ServiceNow, Inc. (NOW) Earnings

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Dec 2026upcoming

Next quarter

Expected to report Jan 27, 2027 — estimated from last year’s reporting date.

Consensus is $0.63 EPS for Dec 2026 across 13 estimates, ranging $0.54 to $0.75.

NOW Sep 2026

Reported Oct 28, 2026 · after the close

: 8.93%
: -26.95%

: $0.56
: $0.51
: —
: $4.11B

Reported results

: $4.11B; from $3.41B
: 70.51%; from 77.28%
: $385.00M; from $572.00M
: 9.38%; from 16.79%
: $277.00M; from $502.00M
: $0.27; from $0.48

Highlights

Subscription growth: Q3 revenue was $4.106 billion, up 20.5% year over year and 2.9% from Q2; subscription revenue was $3.988 billion, up 21% year over year, or 20.5% in constant currency.
AI monetization: ServiceNow raised its 2026 AI annual contract value target to $1.7 billion, from $1 billion at the start of the year; Q3 AI net new ACV grew 65% year over year, while production agentic-AI consumption was up more than 13x year to date.
Bookings visibility: RPO reached $29.7 billion, up 22% year over year (22.5% constant currency), and cRPO was $13.65 billion, up 20.5% (21% constant currency). Both exceeded company guidance.
Margins and cash: Non-GAAP operating margin was 32.5%, 150 basis points above guidance; free cash flow was $822 million, a 20% margin. The company raised its full-year free cash flow margin target by 100 basis points to 36%.
Q4 outlook: Subscription revenue guidance is $4.245–$4.255 billion, or 21.5% constant-currency growth, while cRPO growth is expected to be 18.5% constant currency.
GAAP earnings and comparability: GAAP diluted EPS was $0.27 versus $0.48 a year ago; non-GAAP diluted EPS was $1.00 versus $0.95. The supplied analyst data flags EPS of $0.51 versus $0.56 consensus, but that figure does not reconcile with either EPS measure in the release.
Large-customer demand: ServiceNow closed 19 deals with more than $5 million in net new ACV, up more than 135% year over year, and ended Q3 with 680 customers above $5 million ACV, up approximately 23%.
Investment and costs: GAAP operating income fell to $385 million from $572 million a year ago as stock-based compensation, acquired-intangible amortization and severance rose; acquired Armis and Veza contributed to a much larger intangible-asset base.

Analysis

ServiceNow delivered a strong operating quarter and raised parts of its outlook: revenue of $4.106 billion grew 20.5% year over year, subscription revenue grew 20.5% in constant currency, and cRPO growth of 21% constant currency beat guidance by 100 basis points. Revenue increased 2.9% from Q2’s $3.99 billion. The supplied expectations data records EPS of $0.51 against $0.56 consensus, an 8.9% shortfall, but that reported figure does not reconcile with the release, which shows split-adjusted GAAP diluted EPS of $0.27 and non-GAAP diluted EPS of $1.00. GAAP EPS was $0.48 a year ago; adjusted EPS was $0.95.

The defining feature was accelerating AI adoption and monetization: Q3 AI net new ACV grew 65%, production consumption was up more than 13x year to date, and the company lifted its year-end AI ACV target to $1.7 billion. At the same time, the forward indicators need context: Q4 cRPO growth is guided to 18.5% constant currency, partly reflecting early renewals pulled into Q3, higher on-premise mix and backlog excluded from cRPO. Profitability beat guidance, with a 32.5% non-GAAP operating margin and 20% free cash flow margin; ServiceNow raised its 2026 free cash flow margin target to 36%, while increasing its full-year subscription revenue midpoint by $15 million.

AI commercialization

Management presented AI as the quarter’s central growth engine, with a shift from trials toward production usage and multiple routes to monetize: subscription licenses, consumption and governed actions through partner interfaces. The company also said it is providing short-term deployment expertise in select large deals to speed customers into production; the accounting treatment shifts some value from subscription revenue to professional services temporarily.

Targets and momentum: The 2026 AI ACV target rose from $1 billion at the start of the year to $1.7 billion; Q3 AI net new ACV grew 65% year over year.
Adoption: Year-to-date production consumption of agentic AI was up more than 13x year over year. AI deals above $1 million grew 4.5x, and deals spanning five or more AI products increased more than 8.5x.
Products: EmployeeWorks reached $100 million ACV in less than three quarters. Control Tower net new ACV grew more than 6x year over year; Action Fabric assist consumption increased 500% month over month.
Deployment support: Management said supported customers advanced AI adoption twice as fast in the first five weeks. Select large-deal deployment services reduced subscription revenue by about 25 basis points in Q3 and are expected to have an approximately 50-basis-point impact in Q4; the company described this as temporary.

Revenue and demand

The underlying subscription business remained broad-based, with growth in core technology workflows and increasing penetration of newer AI and security products. Demand was especially visible in large, multi-product transactions: 19 of the company’s top 20 deals included six or more products. Renewal rates remained high, supporting the recurring-revenue base.

Quarterly revenue: Total revenue was $4.106 billion, up 20.5% year over year; subscription revenue of $3.988 billion grew 21%, or 20.5% in constant currency. Professional services and other revenue was $118 million, up 10%.
Large transactions: The company recorded 19 deals with more than $5 million in net new ACV, up more than 135% year over year. It ended the quarter with 680 customers above $5 million ACV, approximately 23% more than a year earlier.
Workflow participation: Security and Risk appeared in 16 of the top 20 deals; Technology workflows had 54 deals above $1 million, and CRM and Industry workflows recorded 28 deals above $1 million.
Retention: The renewal rate was 98%, compared with 97% in Q3 FY2025.

Backlog and guidance

Contracted demand grew faster than revenue, but management cautioned against reading Q4 cRPO guidance as a direct read-through to revenue. Early renewals contributed about half of the Q3 cRPO beat and moved business forward from Q4; higher on-premise mix and certain time-based contracts also affect the metric. Management said approximately 50 basis points of year-over-year subscription backlog growth expected in Q4 is excluded from cRPO but will be included in revenue.

Contracted backlog: RPO was $29.7 billion, up 22% year over year (22.5% constant currency); cRPO was $13.65 billion, up 20.5% (21% constant currency).
Q4 subscription outlook: Revenue is expected at $4.245–$4.255 billion, representing 22.5%–23% reported growth and 21.5% constant-currency growth.
Q4 cRPO outlook: Constant-currency growth is expected to be 18.5%. Management cited early renewals shifting into Q3, a higher on-premise mix and deployment-related accounting as factors affecting the comparison.
Full-year outlook: Subscription revenue guidance is $15.780–$15.790 billion, with 21% constant-currency growth; the midpoint increased $15 million. The non-GAAP operating margin target remains 31.5%.

Margins and earnings

Non-GAAP profitability beat the company’s expectations, but GAAP operating performance was weaker year over year as acquisition-related amortization and other costs rose. The gap between GAAP and adjusted results is particularly relevant this quarter: acquired intangibles, stock-based compensation and severance were all material adjustments, while higher interest expense also weighed on GAAP earnings.

Operating results: GAAP operating income was $385 million, down from $572 million a year ago; GAAP operating margin was 9.5%, versus 17%. Non-GAAP operating income was $1.338 billion, with a 32.5% margin, compared with 33.5% a year earlier.
Acquisition and workforce costs: Q3 stock-based compensation was $633 million versus $492 million a year ago; purchased-intangible amortization was $198 million versus $33 million; and severance was $87 million versus $24 million.
Gross margin: GAAP gross margin was 70.5%, down from 77.5% a year ago. Non-GAAP gross margin was 77.5%, versus 81%; subscription non-GAAP gross margin was 80%, versus 83%.
Cash generation: Free cash flow was $822 million, a 20% margin, compared with $592 million and a 17.5% margin a year earlier. Capital expenditure was $91 million versus $235 million.

Capital and acquisitions

The strategic additions of Armis and Veza strengthen ServiceNow’s security and identity capabilities, but their cost is now visible in the balance sheet and GAAP expense base. The acquisitions were funded in part with debt, leaving the company with higher interest expense and a substantially larger acquired-intangible balance. Management linked the raised free cash flow outlook to lower capital expenditure, rather than to a change in its operating-margin target.

Acquisitions: ServiceNow acquired Armis for approximately $7.6 billion and Veza for approximately $1.2 billion; cash used for business combinations was $9.167 billion over the first nine months of 2026.
Balance-sheet effects: Goodwill rose to $10.012 billion from $3.578 billion at year-end 2025, and net intangible assets increased to $3.594 billion from $1.121 billion.
Debt and interest: At quarter-end, the company had $5.438 billion of long-term debt and $2.086 billion of short-term commercial paper. Q3 interest expense was $81 million, compared with $6 million a year earlier.
Cash-flow target: The full-year free cash flow margin target increased from 35% to 36%, which management attributed to lower capital expenditure.

ServiceNow, Inc.

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