ServiceNow (NOW) Q3 2026 earnings summary

Executive summary

• Q3 subscription revenue was $3.988B, up 21% YoY reported and 20.5% in constant currency; total revenue was $4.106B, up 20.5% reported and 20% in constant currency.

• Q3 exceeded guidance across subscription revenue, cRPO and operating margin; FY26 subscription revenue and free cash flow margin outlook increased.

• cRPO reached $13.65B, up 20.5% reported and 21% in constant currency; RPO was $29.7B, up 22% reported and 22.5% in constant currency.

• AI net new ACV grew 65% YoY; the 2026 AI ACV target rose to more than $1.7B from $1B at the start of the year.

• Selected large AI deals received deployment expertise, shifting some near-term subscription revenue and cRPO recognition to professional services while supporting faster AI adoption.

Financial highlights

• Non-GAAP operating margin was 32.5%, 150 bps above guidance; adjusted free cash flow margin was 20%, versus 17.5% a year earlier.

• Non-GAAP net income was $1.039B and diluted EPS was $1.00; GAAP operating income was $385M and net income was $277M, down from $572M and $502M, respectively.

• Non-GAAP subscription gross margin was 80.0% and total gross margin was 77.5%; GAAP gross margin was 70.5%.

• Net cash from operations was $839M; adjusted free cash flow was $822M, versus $592M a year earlier.

• 19 deals exceeded $5M in net new ACV, up more than 135% YoY.

Outlook and guidance

• FY26 subscription revenue guidance is $15.780B–$15.790B, up 22.5% reported and 21% in constant currency; midpoint increased $15M to $15.785B.

• FY26 free cash flow margin guidance rose 100 bps to 36%; non-GAAP operating margin guidance is 31.5% and subscription gross margin guidance is 81%.

• Q4 subscription revenue guidance is $4.245B–$4.255B, up 22.5%–23% reported and 21.5% in constant currency; cRPO growth guidance is 18.5% in constant currency and operating margin is 32%.

• Armis is expected to affect FY subscription revenue growth by ~125 bps, subscription gross margin by ~25 bps, and free cash flow margin by ~200 bps; its expected Q4 cRPO growth impact is ~175 bps.

• Management cited a 2030 goal for AI to reach 30% of ACV and expects AI adoption momentum to support growth in 2027 and beyond.