$NOW · ServiceNow, Inc.
ServiceNow reported Q3 2026 results with subscription revenues of $3,988M (+21% YoY) and total revenues of $4,106M (+20.5% YoY), beating the high end of guidance across all topline metrics. cRPO reached $13.65B (+20.5% YoY) and RPO hit $29.7B (+22% YoY). GAAP net income fell sharply to $277M ($0.27/share) from $502M ($0.48/share) a year ago, while non-GAAP net income was $1,039M ($1.00/share). The company raised its full-year AI ACV target to $1.7B and lifted free cash flow margin guidance to 36%.
- Subscription revenues of $3,988M grew 21% YoY (20.5% constant currency), beating the high end of guidance.
- cRPO hit $13.65B (+20.5% YoY) and RPO reached $29.7B (+22% YoY), both record levels.
- GAAP net income fell 45% YoY to $277M ($0.27/share) from $502M ($0.48/share) on sharply higher operating costs.
- AI annual contract value target raised for the second time in 2026 to $1.7B, up 70% from the $1B start-of-year goal.
- Full-year free cash flow margin guidance raised 100 bps to 36%; Q4 subscription revenue guided to $4,245–$4,255M (+22.5–23% YoY).
Stock down 3.00% in regular session to $150.13; after-hours reaction not yet captured. The GAAP net income collapse (down 45% YoY) despite topline beats suggests margin compression concerns are weighing on the $155B market cap name.
ServiceNow's Q3 encapsulates the enterprise AI trade: record RPO and accelerating AI bookings validate the narrative, but collapsing GAAP profitability raises the stakes for the margin-recovery story.
ServiceNow's AI ACV acceleration to $1.7B and the OpenAI/Control Tower Alliance announcements position it aggressively in the enterprise agentic AI race against Microsoft, Salesforce, and SAP. The 19 deals over $5M in net new ACV (up 135% YoY) signals large-enterprise AI adoption at scale.
GAAP operating margin compressed to 9.5% from 16.8% a year ago as cost of subscription revenues surged 58% YoY to $1,054M, driven by sharply higher stock-based compensation and infrastructure costs. Interest expense jumped to $81M from $6M YoY, reflecting increased debt service burden.