ServiceNow Revenue Rises 20.5% to $4.106 Billion as Shares Fall 14%
Key Facts
ServiceNow reported results on October 28, 2026, for the third quarter ended September 30, posting total revenue of $4.106 billion, up 20.5% year over year, or 20% in constant currency. Subscription revenue was $3.988 billion, up 21% year over year and 20.5% in constant currency. After closing at $150.13 in New York, the stock fell 14% in extended trading, according to Bloomberg via Yahoo Finance. Shares had risen 36% in the three months before the close. The company’s figures alone do not establish that revenue exceeded analysts’ estimates or that earnings fell short of them; they show actual results under GAAP and non-GAAP measures without comparing them with those estimates.
GAAP net income was about $277 million for the quarter, while diluted earnings per share came to $0.27. On a non-GAAP basis, the company posted net income of $1.039 billion and diluted earnings per share of $1.00. Presenting both measures reflects different bases for calculating earnings, but the data provided do not include market estimates that could be used to determine whether either exceeded or missed expectations. The reported figures therefore describe the period’s results and do not, on their own, support a narrative that earnings came in below analysts’ estimates. Alongside earnings, the company reported growth indicators for revenue and contractual obligations, while the immediate market reaction was a fall in the stock in extended trading after the results were released.
Current remaining performance obligations, the contracted revenue expected to be recognized over the next twelve months, stood at $13.65 billion on September 30, up 20.5% year over year, or 21% in constant currency. Total remaining performance obligations rose to $29.7 billion, up 22%, or 22.5% in constant currency. These figures show growth in the contracted business backlog, but contrast with lower guidance for current remaining performance obligation growth in the next quarter. The company forecast growth of 18.5% in the fourth quarter, compared with the 20.5% year-over-year growth recorded at the end of the third quarter. That trajectory puts the growth rate of near-term contracts at the center of the outlook, alongside reported revenue growth.
In AI, ServiceNow raised its 2026 target for the annual contract value of new product deals to $1.7 billion, up 70% from the target set at the start of the year. Bloomberg reported that the target reached $1.7 billion by the end of December, after the previous target, announced three months earlier, was $1.5 billion. Chief Financial Officer Gina Mastantuono said customers were “rapidly increasing their use of agentic AI,” and that production consumption this year was 13 times its level in the same period a year earlier. The company’s statement also said consumption since the start of the year was up more than 13 times year over year. These indicators link the higher contract target with increased customer use in production, while the annual figure offers a measure of the commercial momentum the company reported.
The company raised its full-year free cash flow margin forecast to 36%, an increase of 100 basis points, and forecast annual subscription revenue of between $15.780 billion and $15.790 billion. This puts the higher cash margin forecast alongside the revenue range announced for 2026. For the fourth quarter, ServiceNow expects subscription revenue of between $4.245 billion and $4.255 billion, alongside current remaining performance obligation growth of 18.5%. The quarterly guidance allows the trajectory of contracted sales to be compared with its growth rate in the third quarter, while the company continues to target year-over-year revenue growth. These are the company’s announced forecasts for the next period and the full year.
As part of its AI-related partnerships, ServiceNow announced an expansion of its collaboration with OpenAI, starting with a new company addition in ChatGPT. Plans include developing security and risk solutions and integrating Codex into AI Workflow Factory. The announcement came alongside the higher target for the value of AI product contracts and the company’s figures on increased customer consumption in production environments. According to the statement, the expanded partnership begins with the new ChatGPT addition, while other initiatives extend to security, risk and workflows. The available facts do not specify when the company will report fourth-quarter results or provide any outlook beyond the announced guidance.