ServiceNow Q3 Subscription Revenue Rises 21%, Q4 Growth Outlook Includes Armis

ServiceNow (NYSE: NOW) reported third-quarter 2026 subscription revenue of $3.99 billion, up 21% year over year, as contracted business continued to expand at a similar pace. The enterprise software company projected faster reported subscription revenue growth for the fourth quarter, though its outlook includes a contribution from Armis and a currency tailwind.

Current remaining performance obligations, or cRPO, reached $13.65 billion, rising 20.5% on a reported basis and 21% in constant currency. Total remaining performance obligations increased 22% to $29.7 billion, or 22.5% in constant currency, providing a measure of revenue under contract that has yet to be recognized.

Third-quarter non-GAAP operating margin was 32.5%, down about 100 basis points from a year earlier. Non-GAAP free cash flow margin rose about 250 basis points to 20%.

AI deployment support shifts revenue mix

ServiceNow said it is including deployment expertise with its platform solutions for selected large transactions to help customers adopt artificial intelligence products more quickly. According to the company, customers receiving that support have progressed through AI adoption twice as fast during the first five weeks and generated higher Assist consumption and product usage over time than customers without the support.

Under ASC 606 accounting rules, the value of those deployment services is separated from the subscription contract and allocated to professional services revenue. In some cases, it is also excluded from cRPO. The resulting mix shift reduced third-quarter subscription revenue growth by approximately 25 basis points, with a corresponding shift to professional services revenue. ServiceNow expects an approximately 50-basis-point impact in the fourth quarter.

Management expects the investment to support higher AI consumption and a larger long-term monetization opportunity. The company also said the value of the service carve-outs returns to subscription revenue and cRPO when the associated contracts renew, although the timing and scale of that effect remain forward-looking.

ServiceNow noted another limitation in the relationship between cRPO and future subscription revenue. The metric excludes a growing balance of backlog from termination-for-convenience contracts inherited through acquisitions and would also exclude potential direct public-sector contracts. The company expects to end the fourth quarter with about 50 basis points of year-over-year subscription backlog growth excluded from cRPO because of those provisions. Those contracts would still contribute to subscription revenue if they remain in effect.

Fourth-quarter and full-year outlook

For the fourth quarter, ServiceNow expects subscription revenue of $4.245 billion to $4.255 billion, representing reported growth of 22.5% to 23%. The company forecasts 21.5% growth on a non-GAAP constant-currency basis, with exchange rates providing an estimated 100-basis-point tailwind to reported growth.

Fourth-quarter cRPO growth is expected to be 18.5% on both a reported and constant-currency basis. Non-GAAP operating margin is projected at 32%, about 100 basis points above the year-earlier period.

The outlook assumes Armis will contribute approximately 175 basis points to fourth-quarter constant-currency subscription revenue growth and the same amount to cRPO growth. Armis is also expected to reduce the quarter’s non-GAAP operating margin by about 75 basis points.

For full-year 2026, ServiceNow forecasts subscription revenue of $15.78 billion to $15.79 billion, up 22.5% as reported and 21% in constant currency. The guidance includes an estimated 150-basis-point currency benefit and approximately 125 basis points of constant-currency growth from Armis.

ServiceNow expects a full-year non-GAAP subscription gross margin of 81%, down about 250 basis points year over year, and a non-GAAP operating margin of 31.5%, up about 50 basis points. Non-GAAP free cash flow margin is projected at 36%, an increase of roughly 100 basis points. The company estimates Armis will reduce the full-year subscription gross margin by about 25 basis points, operating margin by 75 basis points and free cash flow margin by 200 basis points.

The forecasts are based on information available as of Oct. 28, 2026. ServiceNow identified foreign-exchange and interest-rate fluctuations, global economic and political conditions, government spending and operating status, tariffs, inflation, armed conflicts, execution on acquisitions and other strategic transactions, and customer acceptance of products and services—including AI offerings—as factors that could cause results to differ from its expectations.