ServiceNow stock faces AI scrutiny after Q3 earnings miss

ServiceNow reported strong third-quarter operating performance on Wednesday, October 28, but the enterprise software company still missed the market's adjusted earnings expectation. ServiceNow's investor release said subscription revenue reached 3.988 billion US dollars, up 21% year over year, while total revenue rose 20.5% to 4.106 billion US dollars.

Revenue Beat, Earnings Miss

The figures exceeded the high end of the company's guidance for subscription growth, current remaining performance obligations and profitability. Constant-currency subscription growth was 20.5%, current remaining performance obligations rose 21%, and non-GAAP operating margin reached 32.5%.

The weaker point was adjusted earnings of 1.00 US dollar per share, below the 1.02 US dollar consensus cited by Morningstar. The company attributed the shortfall to lower interest income and additional debt costs following its acquisition of cybersecurity company Armis.

AI Pipeline Keeps Expanding

ServiceNow raised its 2026 target for AI annual contract value to 1.7 billion US dollars, the second increase this year. Management said AI net new annual contract value grew 65% year over year in the quarter, while production consumption of agentic AI increased 13-fold year to date.

The company also lifted its full-year subscription-revenue outlook to a midpoint of 15.785 billion US dollars and raised its full-year free-cash-flow-margin target to 36% from 35%. Lower capital expenditure is supporting the cash-flow improvement, according to the company.

Contract Growth Sets Next Test

For the fourth quarter, ServiceNow expects subscription revenue of 4.245 billion to 4.255 billion US dollars, equivalent to 21.5% growth in constant currency. The more closely watched forward-demand measure, current remaining performance obligations, is expected to grow 18.5% in constant currency.

That guidance leaves investors weighing two opposing signals: AI demand and profitability execution remain robust, while contracted growth is set to moderate from the third quarter. Management said the comparison reflects early renewals in the third quarter, a higher mix of on-premises deals and temporary implementation work attached to large AI contracts.

ServiceNow stock traded at 98.02 euros on Lang & Schwarz at 12:37:23 CET on Friday, October 30, 2026. The real-time quote of ServiceNow stock is available for investors tracking the European listing.

Broader technology investors are also assessing artificial-intelligence spending and enterprise software demand through the S&P 500 market environment.

More news and analyses on ServiceNow stock will focus on contract growth, AI adoption and margin development in the next reporting cycle.