NOW 10-Q filed 2026-10-28 | Key takeaways
NOW filed its 10-Q; the most relevant disclosure change is expanded Customer concentration: One customer, a U.S. federal channel partner and systems integrator, represented 20% of accounts receivable as of September 30, 2026 and 12% of total revenues for each of the three and nine months ended September 30, 2026. Customer concentration: One customer (U.S. federal channel partner and systems integrator) represented 12% of revenue; One customer (U.S. federal channel partner and systems integrator) represented 20%...
Key takeaways
Customer concentration: One U.S. federal channel partner represented 12% of total revenues for Q3 and nine months 2026, unchanged from Q3 2025 but up from 11% in prior-year periods; accounts receivable concentration increased to 20% as of September 30, 2026 from 11% at December 31, 2025
Business combinations: Acquired Armis Security Ltd. in April 2026 for approximately $7.6 billion and Veza Technologies, Inc. in March 2026 for approximately $1.2 billion; also completed five other acquisitions for $612 million during nine months 2026
Goodwill increased to $10.012 billion as of September 30, 2026 from $3.578 billion at December 31, 2025, driven by $6.623 billion in goodwill acquired during the nine months
Intangible assets increased to $3.594 billion as of September 30, 2026 from $1.121 billion at December 31, 2025, with acquired intangible assets from Armis ($2.530 billion) and Veza ($356 million)
Debt: Issued $4.0 billion in senior notes in May 2026; $2.1 billion commercial paper outstanding as of September 30, 2026; entered into $3.0 billion revolving credit facility in April 2026
Employee severance: Recognized $87 million in severance costs for Q3 2026 and $167 million for nine months 2026 related to workforce optimization strategy leveraging AI-driven efficiencies
Supply chain finance program obligations decreased to $18 million as of September 30, 2026 from $87 million at December 31, 2025
Key metrics
Customer concentration
Disclosure changes
- Customer concentration
One customer, a U.S. federal channel partner and systems integrator, represented 20% of accounts receivable as of September 30, 2026 and 12% of total revenues for each of the three and nine months ended September 30, 2026.
Accounts receivable concentration nearly doubled year-over-year, increasing credit risk exposure to a single channel partner. - Business combinations
Acquired Armis Security Ltd. in April 2026 for approximately $7.6 billion in cash to expand security workflow offerings and Veza Technologies, Inc. in March 2026 for approximately $1.2 billion in cash to extend identity security capabilities; also completed five other acquisitions for $612 million during the nine months ended September 30, 2026.
Significant acquisition activity has materially changed the company's balance sheet with goodwill increasing from $3.578 billion to $10.012 billion and intangible assets from $1.121 billion to $3.594 billion. - Goodwill and intangible assets
Goodwill increased to $10.012 billion as of September 30, 2026 from $3.578 billion at December 31, 2025, primarily due to $6.623 billion in goodwill acquired from business combinations; intangible assets net increased to $3.594 billion from $1.121 billion.
Goodwill and intangible assets more than doubled compared to year-end 2025 due to 2026 acquisitions; potential impairment risk has increased. - Debt
In May 2026, issued five series of fixed-rate senior notes with aggregate principal of $4.0 billion (coupons ranging from 4.25% to 6.30%); $2.1 billion commercial paper outstanding at September 30, 2026 with weighted-average interest rate of 4.05%; entered into $3.0 billion revolving credit facility in April 2026 with no outstanding borrowings.
Debt increased significantly from $1.491 billion to $5.438 billion long-term debt and $2.086 billion short-term debt; interest expense increased substantially. - Employee severance
During the nine months ended September 30, 2026, the company initiated a workforce optimization strategy that streamlined certain functions by leveraging AI-driven efficiencies; recognized $87 million and $167 million in employee severance and related costs for Q3 and nine months 2026, respectively.
New severance costs represent a material non-recurring expense that affected operating results; the strategy signals organizational restructuring driven by AI efficiency initiatives. - Supply chain finance program
Outstanding payment obligations to suppliers participating in the supply chain finance program totaled $18 million as of September 30, 2026, down from $87 million at December 31, 2025.
Supply chain finance obligations decreased significantly, reducing off-balance sheet payment obligations.
Primary source
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