ServiceNow revenue rises 20.5% to $4.106 billion in third quarter
Key Facts
ServiceNow reported results on October 28 for the third quarter ended September 30, 2026, posting total revenue of $4.106 billion, up 20.5% year over year. Subscription revenue was $3.988 billion, up 21% year over year, according to the company’s statement. The figures showed business expansion during the quarter, while the company said AI adoption was accelerating. But the market’s subsequent reaction reflected investor concerns about the outlook and the impact of new AI models on the software sector. Shares fell 23% on October 29, according to Reuters, a move that would put them on track for their largest recorded daily decline.
Current remaining performance obligations, which reflect contracted revenue expected to be collected in the near term, rose to $13.65 billion, up 20.5% year over year. Total remaining performance obligations reached $29.7 billion, an increase of 22%, according to ServiceNow data. Chief Executive Bill McDermott said remaining obligations reached $30 billion and grew 23%, describing the quarter as a turning point for the company as a “superintelligence control tower.” The difference between the two figures in the statement and the CEO’s remarks reflects how the company presented the metric, with the statement listing total obligations at $29.7 billion. These obligations provide an indication of the volume of contracted business that will later convert into revenue.
The company pointed to broader demand for large contracts, recording 19 deals each worth more than $5 million in annual contract value during the quarter. The number of such deals grew more than 135% compared with the same quarter a year earlier, according to the earnings statement. ServiceNow also said customers’ consumption of agentic AI in production environments since the start of the year had risen more than 13 times year over year. The company cited this development as an indicator of accelerating adoption of its AI-powered tools. However, the post-results share decline came as software stocks were under pressure from broader concerns that new AI models could disrupt existing companies’ business models.
For the following period, the company estimated fourth-quarter subscription revenue of between $4.245 billion and $4.255 billion, with current remaining performance obligations growth of 18.5%. The projected growth rate for the latter points to a slower pace than its 20.5% annual growth in the third quarter. The company had raised its full-year subscription revenue and free cash flow margin forecasts, according to Reuters, but that did not prevent a wave of selling. At least 12 brokerages cut their price targets on the stock after the results, according to the report. ServiceNow is scheduled to report fourth-quarter results on January 27, 2027.