ServiceNow stock follows strong Q3 as AI target rises again

ServiceNow reported strong third-quarter operating growth on October 28 and raised its 2026 targets again, placing greater emphasis on whether artificial intelligence can translate into durable enterprise demand. The company said subscription revenue rose 21 percent year over year to 3.988 billion US dollars for the quarter ended September 30.

ServiceNow also lifted its 2026 AI annual contract value target to 1.7 billion US dollars, up 70 percent from the target set at the start of the year. President and CFO Gina Mastantuono said AI net new annual contract value exceeded expectations and that customers' year-to-date consumption of agentic AI in production had increased more than 13 times from the prior year.

Growth Comes With Higher Expectations

The company's investor release reported total revenue of 4.106 billion US dollars, up 20.5 percent year over year. Current remaining performance obligations reached 13.65 billion US dollars, an increase of 20.5 percent, while total remaining performance obligations rose 22 percent to 29.7 billion US dollars.

GAAP net income fell to 277 million US dollars from 502 million US dollars a year earlier, while diluted earnings per share declined to 0.27 US dollars from 0.48 US dollars. On a non-GAAP basis, net income increased to 1.039 billion US dollars from 992 million US dollars, and diluted earnings per share rose to 1.00 US dollars from 0.95 US dollars. The adjusted figures exclude items including stock-based compensation, amortization of purchased intangibles, business-combination costs and severance.

ServiceNow's full-year outlook calls for subscription revenue of 15.780 billion to 15.790 billion US dollars, subscription gross margin of 81 percent on a non-GAAP basis and a free cash flow margin of 36 percent. The company also expects fourth-quarter subscription revenue of 4.245 billion to 4.255 billion US dollars, representing reported growth of 22.5 percent to 23 percent.

AI Product Execution In Focus

The investor release highlighted expanded work with OpenAI, including a ServiceNow plugin for ChatGPT enabled by Action Fabric. ServiceNow also described new governance capabilities for AI agents, advances to EmployeeWorks and its ToolSmith developer environment, and an expanded Control Tower Alliance involving technology, cloud, security and governance companies.

For investors, the figures support a business still growing rapidly in subscription software, but the rising AI targets also increase the execution burden. The key questions are whether customers convert experimentation into production workloads and whether ServiceNow can preserve cash generation while expanding its AI platform and integrating recent acquisitions.

ServiceNow stock traded at 94.71 euros on Lang & Schwarz at 12:53 CET on Monday, November 2, 2026. The real-time quote of ServiceNow stock is available separately.

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