ServiceNow Q3 FY2026: 20.5% growth, raised guidance, thinner GAAP margins
ServiceNow beat its own guidance again, grew revenue 20.5% to $4.11 billion, and lifted the full-year free cash flow margin target to 36%. Read the quarter in two layers: the subscription and cash engine looks stronger than ever, while the GAAP income statement got visibly worse as acquisitions and stock pay push costs up. One number settles the argument — free cash flow.
1 · Expected vs. Actual
Free preview belowGAAP EPS fell to $0.27 from $0.48, and net income dropped 44.8% to $277 million even as revenue grew a fifth. Most of the gap is non-cash: $633 million of stock-based compensation, $198 million of purchased-intangible amortization and $87 million of severance sit between $385 million of GAAP operating profit and $1.34 billion on a non-GAAP basis. Non-GAAP EPS of $1.00 came in just under the $1.0341 consensus, a 3.3% shortfall.
Revenue of $4.11 billion rose 20.5% from $3.41 billion a year ago, and subscription revenue of $3.99 billion did nearly all the work at 21.0% growth. The mix is now almost pure software: professional services contributed just $118 million. Current remaining performance obligations of $13.65 billion grew 20.5%, in line with revenue rather than ahead of it.
Fourth-quarter subscription revenue is guided to $4.25 billion at the midpoint, 22.5% to 23.0% growth, with the full year at $15.78 billion to $15.79 billion. Management raised the full-year free cash flow margin target by 100 basis points to 36% and pushed the 2026 AI annual contract value target to $1.7 billion, up 70% from the start of the year. Both moves are upgrades to prior targets, not restatements of them.
Log in to read 35 analyses a week for free
Create a free account to read 35 full earnings analyses each week — all five steps: expected vs. actual, guidance tracker, money flow, balance sheet and risks. Members get unlimited access.
Figures on this page come from the company's original SEC filings. The analysis is generated automatically and checked against validation rules, but may still contain errors or omissions. Not investment advice. · Generated 2026-11-03
Answers are based on the earnings release and the analysis above. Free accounts get 3 questions a week; members get 30 a day.