Third Quarter 2026
Filed Oct 28, 2026ServiceNow Reports Third Quarter 2026 Financial Results
ServiceNow reported 20.5% GAAP total revenue growth, 21% GAAP subscription revenue growth, 20.5% GAAP cRPO growth, and 22% GAAP RPO growth, while raising full-year subscription revenue and free cash flow margin outlook.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Q3 2026 subscription revenuesGAAP | $3.99B | – | 21% |
| Q3 2026 subscription revenues, constant currencynon-GAAP | $3.99B | – | 20.5% |
| Q3 2026 professional services and other revenuesGAAP | $118M | – | 10% |
| Q3 2026 professional services and other revenues, constant currencynon-GAAP | $117M | – | 9% |
| Q3 2026 total revenuesGAAP | $4.11B | – | 20.5% |
| Q3 2026 total revenues, constant currencynon-GAAP | $4.11B | – | 20% |
| Q3 2026 current remaining performance obligationsGAAP | $13.65B | – | 20.5% |
| Q3 2026 current remaining performance obligations, constant currencynon-GAAP | $13.72B | – | 21% |
| Q3 2026 remaining performance obligationsGAAP | $29.7B | – | 22% |
| Q3 2026 remaining performance obligations, constant currencynon-GAAP | $29.8B | – | 22.5% |
| Q3 2026 subscription gross profitGAAP | $2.93B | – | – |
| Q3 2026 subscription gross marginGAAP | 73.5% | – | – |
| Q3 2026 subscription gross profitnon-GAAP | $3.20B | – | – |
| Q3 2026 subscription gross marginnon-GAAP | 80% | – | – |
| Q3 2026 professional services and other gross lossGAAP | −$39M | – | – |
| Q3 2026 professional services and other gross marginGAAP | (32.5%) | – | – |
| Q3 2026 professional services and other gross lossnon-GAAP | −$23M | – | – |
| Q3 2026 professional services and other gross marginnon-GAAP | (20%) | – | – |
| Q3 2026 total gross profitGAAP | $2.90B | – | – |
| Q3 2026 gross marginGAAP | 70.5% | – | – |
| Q3 2026 total gross profitnon-GAAP | $3.17B | – | – |
| Q3 2026 gross marginnon-GAAP | 77.5% | – | – |
| Q3 2026 sales and marketing expenseGAAP | $1.27B | – | – |
| Q3 2026 research and development expenseGAAP | $956M | – | – |
| Q3 2026 general and administrative expenseGAAP | $283M | – | – |
| Q3 2026 total operating expensesGAAP | $2.51B | – | – |
| Q3 2026 income from operationsGAAP | $385M | – | – |
| Q3 2026 operating marginGAAP | 9.5% | – | – |
| Q3 2026 income from operationsnon-GAAP | $1.34B | – | – |
| Q3 2026 operating marginnon-GAAP | 32.5% | – | – |
| Q3 2026 net incomeGAAP | $277M | – | – |
| Q3 2026 net incomenon-GAAP | $1.04B | – | – |
| Q3 2026 net income per share - basicGAAP | $0.27 | – | – |
| Q3 2026 net income per share - dilutedGAAP | $0.27 | – | – |
| Q3 2026 non-GAAP net income per share - basicnon-GAAP | $1.00 | – | – |
| Q3 2026 non-GAAP net income per share - dilutednon-GAAP | $1.00 | – | – |
| Q3 2026 net cash provided by operating activitiesGAAP | $839M | – | – |
| Q3 2026 net cash provided by operating activities marginGAAP | 20.5% | – | – |
| Q3 2026 free cash flownon-GAAP | $822M | – | – |
| Q3 2026 free cash flow marginnon-GAAP | 20% | – | – |
| Nine months ended September 30, 2026 total revenuesGAAP | $11.86B | – | – |
| Nine months ended September 30, 2026 income from operationsGAAP | $1.05B | – | – |
| Nine months ended September 30, 2026 net incomeGAAP | $1.04B | – | – |
| Nine months ended September 30, 2026 net cash provided by operating activitiesGAAP | $3.10B | – | – |
| Nine months ended September 30, 2026 free cash flownon-GAAP | $3.12B | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| SubscriptionAI net new ACV exceeded expectations, according to the company. | $3.99B | – | 21% |
| Professional services and otherNot separately stated. | $118M | – | 10% |
Amounts quoted below without a unit are in millions, as in the filing’s tables. Per-share figures are as printed.
Fourth Quarter 2026 and Full-Year 2026 outlook
- RevenueFourth Quarter 2026 GAAP subscription revenues: $4,245 - $4,255 million; Full-Year 2026 GAAP subscription revenues: $15,780 - $15,790 million
- Gross marginFull-Year 2026 non-GAAP subscription gross profit margin: 81%
- NoteFourth Quarter 2026 GAAP subscription revenue growth: 22.5% - 23%; constant currency year-over-year growth: 21.5%.
- NoteFourth Quarter 2026 GAAP and non-GAAP cRPO growth: 18.5%.
- NoteFourth Quarter 2026 GAAP operating margin: 12%; non-GAAP operating margin: 32%.
- NoteFourth Quarter 2026 weighted-average shares used to compute diluted net income per share: 1.05 billion.
- NoteFull-Year 2026 GAAP subscription revenue growth: 22.5%; constant currency year-over-year growth: 21%.
- NoteFull-Year 2026 GAAP subscription gross margin: 75%; non-GAAP subscription margin: 81%.
- NoteFull-Year 2026 GAAP operating margin: 10%; non-GAAP operating margin: 31.5%.
- NoteFull-Year 2026 GAAP net cash provided by operating activities margin: 37%; non-GAAP free cash flow margin: 36%.
- NoteFull-Year 2026 weighted-average shares used to compute diluted net income per share: 1.04 billion.
Capital returns
- Repurchases of common stock were $— for the three months ended September 30, 2026, compared with $(584) million for the three months ended September 30, 2025.
- Repurchases of common stock were $(2,225) million for the nine months ended September 30, 2026, compared with $(1,243) million for the nine months ended September 30, 2025.
What drove it
- AI annual contract value target was raised to $1.7 billion, up 70% from the beginning of the year.
- The company had 19 transactions over $5 million in net new ACV in Q3 2026, representing over 135% year-over-year growth.
- ServiceNow ended Q3 2026 with 680 customers with more than $5 million in ACV, representing approximately 23% year-over-year growth.
- Year-to-date consumption in production was up more than 13x year-over-year, according to the company.
- The company cited reducing capex as supporting the 100-basis-point increase in its full-year free cash flow margin target.
Concerns
- GAAP gross margin was 70.5%, compared with 77.5% in the prior-year quarter.
- GAAP operating margin was 9.5%, compared with 17% in the prior-year quarter.
- GAAP net income was $277 million, compared with $502 million in the prior-year quarter.
- Professional services and other generated a GAAP gross loss of $(39) million and a GAAP gross margin of (32.5%).
- Interest expense was $(81) million in Q3 2026, compared with $(6) million in Q3 2025.
- Current portion of deferred revenue was $7,600 million as of September 30, 2026, compared with $8,314 million as of December 31, 2025.
What to watch
- Fourth Quarter 2026 subscription revenue guidance of $4,245 - $4,255 million and 22.5% - 23% GAAP year-over-year growth.
- Fourth Quarter 2026 cRPO growth guidance of 18.5%.
- Execution against the $1.7 billion AI annual contract value target for 2026.
- Full-Year 2026 non-GAAP free cash flow margin target of 36%.
- Full-Year 2026 non-GAAP operating margin target of 31.5% and non-GAAP subscription margin target of 81%.
Balance sheet and cash flow
- Cash and cash equivalents were $2,393 million as of September 30, 2026, compared with $3,726 million as of December 31, 2025.
- Marketable securities were $2,214 million current and $2,354 million long-term as of September 30, 2026.
- Short-term debt, net was $2,086 million and long-term debt, net was $5,438 million as of September 30, 2026.
- Net cash provided by operating activities was $839 million for Q3 2026 and $3,096 million for the nine months ended September 30, 2026.
- Purchases of property and equipment were $(91) million for Q3 2026 and $(346) million for the nine months ended September 30, 2026.
- Business combinations, net of cash acquired were $(391) million for Q3 2026 and $(9,167) million for the nine months ended September 30, 2026.
Analysis
ServiceNow reported Q3 2026 GAAP subscription revenue of $3,988 million, up 21%, and GAAP total revenue of $4,106 million, up 20.5%. Constant-currency subscription revenue was $3,990 million, up 20.5%, while constant-currency total revenue was $4,107 million, up 20%. The subscription business remained the principal growth engine, while professional services and other revenue was $118 million, up 10%.
Contracted demand indicators remained strong. GAAP cRPO was $13.65 billion, up 20.5%, and GAAP RPO was $29.7 billion, up 22%. On a constant-currency basis, cRPO was $13.72 billion, up 21%, and RPO was $29.8 billion, up 22.5%. The company cited 19 transactions over $5 million in net new ACV, representing over 135% year-over-year growth, and 680 customers with more than $5 million in ACV, representing approximately 23% year-over-year growth.
GAAP profitability was lower than the prior-year quarter. GAAP gross margin was 70.5%, compared with 77.5%, and GAAP operating margin was 9.5%, compared with 17%. GAAP net income was $277 million, compared with $502 million. Non-GAAP operating margin was 32.5%, compared with 33.5%, while non-GAAP diluted net income per share was $1.00, compared with $0.95. The reconciliation identifies stock-based compensation, amortization of purchased intangibles, business combination and other related costs, and severance costs among the adjustments affecting the GAAP-to-non-GAAP comparison.
Cash generation improved in the quarter on the company’s non-GAAP measure. Net cash provided by operating activities was $839 million, compared with $813 million, and non-GAAP free cash flow was $822 million, compared with $592 million. Non-GAAP free cash flow margin was 20%, compared with 17.5%. ServiceNow reported $(2,225) million of common-stock repurchases for the nine months ended September 30, 2026, and held $2,393 million of cash and cash equivalents at quarter end, alongside $2,086 million of short-term debt, net and $5,438 million of long-term debt, net.
The outlook calls for Q4 2026 GAAP subscription revenue of $4,245 - $4,255 million, 22.5% - 23% GAAP year-over-year growth, and 18.5% cRPO growth. Full-year guidance calls for GAAP subscription revenue of $15,780 - $15,790 million, 22.5% GAAP growth, 21% constant-currency growth, a 31.5% non-GAAP operating margin, and a 36% non-GAAP free cash flow margin. Management also raised its 2026 AI annual contract value target to $1.7 billion.
Management, verbatim
This was more than another beat-and-raise quarter for ServiceNow, this was the inflection point for ServiceNow as the Super Intelligence Control Tower.
Bill McDermott, Chairman and CEO
Our AI momentum continues to build, with AI net new ACV exceeding expectations and enabling us to raise our year-end target for the second time this year, from $1 billion at the start of the year to $1.7 billion now.
Gina Mastantuono, President and CFO
Importantly, we are capturing this significant opportunity with a capital-efficient model, reducing capex and raising our full-year free cash flow margin target by 100 basis points to 36 percent.
Gina Mastantuono, President and CFO
Not in the filing
stated, not guessed- Previous-release outlook was not provided, so comparison of actual results with prior guidance is unavailable.
- Q3 2026 prior-quarter figures were not provided for the reported metrics.
- Q4 2026 total revenue guidance was not provided.
- Q4 2026 gross-margin guidance was not provided.
- Q4 2026 free-cash-flow guidance was not provided.
- Dividend information was not provided.
- A Q3 2026 total cash-and-marketable-securities line item was not provided.
- A Q3 2026 net debt line item was not provided.
Written by an AI language model from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure is checked against the filing text, and a metric the filing does not print, or whose value, prior period and change do not add up, is dropped from the metrics. The model can still misread a table, in the metrics or in the text, so check a number in the filing before you rely on it. Consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.