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

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

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 Stock Performance

Shares of NYSE:NOW traded down $5.23 on Wednesday, hitting $149.55. 27,571,978 shares of the company were exchanged, compared to its average volume of 21,329,438. ServiceNow has a 1-year low of $81.24 and a 1-year high of $192.97. The stock’s 50 day moving average price is $138.95 and its 200 day moving average price is $115.78. The company has a current ratio of 0.70, a quick ratio of 0.70 and a debt-to-equity ratio of 0.43. The firm has a market capitalization of $154.63 billion, a P/E ratio of 93.47, a price-to-earnings-growth ratio of 2.92 and a beta of 0.99.

Analyst Upgrades and Downgrades

A number of research firms have recently weighed in on NOW. Truist Financial set a $180.00 price target on shares of ServiceNow and gave the company a “buy” rating in a report on Wednesday, October 21st. Bank of America boosted their price objective on shares of ServiceNow from $130.00 to $150.00 and gave the stock a “buy” rating in a research note on Wednesday, August 19th. Jefferies Financial Group reiterated a “buy” rating on shares of ServiceNow in a research note on Tuesday, October 13th. The Goldman Sachs Group reissued a “buy” rating on shares of ServiceNow in a research report on Monday, August 3rd. Finally, Citigroup restated a “buy” rating and issued a $170.00 target price (up from $154.00) on shares of ServiceNow in a research note on Wednesday, October 14th. One analyst has rated the stock with a Strong Buy rating, thirty-six have issued a Buy rating, three have issued a Hold rating and three have issued a Sell rating to the company. According to data from MarketBeat, the company has an average rating of “Moderate Buy” and a consensus price target of $155.74.

Insider Buying and Selling

In other ServiceNow news, insider Paul Fipps sold 2,034 shares of the business’s stock in a transaction dated Monday, August 31st. The stock was sold at an average price of $147.87, for a total transaction of $300,767.58. Following the sale, the insider owned 18,305 shares in the company, valued at approximately $2,706,760.35. The trade was a 10.00% decrease in their position. The transaction was disclosed in a document filed with the Securities & Exchange Commission, which can be accessed through the SEC website. Also, Director Paul Chamberlain sold 2,700 shares of the stock in a transaction dated Thursday, August 27th. The shares were sold at an average price of $135.50, for a total value of $365,850.00. Following the completion of the transaction, the director directly owned 43,990 shares in the company, valued at $5,960,645. This represents a 5.78% decrease in their ownership of the stock. The disclosure for this sale is available in the SEC filing. Insiders sold 14,081 shares of company stock worth $1,937,904 in the last 90 days. Insiders own 0.34% of the company’s stock.

Key Stories 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

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.