ServiceNow (NOW) Q3 2026 Earnings Call: Q&A Summary

Q: Brad Zelnick from Deutsche Bank asked if customers are requesting outcome-based pricing and how that would impact the financial model.

A: Bill McDermott stated that customers prefer the predictability of seat-based pricing while embracing consumption for AI, creating a hybrid model. Gina Mastantuono added that customers are satisfied with this current hybrid approach and are not requesting outcome-based pricing.

Q: Alex Zukin from Wolfe Research asked why the Q4 guidance did not fully reflect the Q3 beat and requested clarification on CRPO and subscription revenue trends.

A: Gina Mastantuono explained that the company is investing in delivery expertise to help customers deploy AI faster, which shifts some revenue from subscription to professional services. She also noted that early renewals in Q3 pulled growth forward, creating a headwind for Q4 CRPO, and mentioned that a higher on-premise mix in the public sector also impacts CRPO metrics.

Q: An analyst from Morgan Stanley asked when AI momentum will translate to overall acceleration and if the go-to-market motion for agentic sales is optimized.

A: Bill McDermott emphasized the network effect of the Super Intelligence Control Tower and the strategic decision to invest in rapid deployment to drive token consumption. Gina Mastantuono reiterated that the company remains on track to meet the 2030 goal of AI representing 30% of ACV.

Q: Samik Chatterjee from JPMorgan asked for early data points supporting the decision to invest in customer AI deployment and which metrics are being tracked.

A: Gina Mastantuono stated that customers receiving support saw AI adoption progress twice as fast in the first five weeks, with higher assist consumption and product usage. She noted that these metrics are the primary indicators of success.

Q: Peter Weed from Bernstein asked how internal productivity gains from AI are impacting headcount and operations.

A: Gina Mastantuono noted $1 billion in efficiency gains, allowing for reduced hiring in support and overhead roles while increasing quota-bearing sales staff. Bill McDermott added that internal AI tools act as a sales coach and have automated many operational tasks, allowing the company to maintain a steady headcount while strengthening human capital.

Q: Arjun Bhatia from William Blair asked if AI adoption is cannibalistic or accretive and how overall spend is changing for advanced AI customers.

A: Bill McDermott argued that AI business cases show a 10x improvement over previous solutions. Amit Zavery explained that customers typically start with one or two use cases and then expand usage significantly once they see production results, leading to re-ups and higher token consumption.

Q: Samad Samana from Jefferies asked about the decision to provide resources for large customer AI deployment and how investors should model the revenue and margin impact.

A: Gina Mastantuono clarified that this is a short-term initiative to optimize the first wave of adopters and is not a long-term strategy. Amit Zavery added that AI implementation agents are doing much of the heavy lifting, making these engagements short in duration.

Q: Kirk Materne from Evercore ISI asked if customers are building an orchestration layer for agents now or waiting for more production deployment.

A: Bill McDermott highlighted the Super Intelligence Control Tower as a redesign of enterprise governance. Amit Zavery explained that customers are using it upfront for visibility and safety before scaling AI, which then drives consumption as they gain confidence.

Q: Michael Turrin from Wells Fargo asked how IT budget discussions are evolving and how ServiceNow is positioned for the end of the year and 2027.

A: Bill McDermott stated that ServiceNow is strategically relevant because it offers a trusted system of record. He noted that the company is moving past the proof-of-concept phase into serious enterprise deployment, where customers prioritize ROI.

Q: Matt Cleton from Needham asked about the monetization implications of the OpenAI partnership expansion and how it compares to using Employee Works.

A: Amit Zavery explained that the OpenAI partnership allows ChatGPT to interface with ServiceNow, but the actual work happens within ServiceNow, allowing for monetization through assist consumption. Bill McDermott added that ServiceNow acts as the execution layer for the entire AI economy.