ServiceNow reported Q2 subscription revenue up 24.5% to $3.9B, beating guidance and prompting a higher full-year outlook.

AI ACV crossed $1B, net-new AI ACV grew 40%+ QoQ, and 50% of net-new business is now non-seat-based.

But the hyperscaler economics caught my attention

Two hyperscalers, one quarter

Amazon Web Services (AWS) → ServiceNow

surpassed $1 billion in AWS Marketplace transactions and deepened its collaboration with AWS.

Microsoft → ServiceNow

AI specialists are now available through the Microsoft Marketplace, with AI Control Tower governance extended across Microsoft's Agent 365 ecosystem.

The collaboration is deepening in both directions

ServiceNow isn't only selling through the hyperscalers — it's running more of its platform on them.

Full-year subscription gross margin guidance of 81% reflects "more customers utilizing our hyperscaler partnerships as well as accelerating AI adoption."

CFO Gina Mastantuono said: as "more and more goes to hyperscalers, the cost per comes down," and she expects better hyperscaler pricing mid-term.

That creates short-term gross-margin pressure. Management sees the faster ramp as positive because scale should lower unit costs, while operating margin held flat.

ServiceNow is leaning on partners to sell and deliver

Its $29B backlog (RPO), per CEO Bill McDermott, is "fueled by longer customer commitments and skyrocketing demand from our partner ecosystem."

Direct sales fell to 75% of Q2 revenue, from 78%. And ServiceNow counts systems integrators and MSPs inside that "direct" number — so the real partner-sourced share is (much?) higher.

One customer, a U.S. federal channel partner and systems integrator, booked 13% of total revenue, up from 11% a year ago.

Delivery is shifting to partners too — but it's not cheap

Fees to third-party delivery partners hit 42% of professional-services revenue, up from 33%.

ServiceNow’s professional-services business posted a 26% gross loss, primarily driven by personnel costs and “partner ecosystem spend to further help accelerate customer value realization” growing faster than revenue.

ServiceNow also launched a forward-deployed engineering program with Accenture to push AI from pilot to production. It's the FDE model the industry is converging on.

And the commitment runs both ways

Hyperscalers distribute ServiceNow. ServiceNow is committing capacity back — its non-cancellable cloud payments are climbing:

• $324M rest of 2026

• $401M in 2027

• $573M in 2028

• $704M in 2029

• $2.9B in 2030