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ServiceNow Shares Drop 18 Percent After Hours as Q3 Profit Misses Estimates

ServiceNow reported third-quarter revenue of $4.106 billion, up 20.5 percent, but adjusted earnings of $1.00 per share missed the $1.02 consensus, and its shares fell about 15 percent in early extended trading, later reported at 18 percent.

By Orbit Post2 min read
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ServiceNow Shares Drop 18 Percent After Hours as Q3 Profit Misses Estimates

Key points

  • ServiceNow shares fell sharply in after-hours trading on Wednesday after the company's third-quarter adjusted profit missed estimates, with early extended trading showing a drop of about 15…
  • The results topped the company's own internal guidance but mostly fell short of analyst expectations, according to SiliconANGLE.
  • Total revenue for the third quarter was $4.106 billion, up 20.5 percent from a year earlier and about $20 million above the consensus estimate.

ServiceNow shares fell sharply in after-hours trading on Wednesday after the company's third-quarter adjusted profit missed estimates, with early extended trading showing a drop of about 15 percent and later reporting putting the fall at 18 percent.

The results topped the company's own internal guidance but mostly fell short of analyst expectations, according to SiliconANGLE. Bloomberg reporting on the results said the company's sales outlook renewed market concerns that AI could disrupt the enterprise software industry.

Revenue grows, profit misses

Total revenue for the third quarter was $4.106 billion, up 20.5 percent from a year earlier and about $20 million above the consensus estimate. Subscription revenue rose 21 percent to $3.988 billion.

Adjusted earnings were $1.00 per share, missing the $1.02 consensus estimate compiled by LSEG. GAAP net income was $277 million, down from $502 million a year earlier.

Current remaining performance obligations rose 20.5 percent to $13.65 billion, and total remaining performance obligations rose 22 percent to $29.7 billion.

Guidance brackets expectations, full-year outlook raised

ServiceNow forecast fourth-quarter subscription revenue of $4.245 billion to $4.255 billion, bracketing the FactSet consensus of $4.25 billion.

The company raised its full-year subscription revenue outlook to $15.78 billion to $15.79 billion and raised its free cash flow margin target to 36 percent.

AI deals and the OpenAI partnership

ServiceNow raised its 2026 target for AI annual contract value to $1.7 billion, up from $1 billion at the start of the year. Chief Executive Bill McDermott told investors that net new annual contract value attributed to AI products rose 65 percent year over year.

The company closed 19 transactions with more than $5 million in net new annual contract value, up more than 135 percent from a year earlier, and ended the quarter with 680 customers above $5 million in annual contract value, according to remarks by President and Chief Financial Officer Gina Mastantuono on the earnings call.

"Customers are also rapidly increasing their use of agentic AI," Mastantuono said. The same remarks put year-to-date production consumption of agentic AI at more than 13 times the year-earlier level.

ServiceNow also announced an expanded partnership with OpenAI alongside its earnings, starting with a ServiceNow plugin for ChatGPT.

The share drop came on a busy evening for software and technology earnings, and it followed the same pattern seen in other after-hours movers on Wednesday: results close to expectations were not enough for investors.

Timeline

  1. Oct 28, 2026ServiceNow reports third-quarter results after the Wednesday close: total revenue of $4.106 billion, up 20.5 percent, and subscription revenue of $3.988 billion, up 21 percent.
  2. Oct 28, 2026Adjusted earnings of $1.00 per share miss the $1.02 LSEG consensus estimate, and GAAP net income falls to $277 million from $502 million a year earlier.
  3. Oct 28, 2026Shares fall about 15 percent in early extended trading, with later reporting putting the after-hours drop at 18 percent.
  4. Oct 28, 2026ServiceNow forecasts fourth-quarter subscription revenue of $4.245 billion to $4.255 billion, raises its full-year outlook and lifts its 2026 AI annual contract value target to $1.7 billion.

Sources