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ENJAKODEFRESPTITNLPLSVNODAFI
Thu, 29 Oct 2026
BreakingEarnings

ServiceNow tops its own Q3 targets and lifts its 2026 forecast

Shares were down 16.92% in still-moving after-hours trade at 6:06 PM ET on 28 October. The 2026 subscription-revenue midpoint rose $15m, by Polstob's calculation; GAAP EPS fell to $0.27 from $0.48.

By AI markets desk·Sources: 5 sources·Published ·AI-generated·3 min read
Key facts
  • Subscription revenue · Q3 20263,988 $m +21%; +20.5% constant currency
  • Current remaining performance obligations · 30 September 202613.65 $bn +20.5%; +21% constant currency
  • Diluted EPS (non-GAAP) · Q3 20261.00 $ Was $0.95 a year earlier
  • Diluted EPS (GAAP) · Q3 20260.27 $ Was $0.48 a year earlier
  • 2026 free cash flow margin guidance (non-GAAP) · Guidance issued 28 October 202636 % Was 35% (22 July)
Outlook changeRaised

Subscription revenue FY 2026

New$15,780m – $15,790m

Previous range from the 22 July 2026 release.

Source: ServiceNow Q2 and Q3 2026 results releases (Form 8-K, Exhibit 99.1), Guidance issued 28 October 2026.

ServiceNow now expects 2026 subscription revenue of $15,780m to $15,790m, according to the results release it furnished to the SEC at 4:14 PM ET (21:14 CET) on 28 October 2026, against $15,760m to $15,780m in its July release. That lifts the midpoint by $15m, by Polstob's calculation. The free cash flow margin target (non-GAAP) rises to 36% from 35%, while the non-GAAP targets of 31.5% for operating margin and 81% for subscription gross margin are unchanged. For the fourth quarter, the company guides to subscription revenue of $4,245m to $4,255m and cRPO growth of 18.5% in constant currency.

Third-quarter subscription revenue rose 21%, or 20.5% in constant currency, to $3,988m, above the $3,975m to $3,980m range ServiceNow had guided in July, and the non-GAAP operating margin of 32.5% beat the 31% guide. cRPO, which the company defines as contract revenue it will recognise over the next 12 months, reached $13.65bn, up 20.5%, or 21% in constant currency against a 20% guide. Total revenue rose 20.5% to $4,106m and remaining performance obligations 22% to $29.7bn. Non-GAAP diluted EPS was $1.00, against $0.95 a year earlier.

What management said

Gina Mastantuono, President and CFO, ServiceNow (Paraphrased)

  • AI net new annual contract value exceeded the company's expectations, so it raised its year-end AI ACV target for a second time this year, to $1.7bn from $1bn at the start of 2026.
  • Year-to-date consumption of agentic AI in production is more than 13 times higher than a year earlier.
  • Reduced capital spending is part of why the company now targets a 36% free cash flow margin for 2026, one percentage point above its July target.

Source ↗

On a GAAP basis, profit fell. Net income was $277m, against $502m a year earlier, and diluted EPS $0.27, against $0.48. Income from operations dropped to $385m from $572m, while subscription cost of revenues rose to $1,054m from $666m and operating expenses to $2,510m from $2,061m, according to the income statement. Interest expense rose to $81m from $6m. The release also announced an expanded partnership with OpenAI, starting with a ServiceNow plugin for ChatGPT.

ServiceNow shares were down 16.92% at $124.50 in still-moving after-hours trading as of 6:06 PM ET (23:06 CET) on 28 October, according to Nasdaq.com, after falling 3.18% to $149.855 in the regular session. Investing.com linked the fall to fourth-quarter revenue guidance it said was below analysts' expectations; the $4.25bn to $4.26bn range it cited matches ServiceNow's subscription-revenue guide. Nasdaq.com lists a $0.56 EPS consensus from 13 estimates, but the $0.31 it records for the June quarter matches neither ServiceNow's GAAP ($0.29) nor non-GAAP ($0.90) figure, so Polstob makes no beat-or-miss comparison.