ServiceNow (NYSE:NOW) Posts Earnings Results, Misses Expectations By $0.02 EPS

ServiceNow (NYSE:NOW) issued its earnings results on Wednesday. The information technology services provider reported $1.00 earnings per share (EPS) for the quarter, missing the consensus estimate of $1.02 by ($0.02), FiscalAI reports. The business had revenue of $4.11 billion for the quarter, compared to analysts’ expectations of $4.09 billion. ServiceNow had a return on equity of 16.45% and a net margin of 11.34%.

Here are the key takeaways from ServiceNow’s conference call:

• Q3 exceeded guidance across key metrics: subscription revenue grew 20.5% in constant currency, cRPO grew 21%, operating margin reached 32.5%, and free-cash-flow margin was 20%. The company also reported 19 deals with more than $5 million in net-new ACV, up 135% year over year.
• AI monetization accelerated materially. AI net-new ACV grew 65% year over year, $1 million-plus AI deals increased 4.5 times, agentic AI consumption in production rose 13 times, and ServiceNow raised its 2026 AI ACV target to at least $1.7 billion.
• ServiceNow is increasingly positioning its Control Tower and Action Fabric as the governance and execution layer for enterprise AI, supported by expanded partnerships with OpenAI, Google, NVIDIA, Okta, and other ecosystem providers. Management said consumption-based usage is growing rapidly while customers retain predictable subscription pricing.
• The company raised its full-year free-cash-flow margin target by 100 basis points to 36% and expects 21% constant-currency subscription-revenue growth for 2026. Internal AI usage is generating more than $1 billion in annualized value, helping offset hiring needs while allowing continued investment in AI engineering and quota-bearing sales personnel.
• Q4 cRPO growth is expected to slow to 18.5% in constant currency, reflecting early renewals pulled into Q3, a higher mix of on-premise public-sector deals, and the accounting treatment of deployment services and T4C backlog. Management argued these factors should still contribute to revenue, but the softer cRPO outlook contributed to investor concerns.

ServiceNow Price Performance

Shares of ServiceNow stock traded down $5.23 during trading hours on Wednesday, reaching $149.55. The stock had a trading volume of 27,571,978 shares, compared to its average volume of 21,329,438. The stock’s 50 day moving average is $138.95 and its 200 day moving average is $115.78. The firm has a market capitalization of $154.63 billion, a PE ratio of 93.47, a PEG ratio of 2.92 and a beta of 0.99. ServiceNow has a twelve month low of $81.24 and a twelve month high of $192.97. The company has a current ratio of 0.70, a quick ratio of 0.70 and a debt-to-equity ratio of 0.43.

Insider Transactions at ServiceNow

In related news, Director Paul Chamberlain sold 2,700 shares of ServiceNow stock in a transaction dated Thursday, August 27th. The stock was sold at an average price of $135.50, for a total value of $365,850.00. Following the completion of the transaction, the director owned 43,990 shares in the company, valued at $5,960,645. The trade was a 5.78% decrease in their position. The sale was disclosed in a document filed with the Securities & Exchange Commission, which is available at the SEC website. Also, insider Jacqueline Canney sold 7,847 shares of the company’s stock in a transaction dated Friday, August 28th. The stock was sold at an average price of $138.00, for a total value of $1,082,886.00. Following the completion of the transaction, the insider directly owned 30,042 shares of the company’s stock, valued at $4,145,796. The trade was a 20.71% decrease in their position. The SEC filing for this sale provides additional information. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Insiders have sold a total of 14,081 shares of company stock valued at $1,937,904 in the last ninety days. 0.34% of the stock is currently owned by corporate insiders.

Key Headlines Impacting ServiceNow

Here are the key news stories impacting ServiceNow this week:

• Positive Sentiment: ServiceNow and OpenAI expanded their partnership to help enterprises move from AI reasoning to governed action, including workflow, cybersecurity and agentic-development capabilities. The agreement supports ServiceNow’s positioning as an enterprise AI platform. ServiceNow and OpenAI accelerate enterprise AI
• Positive Sentiment: HPE selected ServiceNow as the foundation for support services supporting its Cloud & AI business under a five-year agreement, providing a potential source of recurring enterprise revenue. HPE selects ServiceNow to transform support services
• Positive Sentiment: ServiceNow launched its Control Tower Alliance, with partners including Anthropic, AWS and Cisco, to promote secure and governed enterprise AI adoption. Management also highlighted stronger AI momentum and multi-million-dollar deals. ServiceNow launches Control Tower Alliance
• Neutral Sentiment: Revenue reached $4.11 billion, up 20.5% year over year and slightly above the $4.09 billion consensus. Subscription revenue rose 21% to $3.988 billion, indicating continued demand for the core platform. ServiceNow Reports Third Quarter 2026 Financial Results
• Negative Sentiment: Adjusted EPS was $1.00 versus the $1.02 analyst estimate, ending a six-quarter streak of earnings beats. Acquisition-related costs contributed to the shortfall. ServiceNow Q3 2026 earnings
• Negative Sentiment: Management’s fourth-quarter revenue outlook came in below Wall Street expectations, raising concerns that AI investment and acquisitions may not yet be translating into growth quickly enough to justify NOW’s elevated valuation. ServiceNow shares sink on earnings miss and weak Q4 outlook

Wall Street Analysts Forecast Growth

NOW has been the topic of several recent research reports. CLSA assumed coverage on shares of ServiceNow in a report on Monday, July 20th. They issued an “underperform” rating and a $72.00 price target on the stock. Robert W. Baird lifted their price objective on ServiceNow from $118.00 to $125.00 and gave the company an “outperform” rating in a research note on Thursday, July 23rd. Oppenheimer reissued an “outperform” rating and issued a $165.00 price objective (up from $140.00) on shares of ServiceNow in a report on Tuesday, October 13th. UBS Group set a $165.00 target price on ServiceNow in a research note on Monday, October 19th. Finally, Evercore reaffirmed an “outperform” rating on shares of ServiceNow in a report on Tuesday, October 13th. One analyst has rated the stock with a Strong Buy rating, thirty-six have assigned a Buy rating, three have given a Hold rating and three have issued a Sell rating to the company’s stock. According to MarketBeat.com, the company has a consensus rating of “Moderate Buy” and an average target price of $155.74.

ServiceNow Company Profile

ServiceNow, Inc provides cloud-based software designed to help organizations digitize, automate and manage enterprise workflows. Its Now Platform connects people, processes and systems across departments, enabling customers to manage work through a centralized technology environment.

The company’s products and services address a range of business needs, including information technology service management, IT operations management, customer service management, human resources service delivery, security operations, risk and compliance, and application development.