ServiceNow Q3 Earnings: Subscription Revenue Grows 21%, AI Annual Contract Value Target Raised to $1.7 Billion
ServiceNow reported Q3 subscription revenues of $3.988 billion, up 21% YoY. The company raised its full-year AI annual contract value target to $1.7 billion, signaling accelerated enterprise AI monetization.
US enterprise software company ServiceNow (NYSE: NOW) released its third-quarter 2026 financial results on October 28, 2026, reporting subscription revenues of $3.988 billion, representing 21% year-over-year growth (20.5% in constant currency). Total revenues reached $4.106 billion, growing 20.5% year-over-year. The company raised its full-year AI annual contract value (ACV) target again, increasing it from $1 billion at the start of the year to $1.7 billion, a 70% increase from the initial goal.
As of September 30, 2026, current remaining performance obligations (cRPO) stood at $13.65 billion, up 20.5% year-over-year, while total remaining performance obligations (RPO) reached $29.7 billion, up 22%. This metric reflects the level of future service demand locked in by customers. During the quarter, ServiceNow closed 19 transactions with net new ACV exceeding $5 million, representing over 135% year-over-year growth. The number of customers with more than $5 million in ACV grew approximately 23% year-over-year to 680.
ServiceNow Chairman and CEO Bill McDermott stated that this quarter was not just a "beat-and-raise" but an inflection point for the company as the "Super Intelligence Control Tower." CFO Gina Mastantuono noted that AI net new ACV exceeded expectations, with agentic AI usage in production surging more than 13x year-over-year. Despite reducing capital expenditures, the company raised its full-year free cash flow margin target by 100 basis points to 36%.
In terms of ecosystem partnerships, ServiceNow announced an expanded partnership with OpenAI, launching a ChatGPT plugin enabled by Action Fabric and planning to develop security solutions powered by OpenAI cyber models. Additionally, the company unveiled a new AI Passport solution to verify first- and third-party AI agents’ scopes in real-time, enhancing enterprise AI governance.