill McDermott (Chairman and Chief Executive Officer)
And one thing that's interesting, Peter, just to use ServiceNow as a benchmark, Gina's captured a half a billion in productivity on the back of what Amit just said. So the agents are 99% faster than the human. 90% of our cases on employee and customer issues are now resolved by the agents, the level one agents Amit is talking about. And if you think about a company of our size and scale, scale, we're able to go in a year and exit the year into a new year with the same headcount. And that's a company that's growing at the rule of 56. Between free cash flow and revenue. There's not too many of them out there. I want to invest in some. I'm on the lookout.
Peter Weed (Equity Analyst at Alliance Bernstein)
That's a pretty bullish outcome. Help us understand the pricing that you're able to achieve as a result of the value you're bringing.
Amit Zaveri (President, Chief Product Officer and Chief Operating Officer)
Yeah. So, Peter, the way we. This is part of our current AI native pricing, right? So more you use, more assist you land up using consuming based on the entitlements you have. So over time, we can look at beyond what we do today from the pricing perspective. But today it kind of becomes much simpler for customers when they see this issue's been resolved or questions been handled and us helping them manage their problems inside the enterprise. We can now easily now monetize that through our assist pricing structure we have and now it's available across all our product tiers. So it could start anywhere they want to.
Peter Weed (Equity Analyst at Alliance Bernstein)
Thank you. Thank you, Peter.
Tiffany (Conference Operator)
Your next question comes from the line of Keith Wise with Morgan Stanley. Please go ahead.
Keith Wise (Equity Analyst at Morgan Stanley)
Excellent. Thank you guys for taking the question. I wanted to directly go sort of at I think a topic that a lot of us are dancing around in sort of our initial questions. I'm excited about the opportunity of ServiceNow. You guys are obviously excited about the opportunity for ServiceNow. The stock is down 12% after hours, so. So something's not getting through to investors. And I'd say there's probably two parts of that equation. Like one is a lack of clarity on the inorganic contribution to Q1. There's in there. There's pyramid analytics in there. And we don't quite know how much of a contribution it is. I think invest wondering whether it really was a Q1 beat on an organic basis. And then for the full year, outside of adding armis and currency, the full year number doesn't really move at all. And we're wondering when, like, when are we going to see this acceleration? When are we going to see the benefits of ServiceNow's positioning for this generative AI opportunity? Because we are seeing it in the AI labs. Right. AI labs added $5 billion in net new ARR in Q1 alone. Each one. Right. And we're talking about 1.5 billion for now assists when we get to the end of the year, it seems like they're getting an outsized proportion of the gain. So when does ServiceNow participate in a way that's more analogous to the AI labs that we're actually getting organic, positive revisions? Thank you.
Gina Mastantuno (President and Chief Financial Officer)
So, Keith, there's a lot of questions there. I'll tackle them one by one. So we Vesna and so Vezda closed in the middle of March and it's a small tuck in Pyramid is even smaller. So they had very, very, very tiny contribution, which is why we're not calling it out. So we would have beat regardless. We did talk about 75 basis points of on prem push outs to Q2. So on prem year over year is a little bit more than a point lower in Q1 of this year. Vers. So if you just exclude the on prem. And by the way, we want hosted. We love hosted. So on prem being lower is not a bad thing, but it does impact the numbers. We actually have seen a couple of those on prem deals already close in Q2, but it was a timing issue. So that's the answer. On Q1. We feel very good and strong that we continue to have strong organic growth on top of these great acquisitions that we've added. And so we've been very, very clear on the impact of armis. I spelled it out across the board in every single metric. So you can see that yes, we didn't increase the revenue guide excluding armis, but we didn't take it down either, despite some ongoing conflict. So we held and we never really even in the best of times. We rarely increase our our revenue guide for the full year after just Q1. It's the smallest quarter that we have. And so we held the guide increased with RM s. So we're seeing accelerating revenue growth. And I think the example we gave of Moveworks of being able to integrate it into employee works within three weeks and then very quickly hit it into our distribution network and have more revenue or more deals in Q1 than they had all year last year is a great example of M and A done extremely well. So that's number two to the Question on acceleration of revenue growth. We've basically said historically that our guide for 2026 was a billion. We just told you now that it's 50% higher than that 1.5 in 2026, which is I think pretty darn good for software company that's building AI into our platform and enables our customers to get the value of AI within our platform with all the guardrail security and governance that they love. I'm hoping that you'll be at financial Analyst day in a couple weeks time because we will lay out our long range plan and when we expect to see that flywheel of AI consumption that you're talking about and I can promise you, I think you'll be very excited about what you're going to see.
Keith Wise (Equity Analyst at Morgan Stanley)
Excellent. I will definitely be there. Thank you.
Bill McDermott (Chairman and Chief Executive Officer)
Yeah. And Keith, I do want to mention we didn't buy anything with a whole bunch of revenue. Okay. We didn't buy what's been on the market for 10 or 15 or 20 years to plug a revenue gap. We bought companies that are adding to the AI control tower for business reinvention. So they are not in a meaningful way and never were intended to be a plug for a revenue gap. We just got them and we're building out the story with them and they're going to set the world on fire with re accelerating revenue growth. The other thing we're doing as we're re accelerating revenue growth and by the way, above 20% isn't too bad. Right? On a $15 billion company. And in terms of accelerating margins, who accelerates margins at the rate that we have? So we're a 56 rule company going up and we're obviously taking SBC down at the same time because we know the shareholders. I think the bigger argument for the shareholders is something like what's the terminal value of a software company? Is the seat based pricing going to last? Well, when you have many more seats because the surface area you cover is 80% greater than what you used to cover, you're going to do fine on seats. But nobody cares about seats. We had a CIO from one of the biggest companies in the world tell us yesterday she never bought a pricing plan one way or the other. She buys the return on the investment. And so in our case, we give you the Goldilocks model. You can have it any way you want. You like seats, great. You like consumption, great. You like a blend of the two, great. You want to split the value with us, even greater. We'd love that. But as soon as you show them how big the value is. They say, I'll take the seats. So we got you covered there. And in terms of the terminal value, see with your eyes, you know, it's kind of a parlor trick if you think you're going to touch a button from a language model company and it's going to do everything we just discussed and the complexity of a global corporation. So I think having a sustained growth, a predictable growth and expanding margin company on fire in the global economy, solving major problems is the category you should define us by. And yes, we love the language model companies. That's why we partner with all of them the same way we did the hyperscalers and even the systems of record. And some of them compete with us vigorously. But that has nothing to do with the fact that we know the customer wants everybody to work nice and that's why we opened it up to any system. So we're very confident in our position and we're also mindful that customers are spending a lot on AI, but that is incremental. It is not replacing what they're spending on us.
Keith Wise (Equity Analyst at Morgan Stanley)
Excellent. Thank you, Jeff.
Bill McDermott (Chairman and Chief Executive Officer)
Thank you.
Tiffany (Conference Operator)
Your next question comes from the line of Alex Duken with Wolff Research. Please go ahead.
Alex Duken (Equity Analyst at Wolff Research)
Thank you guys for taking the question. Bill, maybe start for you. Just maybe just give us a characterization of the overall enterprise spending environment right now and not just in the Middle east, but maybe globally. Is there, there's this pervasive sense of, at least from investors, of this AI anxiety where customers are a bit more hesitant to maybe make bigger purchases. Purchases because of some of the uncertainty, maybe not of what's available now, but what's kind of coming given the rapid pace of innovation. And then Gina, I've got a quick follow up for you.
Bill McDermott (Chairman and Chief Executive Officer)
No, Alex, you're right. I think the big thing and one of our great executives discussed this with the board. He spends a lot of time, especially with the CIO community, cto, digital officers and so on. AI officers too. The environment is very excited about AI. These language model companies are great companies, are very exciting. So they're very excited about AI. The problem is they don't exactly know what to do. So they're somewhat confused. I put together, along with our great team here, an agentic business white paper that has cleared things up for a lot of customers because we're highly respectful of the great companies and what they do, but we're also well aware of what they don't do. So the customer just wants the truth and they want to know what they do, meaning it could be a Language company. It could be another type of company. And what we do, and I think our positioning is really resonating with the customer because they tell us the fact that you are so open, yes, you're competitive, yes, you want to win, but you're so open. It's an autonomous platform. You give me the control tower. All the language models are welcome, all the hyperscalers are welcome, all the systems of records are welcome, all the data lakes are welcome. Because that's the environment, this heterogeneous environment that the customer is operating in. And it's also a chaotic world. If you look at the geopolitical landscape or even wars around the world, it's hectic out there. So I think what you have to do is be highly clarifying, very thoughtful with the customer. The customer, in the end, determines who wins or loses. We're not so caught up in the short term things. We just want to really double down on that customer relationship. When they see our roadmap, the great innovation that our dear Amit and his team are building into the company they love, the mas we did, it's a settling effect. It's like, yeah, we're here and we'll be here 22 more years from now taking good care of you. That's really what it is. I tell people there was once a United Airlines commercial where the CEO walks into the boardroom and starts handing out plane tickets and said, go visit our customers. That's what you got to do. You got to get in front of them. You got to help them understand. And it's not a time to be anything less than totally empathetic. Because these customers, just like the shareholders, they have so much coming at them. We just want to give you a solid, clean story and then let you make the best decision you can based on the facts.
Gina Mastantuno (President and Chief Financial Officer)
And then I would just add Alex on the numbers and the proof points, right? I talked about 16 deals greater than 5 million in the quarter, 5 deals over 10. Talked about again, second quarter in a row, our largest net new logo land at 15 million, right? So customers are spending, they are understanding the value proposition that we're driving and that we're delivering. And it is showing up in the numbers for sure.
Bill McDermott (Chairman and Chief Executive Officer)
And if you guys come to knowledge, which I hope you do, and please come to the fad, our knowledge attendance, okay? This is a live attendance, live audience. They must be interested because we're totally sold out and the seats are up 11% year over year already. And we have late sign ons. The fad, the financial analyst day we already have Darren telling us yesterday we we're going to have to have a second and third room because the fire marshal said you can't put any more people in that room. And so if you get there and it's not packed, you'll hold it on me, right? It's packed. Everybody cares about the story, whether it's a customer or it's an investor. And they know ServiceNow has a good heart. And we also know that you're rooting for us. So, you know, we're working hard.
Keith Wise (Equity Analyst at Morgan Stanley)
Nobody packs a room like you guys do. Bill, Gina, maybe just on the numbers for you, actually a $10 million beat in the quarter and then reiterating the full year given a $23 million headwind on Q1 actually seems pretty impressive. Maybe what gives you the confidence to be that prudent in the guide? And then just any, maybe a little bit more specificity on the headwinds from the CRPO Dynamics with Armis.
Gina Mastantuno (President and Chief Financial Officer)
Yeah, so listen, I think at the end of the day, the confidence I get is from the incredible team that we have around the table, the incredible go to market execution machine, all of the innovation that Amit and the team have been driving, and just the environment that we see ourselves in. Right. There's not one person in this company that doesn't spend time with customers every single day. And so that gives me the confidence in the guide. Thank you for realizing that. It's a very strong guide. And by the way, the acquisition of Armis, as Bill talked about, it's not about buying revenue, it's about buying incredible talent, incredible technology capabilities that's going to make our AI control tower even stronger. Right. And so building that in is just really, really strong. I think the headwinds with CRPO Dynamics of Armis. So there's no CRPO headwind from Armis. There's a tailwind from Armis. So I'm not quite sure what you're referring to there, but at the end of the day, CRPO is a strong guide as well. And we feel really good about the overall guidance top to bottom.
Bill McDermott (Chairman and Chief Executive Officer)
And Alex, if I may, if you thought about a headwind, if you were referring to the 50 basis points on the margin with regard to Armis, remember It was originally 100 basis points thanks to Gina's efficiency. And the company is great. Now on now with Ahmed, it's 50 basis points. But here's the commitment. Okay. By the end of the year, it goes down to zero. That's because of the efficiency we're driving in the company and the great platform that we have so we can actually acquire a substantially interesting company and not impact the margin at all. Which is kind of cool because most companies will make excuses. When you get to fad, we're going to talk about margin expansion, revenue acceleration. We're going to show you how the stock based compensation is coming down and we're also going to show you just how big this company is going to be in the next few years. So we're really ready to roll.
Gina Mastantuno (President and Chief Financial Officer)
Yeah. And on crpo, Alex Armis would have been hired. They, they have a lot of CRPO in their contract, so termination for convenience. So not all of it can go into crpo, but they are a strong company. We, we, we feel great about the, the potential there. That's exactly what I was referring to. Thank you guys.
Mark Murphy (Equity Analyst at JP Morgan)
I used maybe headwind was the right, the wrong word.
Bill McDermott (Chairman and Chief Executive Officer)
No problem. We love it. Alex, you gave us a chance to clear some stuff up. That's what the call is for. Thank you so much.
Tiffany (Conference Operator)
Your next question comes from the line of Samad Samana with Jefferies.
Samad Samana (Equity Analyst at Jefferies)
Hi, good evening. Thanks for taking my question. Bill, wanted to start off with you. Just, you know, there's a lot going on and we've covered a lot on the call. But you know, I think I saw on LinkedIn that there's a new Chief Strategy Officer. You've obviously completed a lot of M and A recently and AI is this little thing we all keep talking about. Just help us think through all the changes that are going on inside the organization and maybe what are the top one or two near term priorities? Is it integrating the M and A? Is it driving adoption of the AI business? And just were there any other changes related to the Chief Strategy Officer change? And then I have one follow up.
Bill McDermott (Chairman and Chief Executive Officer)
Yeah, Saman. I'll let Gina talk about the Chief Strategy Officer because he's fantastic and he reports to Gina. But just at a macro level, let me just tell you what's going on in the corporation. One is we have a very fired up company. They're excited and they're really ready to roll. And I think anything that challenges us in the media or talk of software companies and their long term evolution just puts a bigger chip on our shoulders. So we're totally good with that. I tell them we walked over tougher challenges than this on our way to a fight. So that's one thing. The psychology of the company is in great shape. The second thing is we're focused on acceleration of our revenue. We know it's all going to be based upon AI and the hockey stick that's forming around our great platform, autonomous managing the agents. They're going to be 2.2 billion more agents in the workforce in the next couple of years. We're going to manage ours and everybody else's too. And I think what we've done here in security to really change the game, it's not because there aren't great security companies out there. There are. We integrate with all of them. In fact, great ones like CrowdStrike, my friend George and Nikesh and all these guys, they're terrific. They're doing a great job. What we're doing is something very different. We're still integrating with all them, but we've expanded the boundaries into ot, which is a new area that AI is going to be especially kind to. So we are going to grow a lot. So think of it on the margin side. We're going to accelerate the margins of the company too. So we're going to do these really hard things and we're going to accelerate the margins and we're looking at a company that's a rule of 60 company and beyond. We're also taking down the SBC because we want to get it down into single digits because we can. Because whether you look at it as a non GAAP or a gap, we want you to love it. So we're working on all those things. They're in flight. We're going to give you our story at fad. You're going to love it in terms of the big picture also, a great company has to build the best products. We got the best guy with Amit and his team is unbelievable. And with all these acquisitions that we made, again, we didn't buy old hack companies for the revenue. We bought new innovative AI companies. All of these CEOs that came in are running development organizations and businesses for Amit. We have Paul Phipps on the go to market side. They work like factory to foxhole. And so these guys come in and there's a giant synergy between development and the go to market. The FD is in front of customer and the customer engagement folks that really make sure the adoption of the AI is good and that hockey stick is in its early days. When that kicks in, it's going to be really sensational. So it's best products provide the absolute greatest service. We have built the best leadership team. The board said that yesterday. They can't believe the leadership team. It's so stunning. The culture is incredible and we're expanding the ecosystem at a torrid pace. So if you take all that together, it says one thing, gross company, and that's what we are. And so we're going to sustain it and we're going to extend it. And then with respect to the chief strategy Office of Trained, please don't read anything more into it. Natural attrition. Krishna Gidwani is fantastic. We're very excited to have him on board. He comes from us from Pure Storage, now Everpure and he's been doing strategy, ventures, investing as well as M and A integration for a very long time. And so we're really excited to have him on board. Our number one priority from a MA perspective this year is all about integration and integrating these incredible new companies that are part of the ServiceNow family. And Krishna is going to help me do that and help Amit do that extremely effectively.
Samad Samana (Equity Analyst at Jefferies)
Great. Thanks Gina. And maybe just a quick follow up. It's a little bit in the spirit of Keith's questions with a lot going on in terms of the business as well, in terms of like the revenue streams and the AI revenue number is exceptional. Just can you help us think about and I think this helps address the where's the budget dollars coming from? What have NRR trends look like maybe through the first quarter just as we as we reconcile that incremental or that huge AI spend jump as we think about seats still growing. If you translated all that or distilled to nrr, how has that trended through maybe the first quarter compared to history?
Gina Mastantuno (President and Chief Financial Officer)
Yeah, we don't give NRR on a quarterly basis. It's not trending significantly differently. We'll talk more about all of those trends at fad. What I'll tell you is that from a budget perspective, we're seeing it come from a lot of different places. Right. It's not one place a lot of people are finding it because labor budgets are are coming down. A lot of people are reallocating technology spend and eliminating more point solutions and really leaning into platform consolidation and platforms like ServiceNow. And so from a budget perspective, it's kind of coming from different places. And what we're seeing and hearing from our customers is they are moving full speed ahead out of AI experimentation into full scale deployment. And so leaning in on platforms that they trust, especially as the proliferation of agents and devices and code is just exploding. To be able to build their governance all on the platform that they know and Trust for 22 years is a real point of differentiation for us. And so really excited. Bill did take the headline that was supposed to be in fading, but you know, it's all great. Listen, that 50% increase is real. I think you're going to be very excited when you see the trends that we're going to show in a couple of weeks of what we believe AI and ServiceNow is going to drive. And AI is not the only part of the strategy. We have incredible CRM products, we have incredible core and what security and risk is going to be able to do now with Armis and Venza combined with the ServiceNow platform and is just incredible. So hopefully we'll see you in Vegas in 10 days.
Samad Samana (Equity Analyst at Jefferies)
And I look forward to those new headlines. Thank you.
Gina Mastantuno (President and Chief Financial Officer)
Thank you.
Tiffany (Conference Operator)
We have time for one more question. Your final question comes from the line of Michael Curran with Wells Fargo.
Michael Curran (Equity Analyst at Wells Fargo)
Please go ahead. Thanks very much. Appreciate you fitting me in. Bill, there are questions you've alluded to around whether you're playing offense or defense with M and A. I was just hoping you could walk us through some of the feedback you're hearing from customers initially and help us think through the time it takes to get this all fully in the hands of your sales, Oregon customers. And then Gina, just can you help level set your approach to guiding for the newer pieces? We can see the Armis contribution, you're assuming, but is there prudence in terms of how you take some of the new pieces and account for the time to ramp or how would you frame the initial assumptions there? Thanks very much.
Bill McDermott (Chairman and Chief Executive Officer)
Thank you very much, Michael. I appreciate the question. The company and the customer loves the acquisitions that we did. Loves it. You know, ServiceNow has a great relationship with our customers and they count on us for innovation. And if you look at a company like Moveworks, I mean, literally quintupling our employee works business in the first quarter that they're here, that's a testament to the fact that the customers, the ecosystem and obviously our team have already hit the ground running with that and we expect enormous success with that. If you think about Vaso, we just got it and as Gina said, it's a very small revenue buy because we bought the innovation, we bought the entrepreneurs great patented technology. Think about it. To in real time graph people and the agents in real time and all the rights and privileges that they do and don't have across a global corporation in seconds and actually roll that out across an entire corporation to make sure that AI is doing all good things for you and avoiding all the bad things. Armis is already in nine of the 10 top 10 companies in the world and 40% of the Fortune 100 and they don't have a global footprint in Salesforce like we do. And so this AI control tower vision is massive. And it's actually the biggest thing that I've seen the customer react to since I've been here since 2019. Okay. That's a fact. So all of that is all upside. We haven't even realized it yet. We, we're rolling it out. We're having an all hands meeting tomorrow and everybody is just so excited and thrilled here. So I would just say get excited because the customers are. And quintupling a business meaning doing one quarter what they did in a prior year just gives you an indication when they just joined us and the other two just joined us and you know, they'll obviously be part of the Q2 print. And that's. The story is still unfolding as we speak, but it's all going great. So, Michael, I tell you, we got this thing, man. We really got it. And as it relates to all the other participants in the AI universe, this is the part that nobody's accounted for. We love them all because everything that they do contributes to revenue that goes into the servicenow platform. Everything, whether it's an integration point, whether it's a CO solution or whether they're just running with the customer and the customer is running the work through our platform on the execution of the way the world works, it's all hitting our revenue and our growth line. One thing Gina said that's very, very important, the idea of moving from the project to actually moving to the AI process. A lot of the customers hadn't yet deployed all the AI that they have, not because they don't love the solution, but because their company wasn't ready for it yet. So we're very much in front of the customer with a customer excellence group and our forward deployed engineers. So as that goes live, that hockey stick starts to kick in as they consume the assists and reload the assist packs. So all of this and more is part of the story that's yet to be told. And yet the story is a beat and raise.
Gina Mastantuno (President and Chief Financial Officer)
Yeah. And I would just add to your question, as you'd imagine with my approach to guidance, certainly I'm being prudent with brand new acquisitions that have just closed. I feel very confident in the guide. I also feel confident that there's. As we ramp and as we build, as we build integration into the body of ServiceNow, the opportunity for incremental growth is enormous and you'll see a lot more about what we think about that. Into 27 and beyond in Vegas in 10 days. And so prudence in the guide for 26, significant upside. And we truly believe it's going to help not only accelerate our top line revenue, but also be a pull on the core. As Bill talked about earlier, ma done extremely well.
Tiffany (Conference Operator)
Ladies and gentlemen, this concludes today's call. Thank you all for joining the first quarter 2026 ServiceNow earnings conference call. You may now disconnect.
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