ServiceNow — Third Quarter 2026 Earnings Summary

Financial Performance:

• Subscription revenues were $3,988 million in Q3 2026, representing 21% year-over-year growth (20.5% in constant currency).
• Total revenues were $4,106 million in Q3 2026, representing 20.5% year-over-year growth (20% in constant currency).
• GAAP net income was $277 million ($0.27 per share basic and diluted); Non-GAAP net income was $1,039 million ($1.00 per share basic and diluted).
• GAAP income from operations was $385 million (9.5% margin); Non-GAAP income from operations was $1,338 million (32.5% margin).
• Net cash provided by operating activities was $839 million in Q3 2026.
• Free cash flow was $822 million in Q3 2026, representing 20% year-over-year growth.
• Current remaining performance obligations (cRPO) were $13.65 billion as of Q3 2026, up 20.5% year-over-year (21% in constant currency).
• Remaining performance obligations (RPO) were $29.7 billion as of Q3 2026, up 22% year-over-year (22.5% in constant currency).
• Subscription gross profit was $2,934 million (73.5% margin); Non-GAAP subscription gross profit was $3,198 million (80% margin).
• Professional services and other gross loss was $39 million (GAAP); Non-GAAP gross loss was $23 million.
• Total gross profit was $2,895 million (70.5% margin); Non-GAAP total gross profit was $3,175 million (77.5% margin).

Guidance and Future Outlook:

• Raised full-year 2026 subscription revenue guidance to $15,780–$15,790 million (22.5% growth, 21% constant currency).
• Raised full-year 2026 free cash flow margin target to 36%.
• Raised full-year 2026 income from operations margin target to 31.5%.
• Raised full-year 2026 subscription gross margin target to 81%.
• Raised Q4 2026 subscription revenue guidance to $4,245–$4,255 million (22.5%–23% growth, 21.5% constant currency).
• Raised Q4 2026 income from operations margin target to 32%.
• Raised AI annual contract value (ACV) target for 2026 to $1.7 billion, up 70% from the beginning of the year.
• Projected weighted-average shares for full-year 2026 diluted net income per share at 1.04 billion.

Business Segments and Product Lines:

• Announced an expanded partnership with OpenAI to develop Security and Risk solutions, a Codex integration in AI Workflow Factory, and voice-driven governance.
• Launched the Control Tower Alliance, an ecosystem including Anthropic, AWS, Cisco, HiddenLayer, Kong, NVIDIA, Okta, OpenAI, Stripe, WitnessAI, and Zenity.
• Introduced "AI Passport" to verify first- and third-party AI agents' scopes in real-time.
• Launched "Flow," a new AI-native service desk that operates outside the ServiceNow AI Platform.
• Unveiled "Autonomous Security," a suite of six unified security solutions.
• Announced "ServiceNow Arc," a personal long-running AI agent governed by the Super Intelligence Control Tower and enforced with NVIDIA OpenShell.
• Introduced "ToolSmith," an agentic developer environment for building AI agents without code.
• Announced new industry solutions for telecommunications, retail, sales, and IT integrated with Google Cloud's Gemini Enterprise.
• Reported 19 transactions over $5 million in net new ACV in Q3 2026, representing over 135% year-over-year growth.
• Ended the quarter with 680 customers with more than $5 million in ACV, representing approximately 23% year-over-year growth.
• Year-to-date consumption of agentic AI in production was up more than 13x year-over-year.

Market and Competitive Landscape:

• ServiceNow was recognized as a Leader and Customer Favorite in the Forrester Wave™: Configure, Price, Quote Solutions, Q4 2026.
• ServiceNow was recognized as a Leader in the Forrester Wave: Conversational AI Platforms for Employee Services, Q3 2026.
• ServiceNow was named a Market Shaper in the 2026 Gartner® Emerging Market Quadrant for AI Agents in Human Resources.
• ServiceNow was recognized as a Leader in the 2026 Gartner Magic Quadrant for AI Applications in IT Service Management.
• ServiceNow was recognized as a Leader in the 2026 Gartner Magic Quadrant for Business Orchestration and Automation Technologies.
• ServiceNow was recognized as a Leader in the 2026 Gartner Magic Quadrant for AI-Augmented Low-Code Application Platforms.
• ServiceNow placed on the Fortune Best Workplaces in Technology® list and the Forbes World's Best Employers list.

Risks and Challenges:

• Forward-looking statements are subject to risks including cyber-security events, data privacy law compliance, and service interruptions.
• Risks include the ability to compete against existing and new competitors and the ability to execute share repurchases.
• Potential impacts from global macroeconomic conditions, tariffs, inflation, armed conflicts, and foreign currency fluctuations.
• Risks related to the ability to develop and gain customer demand for new products incorporating AI technology.
• Risks associated with the timing and amount of adjustments to non-GAAP financial measures.

Management Commentary and Tone:

• CEO Bill McDermott described the quarter as an "inflection point" for ServiceNow as the "Super Intelligence Control Tower," citing customer validation of the platform as the single harness for enterprise intelligence and security.
• CFO Gina Mastantuono stated that strong Q3 results reinforce ServiceNow's positioning to help customers put AI to work, govern every agent, and translate intelligence into secure outcomes.
• Management noted the company is capturing AI opportunities with a capital-efficient model, reducing capex, and raising free cash flow margin targets.
• Management highlighted that the hybrid business model grew 23% to $30 billion in RPO.
• Management emphasized that ServiceNow has "no capital or compute constraints" compared to other companies at the forefront of the agentic enterprise.

Other Key Points:

• ServiceNow opened its first dedicated office in Brazil, located in São Paulo.
• ServiceNow and Aramco Digital established an agreement to standardize and govern digital workflows across Aramco's affiliates in more than 50 countries.
• Bundesliga named ServiceNow its Official CRM Partner.
• HPE selected ServiceNow to transform customer support and field service for its Cloud & AI business.
• Stagwell chose the ServiceNow AI Platform to consolidate four service desks across more than 70 agencies and 10,000 employees.
• Thrive deployed ServiceNow's CRM solution and AI agents, resolving 73% of issues at first contact and cutting time-to-resolution by 63%.
• INRY deployed ServiceNow EmployeeWorks in six weeks, cutting median request submission time by 60%.
• ServiceNow attended NVIDIA GTC Berlin to announce industry's first personal enterprise agent and policy enforcement with NVIDIA.
• ServiceNow will attend the BMO Technology and Innovation Leaders Conference (Nov 12), RBC Global TIMT Conference (Nov 17), Wells Fargo TMT Summit (Dec 8), and Barclays Global Technology Conference (Dec 9).
• The company reported a $51 million release of valuation allowance on deferred tax assets impacting GAAP net income for the nine months ended September 30, 2026.
• A five-for-one stock split was effective December 17, 2025, with prior period results retroactively adjusted.