$NOW Q3 2026 earnings. My initial thoughts: - Record revenue: $4.11B (+20.5% YoY) - Subscription revenue: $3.99B (+21%) - cRPO: $13.65B (+20.5%) - Total RPO: $29.7B (+22%) - Adjusted EPS: $1.00 (+4% YoY), missed estimates - 680 customers with over $5M in annual contract value (+23%) - 19 deals over $5M in net new ACV (+135%+ YoY) A few other highlights: - AI annual contract value target raised to $1.7B, implying roughly 180% growth from 2025 - Agentic AI production consumption up more than 13x YoY YTD - Q4 subscription revenue growth guidance of 22.5%–23% - Expanded OpenAI partnership, including ChatGPT and planned Codex integrations - Raised full-year subscription revenue and FCF margin guidance And yet, the stock is getting crushed, down around 18% after hours. I understand some of the disappointment. The stock had a strong run heading into earnings, and expectations were high. Adjusted EPS growing just 4% while missing estimates certainly doesn’t help. Neither does GAAP gross profit growing just 10% while net income fell 45%. Revenue costs jumped 56% YoY, partly due to higher acquisition-related amortization and other expenses. That’s putting pressure on profitability, and investors clearly aren’t overlooking it. But there’s also a lot to like here. AI adoption is accelerating, large enterprise customers continue growing, and the company is still delivering 20%+ revenue growth at this scale. I’m still very bullish on ServiceNow’s long-term opportunity. Not a perfect quarter by any means, but I believe the underlying business continues moving in the right direction. I’ll have a much deeper breakdown coming to Substack!
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