Analysts’ Top Questions for ServiceNow Ahead of Q3 Earnings

That wraps up our initial coverage of ServiceNow’s Q3 results. Thank you for stopping by!

ServiceNow delivered several encouraging results in its Q3 2026 earnings report, even as shares plunged 16% following the announcement.

One of the biggest highlights was management raising its 2026 AI annual contract value (ACV) target to $1.7 billion, up from just $1 billion at the beginning of the year.

The company also reported that agentic AI production consumption surged more than 13x year over year, suggesting enterprise customers are increasingly putting AI tools to work.

Meanwhile, ServiceNow’s underlying business continues to expand:

• Subscription Revenue: $4.0B vs. $3.98B expected
• Current RPO: $13.65B vs. $13.56B expected, up 20.5% YoY
• Adjusted Operating Margin: 32.5% vs. 31.2% expected
• Large Deals: 19 transactions exceeding $5M in annual contract value, up 135% YoY

Management also raised its full-year free cash flow margin outlook to 36%, suggesting profitability remains strong despite continued AI investments.

However, investors may be concerned about the company’s forward outlook. ServiceNow expects 18.5% current RPO growth in Q4, compared with 20.5% growth in Q3.

Bottom Line: ServiceNow’s AI business is accelerating, enterprise contracts are expanding, and profitability remains strong. However, the stock’s sharp decline suggests investors are focusing on the company’s premium valuation and whether future growth can justify it.

ServiceNow just reported its Q3 2026 earnings, with shares initially down 14% following the report. Here are the key numbers:

• Revenue: $4.106B vs. $4.09B expected (+21% YoY)
• EPS: $1.00 vs. $1.02 expected (+4% YoY)

Quick Read:

• Mixed Earnings Results: ServiceNow narrowly beat revenue expectations but missed EPS estimates by around 2%, despite revenue growing 21% year over year.
• Stock Plunges: Shares are sinking 13% following the report, suggesting investors expected stronger results from the enterprise software giant. With ServiceNow trading at a premium valuation, even modest earnings disappointments can trigger significant selling pressure.

ServiceNow is scheduled to report its Q3 2026 earnings today at 4:10 PM ET, with investors looking for evidence that its growing AI business can support its premium valuation.

Management previously guided for $3.975-$3.980 billion in subscription revenue, although comparisons could be complicated by federal on-premise revenue shifting into the previous quarter.

ServiceNow’s AI business recently surpassed $1 billion in annual contract value, making continued adoption of its agentic AI products a major focus tonight.

Another important metric will be current remaining performance obligations (cRPO), with management guiding for 19.5% growth, compared to 21% last quarter.

With NOW trading at around 99x earnings, expectations remain high. Strong subscription growth and AI adoption could reinforce the company’s ambitious long-term targets, while disappointing contract growth could raise fresh concerns about the software industry.