ServiceNow 8-K
PositiveEarningsGuidance raised
Agentic AI demand and larger customer commitments support raised FY2026 outlook; AI annual contract value target rises to $1.7B.
Filed 2026-10-28 16:14 ET
- 2.02 Results of Operations
- 9.01 Financial Statements and Exhibits
Summary
Q3 2026 results with Q4 and FY2026 guidance. ServiceNow said it exceeded the high end of guidance across Q3 topline growth and profitability metrics, and raised its FY2026 subscription revenue and free cash flow margin outlook. It is positioning its platform as a control layer for enterprise AI agents, focused on orchestrating, governing and securing AI-driven work; it also raised its 2026 AI annual contract value target to $1.7B.
Key Figures
| Metric | Q3 2026 | 9M 2026 |
|---|---|---|
| Revenue | $4.11B, +20.5% Y/Y | $11.9B, +22% Y/Y |
| GAAP gross margin | 70.5%, vs 77.5% | 72%, vs 78% |
| GAAP operating income | $385M, -33% Y/Y | $1.05B, -24% Y/Y |
| Non-GAAP operating income | $1.34B, +17% Y/Y | $3.71B, +22% Y/Y |
| GAAP net income | $277M, -45% Y/Y | $1.04B, -22% Y/Y |
| GAAP diluted EPS | $0.27, -44% Y/Y | $1.01, -22% Y/Y |
| Non-GAAP diluted EPS | $1.00, +5% Y/Y | $2.87, +12% Y/Y |
| Operating cash flow | $839M, +3% Y/Y | $3.10B, -3% Y/Y |
| Free cash flow, non-GAAP | $822M, +39% Y/Y | $3.12B, +20% Y/Y |
- Subscription revenue was $3.99B, up 21% Y/Y (20.5% in constant currency); total revenue grew 20.5% (20% in constant currency). Current remaining performance obligations (cRPO), contract revenue expected within 12 months, were $13.65B, up 20.5%; remaining performance obligations were $29.7B, up 22%.
- AI demand and larger customer commitments supported the growth outlook: year-to-date production consumption of agentic AI was up more than 13x Y/Y; Q3 included 19 transactions with more than $5M in net new annual contract value, up more than 135%, and the company ended the quarter with 680 customers above $5M in annual contract value, up approximately 23%.
- GAAP operating income fell while non-GAAP operating income rose; the non-GAAP reconciliation adds back, among other items, $633M of stock-based compensation, $198M of purchased-intangible amortization and $87M of severance costs in Q3. ServiceNow also expanded its OpenAI partnership, including a ChatGPT plugin, and cited HPE and Stagwell selections of its platform.
Against earlier guidance (derived from earlier filings)
| Metric | Period | Earlier guidance | Actual | Result |
|---|---|---|---|---|
| GAAP subscription revenues | Q3 2026 | $3.975B-$3.98B; 20.5% Y/Y, 20% constant-currency Y/Y | $3.99B | beat |
Guidance
| Metric | Period | Guidance | Prior | Direction |
|---|---|---|---|---|
| Subscription revenue (GAAP); Y/Y growth (GAAP); Y/Y growth (constant currency, non-GAAP) | Q4 2026 | $4.245B-$4.255B; 22.5%-23%; 21.5% | — | — |
| cRPO Y/Y growth; constant-currency Y/Y growth | Q4 2026 | 18.5%; 18.5% | — | — |
| Operating margin (non-GAAP) | Q4 2026 | 32% | — | — |
| Diluted weighted-average shares | Q4 2026 | 1.05B | — | — |
| Subscription revenue (GAAP); Y/Y growth (GAAP); Y/Y growth (constant currency, non-GAAP) | FY2026 | $15.78B-$15.79B; 22.5%; 21% | — | Raised |
| Subscription gross margin (non-GAAP) | FY2026 | 81% | — | — |
| Operating margin (non-GAAP) | FY2026 | 31.5% | — | — |
| Free cash flow margin (non-GAAP) | FY2026 | 36% | 35% | Raised |
| Diluted weighted-average shares | FY2026 | 1.04B | — | — |
| AI annual contract value target | 2026 | $1.7B | $1B at the start of 2026 | Raised |
| Rule of 60+ (subscription revenue growth in constant currency plus free cash flow margin) | Long term | 60%+ | — | — |
Guidance changes, derived from earlier filings
| Metric | Period | Earlier guidance | Guidance now | Change |
|---|---|---|---|---|
| Subscription revenue (GAAP); Y/Y growth (GAAP); Y/Y growth (constant currency, non-GAAP) | FY2026 | $15.76B-$15.78B; 22.5% Y/Y, 21% constant-currency Y/Y | $15.78B-$15.79B; 22.5%; 21% | raised |
| Free cash flow margin (non-GAAP) | FY2026 | 35% | 36% | raised |
| Diluted weighted-average shares | FY2026 | 1.04B | 1.04B | reaffirmed |
Investor Takeaways
- Track Q4 subscription revenue against the $4.245B-$4.255B outlook and cRPO growth against 18.5%; those figures will show whether contracted demand continues to convert and grow.
- Watch production agentic AI consumption and progress toward the $1.7B AI annual contract value target; continued adoption would support the raised target.
The summary is written by an AI model reading the filing.
Model 005 · prompt v111 · 2026-10-30 14:49:59Z