ServiceNow lifts AI contract target to $1.7B as enterprise workflows expand

ServiceNow raised its year-end AI annual contract value target to $1.7 billion on October 28, 70% above its start-of-year target. The target measures annualized contract value, rather than AI revenue recognized during the quarter.

Revenue for the quarter ended September 30 rose 20.5% to $4.106 billion. Current remaining performance obligations, or contracted revenue due to be recognized within 12 months, reached $13.65 billion. ServiceNow forecasts 18.5% growth in that backlog measure for the fourth quarter.

The investor presentation explains an accounting effect from supporting AI adoption. ServiceNow includes deployment expertise in selected large contracts, allocating that value to professional services instead of subscriptions. The shift reduced subscription revenue growth by approximately 0.25 percentage points in Q3, with an approximately 0.5-point effect expected in Q4.

The deck also identifies backlog excluded because contracts allow termination for convenience. ServiceNow expects that exclusion to represent approximately 0.5 percentage points of year-over-year subscription backlog growth at year-end; contracts still in force can generate revenue. Its Q4 cRPO growth outlook includes approximately 1.75 percentage points from the Armis acquisition.

In a separate announcement that day, ServiceNow expanded AI-assisted execution. Its new ChatGPT plugin lets teams find similar incidents, assess the risk of a system change and update relevant records within a conversation. Business rules and permissions apply; ServiceNow executes and governs the actions.

The plugin is available in the OpenAI marketplace. Enhanced capabilities are expected by year-end, followed by voice-assisted risk assessments in the first quarter of 2027. Joint security features are scheduled for early access in January and general availability in the second quarter. Codex integration for building workflow applications is expected in 2027.

Contracts and the work being connected

The company launched the Control Tower Alliance for centralized AI oversight. Partners will develop solutions for ServiceNow’s governance platform, with qualification, certification and integration testing before listing. Selected offerings will be jointly supported.

Its scope includes usage and spending. Stripe’s Metronome described billing controls; NVIDIA emphasized runtime permission boundaries. Okta outlined blocking new token requests from out-of-scope agents. Cross-platform revocation standards remain a future ambition.

HPE illustrated the support operations customers intend to connect. Under a five-year agreement, it selected ServiceNow for its Cloud & AI business, planning a common foundation for cases and service management. Field-service scheduling would match technicians to work orders using skills, location, availability and the parts they have on hand.

The deployment connects support data, tracks customer equipment ownership and location, and automates returns, replacements and repairs. Separate ServiceNow installations would link enterprise customers, suppliers and systems integrators. Faster resolution and efficient support are intended benefits of the implementation, as described in HPE’s implementation plans.

Stagwell is deploying the platform across more than 70 agencies to connect HR, IT and security. It is consolidating four service desks and custom middleware, with a single support portal for more than 10,000 employees. Native AI supports incident summaries and knowledge articles as the group brings fragmented back-office systems together.

The agency group said common infrastructure would preserve agencies’ cultures and autonomy. It connects payroll, equipment and access during onboarding and offboarding, with oversight of models and credentials. Stagwell plans a repeatable integration blueprint for future acquisitions.