ServiceNow, Inc. (NOW): verified earnings note

•Subscription revenues of $3,988 million in Q3 2026, representing 21% year-over-year growth, 20.5% in constant currency

"This was more than another beat-and-raise quarter for ServiceNow, this was the inflection point for ServiceNow as the Super Intelligence Control Tower," said ServiceNow Chairman and CEO Bill McDermott. "Our customers have validated our strategic relevance as the single harness for enterprise intelligence and security. The Control Tower is the elixir that simplifies tech debt, limits token overload and manages unprecedented cybersecurity risk. That's why AI adoption is accelerating, surging our hybrid business model to $30 billion in RPO, growing 23 percent. What other company at the forefront of the agentic enterprise has no capital or compute constraints? This is a one-of-one, rule of 571 growth company firing on all cylinders."

•ServiceNow raises AI annual contract value target again for 2026 to $1.7 billion, up 70% from the beginning of the year

Full-Year 2026GAAP Guidance | Full-Year 2026Non-GAAP Guidance(1) Amount ($ millions)(2) | Year/YearGrowth (%)(2) | Constant CurrencyYear/Year Growth (%) Subscription revenues | $15,780 - $15,790 | 22.5 | % | 21 | % Margin (%)(3) Subscription gross profit | 81 | % Income from operations | 31.5 | % Free cash flow | 36 | % Amount(billions) Weighted-average shares used to compute diluted net income per share | 1.04

"Our strong Q3 results reinforce how ServiceNow is perfectly positioned to help customers put AI to work across their business, govern every agent and action, and translate intelligence into secure, measurable outcomes," said ServiceNow President and CFO Gina Mastantuono. "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. Customers are also rapidly increasing their use of agentic AI, with year-to-date consumption in production up more than 13x year-over-year. 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."

Fourth Quarter 2026GAAP Guidance | Fourth Quarter 2026Non-GAAP Guidance(1) Amount ($ millions)(2) | Year/Year Growth (%)(2) | Constant Currency Year/Year Growth (%) Subscription revenues | $4,245 - $4,255 | 22.5% - 23% | 21.5 | % cRPO | 18.5 | % | 18.5 | % Margin (%)(3) Income from operations | 32 | % Amount(billions) Weighted-average shares used to compute diluted net income per share | 1.05

Fourth Quarter 2026GAAP Guidance | Fourth Quarter 2026Non-GAAP Guidance(1) Amount ($ millions)(2) | Year/Year Growth (%)(2) | Constant Currency Year/Year Growth (%) Subscription revenues | $4,245 - $4,255 | 22.5% - 23% | 21.5 | % cRPO | 18.5 | % | 18.5 | % Margin (%)(3) Income from operations | 32 | % Amount(billions) Weighted-average shares used to compute diluted net income per share | 1.05

Three Months Ending December 31, 2026 GAAP operating margin | 12 | % Stock-based compensation expense as % of total revenues | 14 | % Amortization of purchased intangibles as % of total revenues | 5 | % Business combination and other related costs as % of total revenues | 1 | % Severance costs as % of total revenues | 1 | % Non-GAAP operating margin | 32 | %

•Today, ServiceNow announced the Control Tower Alliance, a new ecosystem of leading companies in AI, cloud infrastructure, security, and governance, which will work with ServiceNow to help customers adopt trusted enterprise AI safely at scale. Founding members of the new program include Anthropic, Amazon Web Services (AWS), Cisco, HiddenLayer, Kong, NVIDIA, Okta, OpenAI, Stripe, WitnessAI, and Zenity.

•Subscription revenues of $3,877 million in Q2 2026, representing 24.5% year-over-year growth, 23% in constant currency

"Q2 was an outstanding quarter that highlights ServiceNow's broad based demand, strong execution, and operating leverage," said ServiceNow President and CFO Gina Mastantuono. "Once again, we beat the high end of our guidance range across every topline and profitability metric. AI net new ACV growth continues to outpace expectations, our AI Control Tower is supercharging our Security and Risk business, and ITOM is seeing strong demand tailwinds for the CMDB to serve as an essential governance and data foundation. In an environment where most enterprises are still searching for AI's ROI, ServiceNow is the platform delivering it."

Q2 2026 subscription revenues exceeded the high end of our guidance range by 150 basis points, driven by a combination of net new ACV outperformance and on-premise revenue mix coming in ahead of expectations. This higher mix is primarily attributable to strong U.S. Federal demand, which accelerated some on-premise subscription revenues from Q3 2026 into Q2 2026. We are raising our FY 2026 subscription revenues guidance to reflect the net new ACV strength.

Full-Year 2026GAAP Guidance | Full-Year 2026Non-GAAP Guidance(1) Amount ($ millions)(2) | Year/YearGrowth (%)(2) | Constant CurrencyYear/Year Growth (%) Subscription revenues | $15,760 - $15,780 | 22.5 | % | 21 | % Margin (%)(3) Subscription gross profit | 81 | % Income from operations | 31.5 | % Free cash flow | 35 | % Amount(billions) Weighted-average shares used to compute diluted net income per share | 1.04

Third Quarter 2026GAAP Guidance | Third Quarter 2026Non-GAAP Guidance(1) Amount ($ millions)(2) | Year/Year Growth (%)(2) | Constant Currency Year/Year Growth (%) Subscription revenues | $3,975 - $3,980 | 20.5 | % | 20 | % cRPO | 19.5 | % | 20 | % Margin (%)(3) Income from operations | 31 | % Amount(billions) Weighted-average shares used to compute diluted net income per share | 1.05

Our FY 2026 gross margin guidance reflects more customers utilizing our hyperscaler partnerships and an acceleration of customer AI adoption.

Third Quarter 2026GAAP Guidance | Third Quarter 2026Non-GAAP Guidance(1) Amount ($ millions)(2) | Year/Year Growth (%)(2) | Constant Currency Year/Year Growth (%) Subscription revenues | $3,975 - $3,980 | 20.5 | % | 20 | % cRPO | 19.5 | % | 20 | % Margin (%)(3) Income from operations | 31 | % Amount(billions) Weighted-average shares used to compute diluted net income per share | 1.05

Q2 2026 subscription revenues exceeded the high end of our guidance range by 150 basis points, driven by a combination of net new ACV outperformance and on-premise revenue mix coming in ahead of expectations. This higher mix is primarily attributable to strong U.S. Federal demand, which accelerated some on-premise subscription revenues from Q3 2026 into Q2 2026. We are raising our FY 2026 subscription revenues guidance to reflect the net new ACV strength.

Third Quarter 2026GAAP Guidance | Third Quarter 2026Non-GAAP Guidance(1) Amount ($ millions)(2) | Year/Year Growth (%)(2) | Constant Currency Year/Year Growth (%) Subscription revenues | $3,975 - $3,980 | 20.5 | % | 20 | % cRPO | 19.5 | % | 20 | % Margin (%)(3) Income from operations | 31 | % Amount(billions) Weighted-average shares used to compute diluted net income per share | 1.05

Since March 31, 2026, ServiceNow has seen an incremental strengthening of the U.S. dollar resulting in foreign exchange ("FX") headwinds. The total FX impact is estimated to be an approximately $35 million year-over-year headwind for Q3 2026 cRPO.

•ServiceNow hosted its annual Financial Analyst Day on May 4, where the company outlined long-term targets including $30 billion+ in subscription revenues, 30% of ACV to come from AI, and a Rule of 60+ by 20301. In addition, the company shared a commitment to reduce stock-based compensation to less than 10% of revenue by 2029.

•Subscription revenues of $3,671 million in Q1 2026, representing 22% year-over-year growth, 19% in constant currency

"ServiceNow's first quarter performance beat the high end of our guidance once again," said ServiceNow Chairman and CEO Bill McDermott. "Since our founding, we've built our platform around the work customers need to accomplish. Today, they rely on ServiceNow to be their AI control tower for business reinvention. Customers trust our platform because we integrate with any model, cloud, interface, data, and system they choose to deploy. As new technologies create both opportunity and risk, our two decades of engineering combined with deep business context enable us to orchestrate and secure the agentic enterprise. With this foundation, our AI growth is far exceeding even our own expectations, reinforcing our position as one of the fastest growing enterprise software companies ever."

"In Q1, we exceeded the high end of our topline and profitability guidance metrics, grew free cash flow, and returned capital to shareholders," said ServiceNow President and CFO Gina Mastantuono. "The early close of our Armis acquisition meaningfully expands our TAM and accelerates our subscription revenue growth trajectory. With agentic AI, workflow orchestration, security, and data fabric converging on a single platform, we believe the most compelling chapter in ServiceNow's growth story is just beginning."

Second Quarter 2026GAAP Guidance | Second Quarter 2026Non-GAAP Guidance(1) Amount ($ millions)(2) | Year/Year Growth (%)(2) | Constant Currency Year/Year Growth (%) Subscription revenues | $3,815 - $3,820 | 22.5 | % | 21% - 21.5% cRPO | 19 | % | 19.5 | % Margin (%)(3) Income from operations | 26.5 | % Amount(billions) Weighted-average shares used to compute diluted net income per share | 1.04

In Q1 2026, subscription revenues growth saw an approximately 75 basis point headwind from delayed closings of several large on-premise deals in the Middle East, due to the ongoing conflict in the region. This outlook reflects a prudent assessment of those geopolitical headwinds on deal timing for the remainder of FY 2026.

The acquisition is also expected to create headwinds of approximately 25 basis points to FY 2026 subscription gross margin, approximately 75 basis points to FY 2026 operating margin, approximately 200 basis points to FY 2026 free cash flow margin, and approximately 125 basis points to Q2 2026 operating margin. While we will see some near-term headwinds to margins as we integrate the business in FY 2026, strong AI efficiencies internally from Now on Now and our underlying platform leverage are expected to normalize our operating and free cash flow margin expansion trajectories in FY 2027.

Second Quarter 2026GAAP Guidance | Second Quarter 2026Non-GAAP Guidance(1) Amount ($ millions)(2) | Year/Year Growth (%)(2) | Constant Currency Year/Year Growth (%) Subscription revenues | $3,815 - $3,820 | 22.5 | % | 21% - 21.5% cRPO | 19 | % | 19.5 | % Margin (%)(3) Income from operations | 26.5 | % Amount(billions) Weighted-average shares used to compute diluted net income per share | 1.04

Full-Year 2026GAAP Guidance | Full-Year 2026Non-GAAP Guidance(1) Amount ($ millions)(2) | Year/YearGrowth (%)(2) | Constant CurrencyYear/Year Growth (%) Subscription revenues | $15,735 - $15,775 | 22% - 22.5% | 20.5% - 21% Margin (%)(3) Subscription gross profit | 81.5 | % Income from operations | 31.5 | % Free cash flow | 35 | % Amount(billions) Weighted-average shares used to compute diluted net income per share | 1.04

Our Q2 2026 subscription revenues growth, Q2 2026 cRPO growth, and FY 2026 subscription revenues growth guidance each include approximately 125 basis points of contribution from Armis. A portion of Armis customer contracts include termination‑for‑convenience provisions, which limit the amount of contract value reflected in cRPO.

In Q1 2026, subscription revenues growth saw an approximately 75 basis point headwind from delayed closings of several large on-premise deals in the Middle East, due to the ongoing conflict in the region. This outlook reflects a prudent assessment of those geopolitical headwinds on deal timing for the remainder of FY 2026.

"ServiceNow significantly beat Q4 expectations, accelerated net new business, and issued exceptional guidance for 2026," said ServiceNow Chairman and CEO Bill McDermott. "We had substantial growth in licensed users, workflows, and transactions on our platform. With our consistent Rule of 55+ profile, there is no AI company in the enterprise better positioned for sustainable profitable revenue growth than ServiceNow. We are building the AI control tower for business reinvention so enterprises can operate securely in an agentic AI world."

"Q4 was another strong quarter, concluding a remarkable year of AI innovation, with emerging products like Now Assist, Workflow Data Fabric, Raptor, and CPQ all outperforming," said ServiceNow President and CFO Gina Mastantuono. "Our recent strategic acquisitions create enormous new market opportunities and solidify our ability to put AI to work securely across every corner of the enterprise. Make no mistake, our strategy, complete with a disciplined focus on margin expansion, remains unchanged. But the ambition is higher, and our confidence in sustained high organic growth has never been greater."

Our Q1 2026 subscription revenue growth, Q1 2026 cRPO growth, and full-year 2026 subscription revenue growth guidance each include approximately 100bps of contribution from Moveworks.

Full-Year 2026GAAP Guidance | Full-Year 2026 Non-GAAP Guidance(1) Amount ($ millions)(2) | Year/Year Growth (%)(2) | Constant Currency Year/Year Growth (%) Subscription revenues | $15,530 - $15,570 | 20.5% - 21% | 19.5% - 20% Margin (%)(3) Subscription gross profit | 82 | % Income from operations | 32 | % Free cash flow | 36 | % Amount (billions) Weighted-average shares used to compute diluted net income per share | 1.05

Our Q1 2026 subscription revenue growth guidance includes an approximately 150bps headwind from a mix shift of self‑hosted revenue to hosted revenue, partially driven by strong adoption of our hyperscaler offerings.

First Quarter 2026GAAP Guidance | First Quarter 2026 Non-GAAP Guidance(1) Amount ($ millions)(2) | Year/Year Growth (%)(2) | Constant Currency Year/Year Growth (%) Subscription revenues | $3,650 - $3,655 | 21.5 | % | 18.5% - 19% cRPO | 22.5 | % | 20 | % Margin (%)(3) Income from operations | 31.5 | % Amount (billions) Weighted-average shares used to compute diluted net income per share | 1.05

•ServiceNow closed its acquisition of Moveworks on December 15, 2025. The companies' combined strengths in agentic AI, intelligent workflows, and enterprise search deliver an advanced AI platform for work and create an AI-native front door for employee engagement.

•ServiceNow plans to launch a $2 billion accelerated share repurchase imminently.

•Subscription revenues of $3,299 million in Q3 2025, representing 21.5% year-over-year growth, 20.5% in constant currency

Three Months Ended | Nine Months Ended September 30, 2025 | September 30, 2024 | September 30, 2025 | September 30, 2024 Revenues: Subscription | $ | 3,299 | $ | 2,715 | $ | 9,417 | $ | 7,780 Professional services and other | 108 | 82 | 293 | 247 Total revenues | 3,407 | 2,797 | 9,710 | 8,027 Cost of revenues (1): Subscription | 666 | 496 | 1,852 | 1,406 Professional services and other | 108 | 88 | 297 | 250 Total cost of revenues | 774 | 584 | 2,149 | 1,656 Gross profit | 2,633 | 2,213 | 7,561 | 6,371 Operating expenses (1): Sales and marketing | 1,056 | 944 | 3,238 | 2,827 Research and development | 750 | 626 | 2,187 | 1,875 General and administrative | 255 | 225 | 755 | 679 Total operating expenses | 2,061 | 1,795 | 6,180 | 5,381 Income from operations | 572 | 418 | 1,381 | 990 Interest income | 115 | 108 | 346 | 313 Other income (expense), net | 7 | (10) | (7) | (28) Income before income taxes | 694 | 516 | 1,720 | 1,275 Provision for income taxes | 192 | 84 | 373 | 234 Net income | $ | 502 | $ | 432 | $ | 1,347 | $ | 1,041 Net income per share - basic | $ | 2.42 | $ | 2.09 | $ | 6.50 | $ | 5.06 Net income per share - diluted | $ | 2.40 | $ | 2.07 | $ | 6.43 | $ | 5.00 Weighted-average shares used to compute net income per share - basic | 208 | 206 | 207 | 206 Weighted-average shares used to compute net income per share - diluted | 210 | 209 | 209 | 208

"This outstanding Q3 performance is the clearest demonstration yet that ServiceNow is the AI platform for business transformation," said ServiceNow Chairman and CEO Bill McDermott. "Every enterprise in every industry is focused on AI as the innovation opportunity of our generation. Leaders work with ServiceNow because they trust this proven platform as the core of their technology estate for decades to come. From autonomous workflows to AI-driven CRM, ServiceNow is putting AI to work for people, driving massive value creation for customers and shareholders."

"Q3 was an exceptional quarter, with standout performances across the board," said ServiceNow President and CFO Gina Mastantuono. "Now Assist, U.S. Federal, Workflow Data Fabric, and RaptorDB were all ahead of plan. These results underscore the power of the ServiceNow AI Platform and our multiple growth vectors, from core workflow expansion to the accelerating adoption of our innovative new products. Massive platform demand, combined with AI-driven efficiencies, not only fueled fantastic results but also reinforced our ability to scale with accelerating margin expansion."

Fourth Quarter 2025GAAP Guidance | Fourth Quarter 2025 Non-GAAP Guidance(1) Amount ($ millions)(3) | Year/Year Growth (%)(3) | Constant Currency Year/Year Growth (%) Subscription revenues | $3,420 - $3,430 | 19.5 | % | 17.5% - 18% cRPO | 23 | % | 19 | % Margin (%)(2) Income from operations | 30 | % Amount (millions) Weighted-average shares used to compute diluted net income per share | 210

•ServiceNow raises 2025 subscription revenue, operating margin, and free cash flow guidance; expects 250bps of free cash flow margin expansion year-over-year

ServiceNow today announced that its Board of Directors approved a five-for-one split of the Company's common stock. The stock split is subject to shareholder approval, which the Company will seek at a Special Meeting of Shareholders scheduled to take place on December 5, 2025.

U.S. Federal agencies are currently navigating changes, from tightening budgets to evolving mission demands. The recent government shutdown may also impact deal timing in the near-term. These dynamics have been reflected in our Q4 2025 guidance.

Fourth Quarter 2025GAAP Guidance | Fourth Quarter 2025 Non-GAAP Guidance(1) Amount ($ millions)(3) | Year/Year Growth (%)(3) | Constant Currency Year/Year Growth (%) Subscription revenues | $3,420 - $3,430 | 19.5 | % | 17.5% - 18% cRPO | 23 | % | 19 | % Margin (%)(2) Income from operations | 30 | % Amount (millions) Weighted-average shares used to compute diluted net income per share | 210

ServiceNow today announced that its Board of Directors approved a five-for-one split of the Company's common stock. The stock split is subject to shareholder approval, which the Company will seek at a Special Meeting of Shareholders scheduled to take place on December 5, 2025.

Full-Year 2025GAAP Guidance | Full-Year 2025 Non-GAAP Guidance(1) Amount ($ millions)(3) | Year/Year Growth (%)(3) | Constant Currency Year/Year Growth (%) Subscription revenues | $12,835 - $12,845 | 20.5 | % | 20 | % Margin (%)(2) Subscription gross profit | 83.5 | % Income from operations | 31 | % Free cash flow | 34 | % Amount (millions) Weighted-average shares used to compute diluted net income per share | 210