Latest news with #GinaMastantuono
Yahoo
25-07-2025
- Business
- Yahoo
NOW Q2 Deep Dive: AI and Workflow Expansion Drive Outperformance, Margins Improve
Enterprise workflow software maker ServiceNow (NYSE:NOW) reported Q2 CY2025 results topping the market's revenue expectations , with sales up 22.4% year on year to $3.22 billion. Its non-GAAP profit of $4.09 per share was 14.6% above analysts' consensus estimates. Is now the time to buy NOW? Find out in our full research report (it's free). ServiceNow (NOW) Q2 CY2025 Highlights: Revenue: $3.22 billion vs analyst estimates of $3.12 billion (22.4% year-on-year growth, 2.9% beat) Adjusted EPS: $4.09 vs analyst estimates of $3.57 (14.6% beat) Adjusted Operating Income: $955 million vs analyst estimates of $846.5 million (29.7% margin, 12.8% beat) The company provided subscription revenue guidance for the full year of $12.79 billion at the midpoint Operating Margin: 11.1%, up from 9.1% in the same quarter last year Annual Recurring Revenue: $12.45 billion at quarter end, up 22.5% year on year Billings: $3.25 billion at quarter end, up 27.8% year on year Market Capitalization: $206.7 billion StockStory's Take ServiceNow's Q2 results were met with a strongly positive market reaction, reflecting the company's ability to surpass Wall Street expectations on both revenue and non-GAAP profit. Management credited the performance to widespread customer adoption of its AI-powered Now Assist products, a surge in large enterprise deals, and robust demand across all workflow segments. CEO Bill McDermott noted, 'AI is what changed. And agentic AI is transforming the business model every company in the world.' The quarter also saw notable strength in technology workflows and increased renewal activity, supported by early on-premises contract renewals. Looking ahead, ServiceNow's forward guidance is built on continued growth in AI-driven products, expanding adoption of its Control Tower and Pro Plus offerings, and broadening its reach in front office and industry-specific workflows. Management emphasized its focus on investing in technical talent to accelerate customer value from AI transformation, while maintaining prudent margin management. CFO Gina Mastantuono explained, 'We're definitely still investing for growth to meet demand for AI transformation,' highlighting ongoing investments in sales, engineering, and R&D to support ramping AI deployments and new customer use cases. Key Insights from Management's Remarks Management attributed Q2's performance to rapid adoption of agentic AI capabilities, strong execution in new logo acquisition, and continued expansion across industries and workflows. AI-powered product momentum: Uptake of Now Assist and Pro Plus offerings far exceeded expectations, with customers increasingly deploying multiple AI-powered workflow tools across their organizations. Management highlighted that Now Assist net new annual contract value outperformed internal goals, and the largest Now Assist deal to date exceeded $20 million. Large enterprise deal growth: The company closed 89 deals greater than $1 million in net new annual contract value, with 11 exceeding $5 million. Notably, the number of customers contributing more than $20 million annually increased by over 30% year-on-year, reflecting ServiceNow's growing importance to large organizations. Industry and product diversification: Technology, media, and telecom saw growth above 70% year-over-year, with transportation, logistics, retail, hospitality, and energy also showing notable gains. The addition of and the launch of Configuration, Price, Quote (CPQ) solutions drove new wins in sales and order management, particularly in complex front-office environments. Workflow Data Fabric adoption: Workflow Data Fabric, which integrates and manages enterprise data for AI-driven workflows, was included in 17 of the top 20 largest deals, helping customers combine analytics, data, and automation for smarter operations. Internal AI efficiencies: ServiceNow's use of its own AI tools, such as CodeAssist, contributed to margin expansion and operational productivity, with management reporting $100 million in expected headcount savings for 2025 and increased engineering capacity. Drivers of Future Performance Management expects near-term growth to be led by ongoing enterprise adoption of AI-driven workflows, new product introductions, and increased investment in technical talent supporting customer AI transformations. Expansion of AI adoption: The company believes that continued momentum for Now Assist, Pro Plus, and Control Tower will drive additional revenue growth, as customers expand usage into more business functions and workflows. Management set a target of $1 billion in annual contract value from Now Assist by 2026. Front office and industry solutions: ServiceNow is broadening its addressable market by targeting front office workflows—such as sales, service, and order management—and tailoring AI-driven solutions to verticals like insurance and public sector. Management expects this strategy to unlock new deal opportunities and deepen existing relationships. Investments and margin balance: Management indicated that while AI-driven productivity gains are flowing into operating margins, some of these efficiencies will be reinvested to accelerate customer onboarding and technical support. The company remains cautious about potential federal spending headwinds and is maintaining prudent expense management to absorb possible integration costs from acquisitions such as Moveworks. Catalysts in Upcoming Quarters In coming quarters, the StockStory team will be watching (1) the pace of customer expansion into new AI-powered workflows and the degree of adoption of Control Tower and Now Assist, (2) the impact of front office and industry-specific product launches on deal volume and average contract value, and (3) the integration of recent acquisitions such as and into ServiceNow's workflow platform. Progress in onboarding technical talent and navigating public sector budget dynamics will also be important to track. ServiceNow currently trades at $973.37, up from $955.51 just before the earnings. At this price, is it a buy or sell? Find out in our full research report (it's free). Now Could Be The Perfect Time To Invest In These Stocks Trump's April 2024 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines. Take advantage of the rebound by checking out our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025). Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today. StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.
Yahoo
24-07-2025
- Business
- Yahoo
ServiceNow Smashes Q2 Estimates Again
ServiceNow (NOW) just crushed Q2adjusted EPS came in at $4.09 versus the $3.57 consensus, GAAP EPS hit $1.84 versus $1.60 and revenue climbed to $3.22 B versus $3.12 B, which sent shares up 6% after hours. CFO Gina Mastantuono said Now Assist showed up in 18 of the top 20 deals, pushing deal volume up 50% as heavy hitters like Nvidia (NASDAQ:NVDA) and Starbucks (NASDAQ:SBUX) ramp AI use. Next quarter they're guiding subscription revenue to $3.263.27 billion (versus the $3.21 B estimate) and lifted full?year subs to $12.7712.79 billion, $125 million above the old midpoint. Warning! GuruFocus has detected 3 Warning Sign with NOW. They also teamed with CapZone to modernize a naval yard in Mobile, Ala., and rolled out an agentic workforce management so AI and humans can tag?team tasks. Why it matters: Rapid AI adoption and an upward guidance tweak show ServiceNow is right at the heart of enterprise AI budgets. Investors will be watching Q3 subscription numbers and uptake of these new AI workforce tools. This article first appeared on GuruFocus. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
24-07-2025
- Business
- Yahoo
ServiceNow Smashes Q2 Estimates Again
ServiceNow (NOW) just crushed Q2adjusted EPS came in at $4.09 versus the $3.57 consensus, GAAP EPS hit $1.84 versus $1.60 and revenue climbed to $3.22 B versus $3.12 B, which sent shares up 6% after hours. CFO Gina Mastantuono said Now Assist showed up in 18 of the top 20 deals, pushing deal volume up 50% as heavy hitters like Nvidia (NASDAQ:NVDA) and Starbucks (NASDAQ:SBUX) ramp AI use. Next quarter they're guiding subscription revenue to $3.263.27 billion (versus the $3.21 B estimate) and lifted full?year subs to $12.7712.79 billion, $125 million above the old midpoint. Warning! GuruFocus has detected 3 Warning Sign with NOW. They also teamed with CapZone to modernize a naval yard in Mobile, Ala., and rolled out an agentic workforce management so AI and humans can tag?team tasks. Why it matters: Rapid AI adoption and an upward guidance tweak show ServiceNow is right at the heart of enterprise AI budgets. Investors will be watching Q3 subscription numbers and uptake of these new AI workforce tools. This article first appeared on GuruFocus. Sign in to access your portfolio
Business Wire
23-07-2025
- Business
- Business Wire
ServiceNow Reports Second Quarter 2025 Financial Results
SANTA CLARA, Calif.--(BUSINESS WIRE)--ServiceNow (NYSE: NOW), the AI platform for business transformation, today announced financial results for its second quarter ended June 30, 2025, with subscription revenues of $3,113 million in Q2 2025, representing 22.5% year-over-year growth and 21.5% in constant currency. 'ServiceNow's outstanding second quarter results continue our long track record of elite level execution,' said ServiceNow Chairman and CEO Bill McDermott. 'Our beat-and-raise quarter showcases the mission-critical nature of the ServiceNow AI Platform. Every business process in every industry is being refactored for agentic AI. ServiceNow has never been more differentiated as a full stack agentic operating system for the enterprise.' As of June 30, 2025, current remaining performance obligations ('cRPO'), contract revenue that will be recognized as revenue in the next 12 months, was $10.92 billion, representing 24.5% year-over-year growth and 21.5% in constant currency. The company had 89 transactions over $1 million in net new annual contract value ('ACV') in Q2, and ended the quarter with 528 customers with more than $5 million in ACV, representing approximately 19.5% year-over-year growth. 'Q2 was a spectacular quarter across the board, as we significantly beat the high end of our guidance across all topline and profitability metrics,' said ServiceNow President and CFO Gina Mastantuono. 'Now Assist continued to surpass net new ACV expectations, fueled by an increase in both deal volume and size quarter-over-quarter, putting us firmly on track to hit our $1 billion ACV target by 2026. With a robust pipeline and expanding market opportunities, including strong momentum in CRM, we are well-positioned for the second half of the year.' Recent Business Highlights Innovation ServiceNow's annual Knowledge event in May more than doubled its combined in-person and online attendance year-over-year, showcasing 800+ sessions and introducing major innovations across AI, data, CRM, and enterprise operations to drive efficiency and business impact at scale. ServiceNow introduced AI Control Tower and AI Agent Fabric, providing organizations with a centralized system to govern, orchestrate, and scale AI agents across functions, along with new AI Agents for security and risk to help customers proactively resolve issues and maintain compliance. The company expanded its data capabilities with the launch of Workflow Data Network, a new partner ecosystem to unify data, improve governance, and fuel AI-powered decision-making with real-time intelligence. ServiceNow reimagined CRM for the AI era, launching new CRM AI Agents and expanded CPQ capabilities that enable businesses to sell, fulfill, and service customers from a single AI-powered platform to increase productivity and strengthen loyalty. To drive digital transformation across key functions at scale, ServiceNow introduced Core Business Suite, an AI-powered solution that integrates HR, procurement, finance, legal, and facilities operations into one unified experience for improved efficiency and faster time to value. ServiceNow introduced its Autonomous IT vision, powered by agentic AI. This marks a turning point in enterprise technology, where AI-powered autonomy becomes foundational – aimed at delivering zero downtime, zero outages, and greater operational resilience across the enterprise. The company launched ServiceNow University, a dynamic learner experience offering hundreds of courses and assessments to help individuals and teams build essential digital skills for an AI-driven world. ServiceNow today announced agentic workforce management, a new, innovative extension of end-to-end AI agent orchestration that will enable employees and AI agents to seamlessly and securely work together to deliver real business outcomes. Partnerships and Acquisitions Throughout the quarter, ServiceNow announced several partnerships to further strengthen its AI capabilities: ServiceNow and AWS launched a new solution to unify enterprise data through bi-directional data integration and automated workflow orchestration, eliminating silos and providing real-time insights for AI-driven action. ServiceNow and NVIDIA introduced a new class of intelligent AI agents, powered by the high-performance Apriel Nemotron 15B reasoning model which delivers lower latency, lower inference costs, and faster agentic AI. ServiceNow and UKG announced an integration between UKG's AI solutions and ServiceNow's AI Agent Fabric to modernize employee experiences and streamline tasks across HR, payroll, and workforce management. ServiceNow and Cisco deepened their partnership, including the integration of Cisco's AI Defense into ServiceNow's AI Control Tower, to help customers securely and efficiently adopt and scale AI by delivering unified solutions that enhance governance, bolster security and scalability, and reduce risk and complexity. In May 2025, ServiceNow announced its plans to acquire the deal closed in July 2025. powerful data catalog and data governance platform will be brought into the ServiceNow AI Platform to enhance AI agent understanding and deepen enterprise data intelligence and governance. Global and Industry Expansion Today, ServiceNow announced that it is partnering with CapZone Impact Investments to create a national network of next-gen digital solutions to modernize mission-critical manufacturing facilities. The first phase will transform legacy shipbuilding and bolster U.S. naval operations, powered by the ServiceNow AI Platform, in Mobile, Alabama. Earlier this month, ServiceNow announced it had teamed up with Ferrari as the Official Partner of the Ferrari Hypercar team. In addition to powering real-time race operations for Hypercar, Ferrari's One Digital Portal, built on ServiceNow, is connecting over 25,000 employees, dealers, suppliers, and platforms to support Ferrari's global operations. The company also launched the ServiceNow Protected Platform Singapore (SPP-SG), a new secure, regulatory-compliant cloud platform that will accelerate AI innovation and bolster data security for the Singapore government and regulated sectors. In addition, ServiceNow is collaborating with Nanyang Polytechnic (NYP) to fast-track AI skills development, allowing students to build AI solutions on the SPP-SG and contribute to Singapore's digital economy. Investment ServiceNow repurchased approximately 381,000 shares of its common stock for $361 million as part of its share repurchase program 1, with the primary objective of managing the impact of dilution. Of the authorized amount of $4.5 billion, approximately $2.6 billion remains available for future share repurchases. Recognition ServiceNow was named a Leader in The Forrester Wave™: Low-Code Platforms for Professional Developers, Q2 2025 2, achieving the highest scores possible in 12 criteria. For the first time, ServiceNow was recognized as a Leader in the IDC MarketScape: Worldwide Business Automation Platforms 2025 Vendor Assessment 3 and the inaugural IDC MarketScape: Worldwide FinOps Cloud Costs Optimization Multicloud 2025 Vendor Assessment 4, which we believe demonstrates our expansion into new markets. Additionally, ServiceNow was named a Leader in the IDC MarketScape: Worldwide Governance, Risk, and Compliance Software Vendor Assessment, 2025 5. As a testament to ServiceNow's market outperformance, ServiceNow earned a spot on the Fortune 500® list 6 for the third consecutive year. The company was also named to the Forbes Most Trusted and LinkedIn Top Companies lists, and recognized on Ethisphere's 2025 World's Most Ethical Companies. (1) The program does not have a fixed expiration date, may be suspended, or discontinued at any time, and does not obligate ServiceNow to acquire any amount of its common stock. The timing, manner, price, and amount of any repurchases will be determined by ServiceNow at its discretion and will depend on a variety of factors, including business, economic and market conditions, prevailing stock prices, corporate and regulatory requirements, and other considerations. (2) Source: The Forrester Wave™: Low-Code Platforms for Professional Developers, Q2 2025, Forrester Research, Inc., May 22, 2025 Forrester Disclaimer Forrester does not endorse any company, product, brand, or service included in its research publications and does not advise any person to select the products or services of any company or brand based on the ratings included in such publications. Information is based on the best available resources. Opinions reflect judgment at the time and are subject to change. For more information, read about Forrester's objectivity at (4) Source: IDC MarketScape: Worldwide FinOps Cloud Costs Optimization Multicloud 2025 Vendor Assessment (doc #US52991225, June 2025) (5) Source: IDC MarketScape: Worldwide Governance, Risk, and Compliance Software Vendor Assessment, 2025 (doc #US53615325, June 2025) (6) From Fortune ©2025 Fortune Media IP Limited. All rights reserved. Fortune and Fortune 500® are registered trademarks of Fortune Media IP Limited and are used under license. Fortune and Fortune Media IP Limited are not affiliated with, and do not endorse the products or services of, ServiceNow. Expand Second Quarter 2025 GAAP and Non-GAAP Results: The following table summarizes our financial results for the second quarter 2025: (1) We report non-GAAP financial measures in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. See the section entitled 'Statement Regarding Use of Non-GAAP Financial Measures' for an explanation of non-GAAP measures. (2) Refer to the table entitled 'GAAP to Non-GAAP Reconciliation' for a reconciliation of GAAP to non-GAAP measures. (3) Non-GAAP subscription revenues and total revenues are adjusted for constant currency by excluding effects of foreign currency rate fluctuations and any gains or losses from foreign currency hedge contracts. Professional services and other revenues, cRPO, and RPO are adjusted only for constant currency. See the section entitled 'Statement Regarding Use of Non-GAAP Financial Measures' for an explanation of non-GAAP measures. Note: Numbers rounded for presentation purposes and may not foot. Expand Financial Outlook Our guidance includes GAAP and non‑GAAP financial measures. The non‑GAAP growth rates for subscription revenues are adjusted for constant currency by excluding the effects of foreign currency rate fluctuations and any gains or losses from foreign currency hedge contracts, and the non-GAAP growth rates for cRPO are adjusted only for constant currency to provide better visibility into the underlying business trends. ServiceNow has a larger‑than‑average customer cohort scheduled to renew in Q4 2025. As a result, Q3 2025 will experience approximately 2 points of headwinds to cRPO growth as the contractual obligations wind down. We expect that cohort to renew in Q4 2025, at which time those headwinds will subside. As noted last quarter, U.S. Federal agencies are navigating changes, from tightening budgets to evolving mission demands. We expect those dynamics to continue into Q3 2025. We remain confident that our revised guidance appropriately reflects these trends and continues to set us up for success for the remainder of the year. The following table summarizes our guidance for the third quarter 2025: (1) We report non-GAAP financial measures in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. See the section entitled 'Statement Regarding Use of Non-GAAP Financial Measures' for an explanation of non-GAAP measures. (2) Refer to the table entitled 'Reconciliation of Non-GAAP Financial Guidance' for a reconciliation of GAAP to non-GAAP measures. (3) Guidance for GAAP subscription revenues and GAAP subscription revenues and cRPO growth rates are based on the 30-day average of foreign exchange rates for June 2025 for entities reporting in currencies other than U.S. Dollars. Expand The following table summarizes our guidance for the full-year 2025: (1) We report non-GAAP financial measures in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. See the section entitled 'Statement Regarding Use of Non-GAAP Financial Measures' for an explanation of non-GAAP measures. (2) Refer to the table entitled 'Reconciliation of Non-GAAP Financial Guidance' for a reconciliation of GAAP to non-GAAP measures. (3) GAAP subscription revenues and related growth rate for the future quarter included in our full-year 2025 guidance are based on the 30-day average of foreign exchange rates for June 2025 for entities reporting in currencies other than U.S. Dollars. Note: Numbers are rounded for presentation purposes and may not foot. Expand Conference Call Details The conference call will begin at 2 p.m. Pacific Daylight Time (21:00 GMT) on July 23, 2025. Interested parties may listen to the call by dialing (888) 330‑2455 (Passcode: 8135305), or if outside North America, by dialing (240) 789‑2717 (Passcode: 8135305). Individuals may access the live teleconference from this webcast. An audio replay of the conference call and webcast will be available two hours after its completion and will be accessible for 30 days. To hear the replay, interested parties may go to the investor relations section of the ServiceNow website or dial (800) 770‑2030 (Passcode: 8135305), or if outside North America, by dialing (647) 362‑9199 (Passcode: 8135305). Investor Presentation Details An investor presentation providing additional information, including forward-looking guidance, and analysis can be found at Upcoming Investor Conferences ServiceNow today announced that it will attend and have executives present at four upcoming investor conferences. These include: ServiceNow President and Chief Financial Officer Gina Mastantuono will participate in a fireside chat at the Stifel Tech Executive Summit on Tuesday, August 26, 2025, at 9:30 a.m. PDT. ServiceNow President, Chief Product Officer, and Chief Operating Officer Amit Zavery will participate in a fireside chat at the Deutsche Bank Technology Conference on Wednesday, August 27, 2025, at 1:15 p.m. PDT. ServiceNow President and Chief Financial Officer Gina Mastantuono will participate in a fireside chat at the Citi Global TMT Conference on Wednesday, September 3, 2025, at 9:50 a.m. PDT. ServiceNow Chairman and Chief Executive Officer Bill McDermott will participate in a keynote at the Goldman Sachs Communacopia + Technology Conference on Wednesday, September 10, 2025, at 11:30 a.m. PDT. The live webcast for each will be accessible on the investor relations section of the ServiceNow website at and archived on the ServiceNow site for a period of 30 days. Statement Regarding Use of Non-GAAP Financial Measures We use the following non-GAAP financial measures in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. Revenues. We adjust revenues and related growth rates for constant currency to provide a framework for assessing how our business performed excluding the effect of foreign currency rate fluctuations and any gains or losses from foreign currency hedge contracts that are reported in the current and comparative period. To exclude the effect of foreign currency rate fluctuations, current period results for entities reporting in currencies other than U.S. Dollars ('USD') are converted into USD at the average exchange rates in effect during the comparison period (for Q2 2024, the average exchange rates in effect for our major currencies were 1 USD to 0.93 Euros and 1 USD to 0.79 British Pound Sterling ('GBP')), rather than the actual average exchange rates in effect during the current period (for Q2 2025, the average exchange rates in effect for our major currencies were 1 USD to 0.88 Euros and 1 USD to 0.75 GBP). Guidance for related growth rates is derived by applying the average exchange rates in effect during the comparison period, rather than the exchange rates for the guidance period, adjusted for any foreign currency hedging effects. We believe the presentation of revenues and related growth rates adjusted for constant currency facilitates the comparison of revenues year-over-year. Remaining performance obligations and current remaining performance obligations. We adjust cRPO and remaining performance obligations ('RPO') and related growth rates for constant currency to provide a framework for assessing how our business performed. To present this information, current period results for entities reporting in currencies other than USD are converted into USD at the exchange rates in effect at the end of the comparison period (for Q2 2024, the end of the period exchange rates in effect for our major currencies were 1 USD to 0.93 Euros and 1 USD to 0.79 GBP), rather than the actual end of the period exchange rates in effect during the current period (for Q2 2025, the end of the period exchange rates in effect for our major currencies were 1 USD to 0.85 Euros and 1 USD to 0.73 GBP). Guidance for the related growth rate is derived by applying the end of period exchange rates in effect during the comparison period rather than the exchange rates in effect during the guidance period. We believe the presentation of cRPO and RPO and related growth rates adjusted for constant currency facilitates the comparison of cRPO and RPO year-over-year, respectively. Gross profit, Income from operations, Net income and Net income per share - diluted. Our non-GAAP presentation of gross profit, income from operations, and net income measures exclude certain non-cash or non-recurring items, including stock-based compensation expense, amortization of purchased intangibles, legal settlements, business combination and other related costs including compensation expense, impairment of assets, severance costs, and income tax effects and adjustments. We believe these adjustments provide useful supplemental information to investors and facilitates the analysis of our operating results and comparison of operating results across reporting periods. Free cash flow. Free cash flow is defined as net cash provided by operating activities plus cash outflows for legal settlements and business combination and other related costs including compensation expense, reduced by purchases of property and equipment. Free cash flow margin is calculated as free cash flow as a percentage of total revenues. We believe information regarding free cash flow and free cash flow margin provides useful information to investors because it is an indicator of the strength and performance of our business operations. Our presentation of non-GAAP financial measures may not be comparable to similar measures used by other companies. We encourage investors to carefully consider our results under GAAP, as well as our supplemental non-GAAP information and the reconciliation between these presentations, to more fully understand our business. Please see the tables included at the end of this release for the reconciliation of GAAP and non-GAAP results for gross profit, income from operations, net income, net income per share, and free cash flow. Use of Forward-Looking Statements This release contains 'forward-looking statements' regarding our performance, including but not limited to statements in the section entitled 'Financial Outlook' and statements regarding the expected benefits of our announced partnerships. Forward-looking statements are subject to known and unknown risks and uncertainties and are based on potentially inaccurate assumptions that could cause actual results to differ materially from those expected or implied by the forward-looking statements. If any such risks or uncertainties materialize or if any of the assumptions prove incorrect, our results could differ materially from the results expressed or implied by the forward-looking statements we make. Factors that may cause actual results to differ materially from those in any forward-looking statements include, among others, experiencing an actual or perceived cyber-security event or weakness; our ability to comply with evolving privacy laws, data transfer restrictions, and other foreign and domestic standards related to data and the Internet; errors, interruptions, delays or security breaches in or of our service or data centers; our ability to maintain and attract key employees and manage workplace culture; alleged violations of laws and regulations, including those relating to anti-bribery and anti-corruption and those relating to public sector contracting requirements; our ability to compete successfully against existing and new competitors; our ability to predict, prepare for and respond promptly to rapidly evolving technological, market and customer developments; our ability to grow our business, including converting remaining performance obligations into revenue, adding and retaining customers, selling additional subscriptions to existing customers, selling to larger enterprises, government and regulated organizations with complex sales cycles and certification processes, and entering new geographies and markets; our ability to develop and gain customer demand for and acceptance of existing, new and improved products and services, including products that incorporate AI technology; our ability to expand and maintain our partnerships and partner programs, including expected market opportunity from such relationships, and realize the anticipated benefits thereof; global macroeconomic and political conditions including tariffs, inflation and armed conflicts; fluctuations in the value of foreign currencies relative to the U.S. Dollar; fluctuations in interest rates; our ability to consummate and realize the benefits of any strategic transactions or acquisitions; our ability to execute share repurchases, including the timing, manner, price, and amount of any repurchase; and fluctuations and volatility in our stock price. Further information on these and other factors that could affect our financial results are included in our Form 10-K for the year ended December 31, 2024, and in other filings we make with the Securities and Exchange Commission from time to time. We undertake no obligation, and do not intend, to update these forward-looking statements, to review or confirm analysts' expectations, or to provide interim reports or updates on the progress of the current financial quarter. About ServiceNow ServiceNow (NYSE: NOW) is putting AI to work for people. We move with the pace of innovation to help customers transform organizations across every industry while upholding a trustworthy, human centered approach to deploying our products and services at scale. Our AI platform for business transformation connects people, processes, data, and devices to increase productivity and maximize business outcomes. For more information, visit: © 2025 ServiceNow, Inc. All rights reserved. ServiceNow, the ServiceNow logo, Now, and other ServiceNow marks are trademarks and/or registered trademarks of ServiceNow, Inc. in the United States and/or other countries. Other company names, product names, and logos may be trademarks of the respective companies with which they are associated. ServiceNow, Inc. Condensed Consolidated Balance Sheets (in millions) December 31, 2024 (unaudited) Assets Current assets: Cash and cash equivalents $ 3,124 $ 2,304 Short-term investments 3,008 3,458 Accounts receivable, net 1,696 2,240 Current portion of deferred commissions 551 517 Prepaid expenses and other current assets 896 668 Total current assets 9,275 9,187 Deferred commissions, less current portion 1,017 999 Long-term investments 4,655 4,111 Property and equipment, net 1,985 1,763 Operating lease right-of-use assets 818 693 Intangible assets, net 319 209 Goodwill 1,778 1,273 Deferred tax assets 1,340 1,385 Other assets 864 763 Total assets $ 22,051 $ 20,383 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 211 $ 68 Accrued expenses and other current liabilities 1,378 1,369 Current portion of deferred revenue 6,802 6,819 Current portion of operating lease liabilities 104 102 Total current liabilities 8,495 8,358 Deferred revenue, less current portion 110 95 Operating lease liabilities, less current portion 815 687 Long-term debt, net 1,490 1,489 Other long-term liabilities 209 145 Stockholders' equity 10,932 9,609 Total liabilities and stockholders' equity $ 22,051 $ 20,383 Expand ServiceNow, Inc. Condensed Consolidated Statements of Cash Flows (in millions) (unaudited) Three Months Ended Six Months Ended June 30, 2025 June 30, 2024 June 30, 2025 June 30, 2024 Cash flows from operating activities: Net income $ 385 $ 262 $ 845 $ 609 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 172 136 332 266 Amortization of deferred commissions 148 132 293 263 Stock-based compensation 499 444 969 866 Deferred income taxes 16 24 48 52 Other 58 (7 ) 62 (25 ) Changes in operating assets and liabilities, net of effect of business combinations: Accounts receivable (302 ) (216 ) 599 499 Deferred commissions (136 ) (141 ) (291 ) (306 ) Prepaid expenses and other assets (83 ) (146 ) (222 ) (252 ) Accounts payable (101 ) 65 133 172 Deferred revenue (116 ) (82 ) (264 ) (92 ) Accrued expenses and other liabilities 176 149 (111 ) (91 ) Net cash provided by operating activities $ 716 $ 620 $ 2,393 $ 1,961 Cash flows from investing activities: Purchases of property and equipment (190 ) (262 ) (395 ) (397 ) Business combinations, net of cash acquired (58 ) (31 ) (76 ) (41 ) Purchases of other intangibles — (9 ) (34 ) (30 ) Purchases of investments (1,182 ) (1,055 ) (2,322 ) (2,660 ) Purchases of non-marketable investments (134 ) (46 ) (138 ) (88 ) Sales and maturities of investments 1,100 1,040 2,281 2,113 Other 41 (8 ) 44 (2 ) Net cash used in investing activities $ (423 ) $ (371 ) $ (640 ) $ (1,105 ) Cash flows from financing activities: Proceeds from employee stock plans — — 153 131 Repurchases of common stock (361 ) — (659 ) (175 ) Taxes paid related to net share settlement of equity awards (185 ) (137 ) (438 ) (352 ) Business combination — — — (184 ) Net cash used in financing activities $ (546 ) $ (137 ) $ (944 ) $ (580 ) Foreign currency effect on cash, cash equivalents and restricted cash 9 (9 ) 14 (13 ) Net change in cash, cash equivalents and restricted cash (244 ) 103 823 263 Cash, cash equivalents and restricted cash at beginning of period 3,377 2,064 2,310 1,904 Cash, cash equivalents and restricted cash at end of period $ 3,133 $ 2,167 $ 3,133 $ 2,167 Expand ServiceNow, Inc. GAAP to Non-GAAP Reconciliation (in millions, except per share data) (unaudited) Three Months Ended Six Months Ended June 30, 2025 June 30, 2024 June 30, 2025 June 30, 2024 Gross profit: GAAP subscription gross profit $ 2,488 $ 2,073 $ 4,932 $ 4,155 Stock-based compensation 76 62 144 120 Amortization of purchased intangibles 23 21 43 42 Severance costs 3 — 3 — Non-GAAP subscription gross profit $ 2,590 $ 2,156 $ 5,122 $ 4,317 GAAP professional services and other gross (loss) profit $ 3 $ 2 $ (4 ) $ 3 Stock-based compensation 11 12 22 24 Severance costs — — — — Non-GAAP professional services and other gross profit $ 14 $ 14 $ 18 $ 27 GAAP gross profit $ 2,491 $ 2,075 $ 4,928 $ 4,158 Stock-based compensation 87 74 166 144 Amortization of purchased intangibles 23 21 43 42 Severance costs 3 — 3 — Non-GAAP gross profit $ 2,604 $ 2,170 $ 5,140 $ 4,344 Gross margin: GAAP subscription gross margin 80 % 81.5 % 80.5 % 82 % Stock-based compensation as % of subscription revenues 2.5 % 2.5 % 2.5 % 2.5 % Amortization of purchased intangibles as % of subscription revenues 0.5 % 1 % 0.5 % 1 % Severance costs as % of subscription revenues — % — % — % — % Non-GAAP subscription gross margin 83 % 85 % 83.5 % 85 % GAAP professional services and other gross margin 3 % 2 % (2.5 %) 1.5 % Stock-based compensation as % of professional services and other revenues 11 % 13.5 % 12 % 14 % Severance costs as % of professional services and other revenues — % — % — % — % Non-GAAP professional services and other gross margin 14 % 15.5 % 9.5 % 15.5 % GAAP gross margin 77.5 % 79 % 78 % 79.5 % Stock-based compensation as % of total revenues 2.5 % 3 % 2.5 % 2.5 % Amortization of purchased intangibles as % of total revenues 0.5 % 1 % 0.5 % 1 % Severance costs as % of total revenues — % — % — % — % Non-GAAP gross margin 81 % 82.5 % 81.5 % 83 % Income from operations: GAAP income from operations $ 358 $ 240 $ 809 $ 572 Stock-based compensation 499 444 969 866 Amortization of purchased intangibles 25 24 46 48 Business combination and other related costs 14 12 25 25 Impairment of assets 30 — 30 — Severance costs 29 — 29 — Non-GAAP income from operations $ 955 $ 720 $ 1,908 $ 1,511 Operating margin: GAAP operating margin 11 % 9 % 13 % 11 % Stock-based compensation as % of total revenues 15.5 % 17 % 15.5 % 16.5 % Amortization of purchased intangibles as % of total revenues 1 % 1 % 0.5 % 1 % Business combination and other related costs as % of total revenues 0.5 % 0.5 % 0.5 % 0.5 % Impairment of assets as % of total revenues 1 % — % 0.5 % — % Severance costs as % of total revenues 1 % — % 0.5 % — % Non-GAAP operating margin 29.5 % 27.5 % 30.5 % 29 % Net income: GAAP net income $ 385 $ 262 $ 845 $ 609 Stock-based compensation 499 444 969 866 Amortization of purchased intangibles 25 24 46 48 Business combination and other related costs 14 12 25 25 Impairment of assets 30 — 30 — Severance costs 29 — 29 — Income tax effects and adjustments (1) (128 ) (91 ) (244 ) (190 ) Non-GAAP net income $ 854 $ 651 $ 1,700 $ 1,358 Net income per share - basic and diluted: GAAP net income per share - basic $ 1.86 $ 1.27 $ 4.08 $ 2.97 GAAP net income per share - diluted $ 1.84 $ 1.26 $ 4.04 $ 2.93 Non-GAAP net income per share - basic $ 4.13 $ 3.16 $ 8.22 $ 6.61 Non-GAAP net income per share - diluted $ 4.09 $ 3.13 $ 8.12 $ 6.54 Weighted-average shares used to compute net income per share - basic 207 206 207 205 Weighted-average shares used to compute net income per share - diluted 209 208 209 208 Free cash flow: GAAP net cash provided by operating activities $ 716 $ 620 $ 2,393 $ 1,961 Purchases of property and equipment (190 ) (262 ) (395 ) (397 ) Business combination and other related costs 9 1 14 20 Non-GAAP free cash flow $ 535 $ 359 $ 2,012 $ 1,584 Free cash flow margin: GAAP net cash provided by operating activities as % of total revenues 22.5 % 23.5 % 38 % 37.5 % Purchases of property and equipment as % of total revenues (6 %) (10 %) (6.5 %) (7.5 %) Business combination and other related costs as % of total revenues 0.5 % — % — % 0.5 % Non-GAAP free cash flow margin 16.5 % 13.5 % 32 % 30.5 % Expand (1) We use a non-GAAP effective tax rate for evaluating our operating results to provide consistency across reporting periods. Based on our long-term projections, we are using a non-GAAP tax rate of 20% for each of the three and six months ended June 30, 2025 and 2024. This non-GAAP tax rate could change for various reasons including significant changes in our geographic earnings mix or fundamental tax law changes in major jurisdictions in which we operate. Note: Numbers are rounded for presentation purposes and may not foot. Expand
Yahoo
19-06-2025
- Business
- Yahoo
5 Insightful Analyst Questions From ServiceNow's Q1 Earnings Call
ServiceNow's first quarter results were well received by the market, reflecting management's focus on broad-based workflow adoption and rapid expansion in artificial intelligence-driven solutions. CEO Bill McDermott credited the quarter's growth to substantial increases in large enterprise deals, particularly within technology, CRM, and public sector workflows. The company highlighted significant acceleration in its Pro Plus and Now Assist AI products, noting that the number of Pro Plus deals more than quadrupled year over year. Management also emphasized strong renewal rates and customer expansion, with CFO Gina Mastantuono noting, 'Our renewal rate remained best in class at 98%, underscoring the consistent value that ServiceNow delivers to our customers.' Is now the time to buy NOW? Find out in our full research report (it's free). Revenue: $3.09 billion vs analyst estimates of $3.08 billion (18.6% year-on-year growth, in line) Adjusted EPS: $4.04 vs analyst estimates of $3.83 (5.4% beat) Adjusted Operating Income: $953 million vs analyst estimates of $928 million (30.9% margin, 2.7% beat) The company provided subscription revenue guidance for the full year of $12.66 billion at the midpoint Operating Margin: 14.6%, up from 12.8% in the same quarter last year Market Capitalization: $208.5 billion While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention. Keith Weiss (Morgan Stanley) asked whether macro uncertainty or elongated sales cycles factored into guidance. CFO Gina Mastantuono replied that guidance incorporates a healthy degree of conservatism, but 'demand that we're seeing remains strong,' with comprehensive pipeline analysis supporting outlook. Kash Rangan (Goldman Sachs) inquired about the impact of the Moveworks acquisition and any changes to the sales playbook amid customer tariff concerns. President and Chief Product Officer Amit Zavery explained Moveworks will accelerate the roadmap and user experience, while CEO Bill McDermott emphasized continued strong demand despite macro variables. Mark Murphy (JPMorgan) questioned ServiceNow's ambitions in CRM and whether the company intends to be a core system of record. McDermott confirmed broader aspirations, aiming to deliver a fully integrated, AI-powered front office that connects sales and service for improved customer productivity. Alex Zukin (Wolfe Research) asked about the quarterly mix shift in workflows and whether manufacturing and federal results reflected pull-forward demand. Mastantuono noted that all workflows continue to perform well and no material pull-forwards were seen, attributing results to strong execution. Kylie (Citi) asked about the adoption trajectory for Pro Plus and its importance to growth targets. Zavery said adoption is expected to continue accelerating, and Mastantuono reiterated Now Assist and AI as key contributors to ServiceNow's multi-year growth goals. In coming quarters, our analysts will watch (1) the adoption rate and customer expansion of AI-powered products like Pro Plus and AgenTek, (2) integration progress and customer impact from the Moveworks and acquisitions, and (3) continued momentum in public sector and regulated industry segments. Execution on these priorities, along with the rollout of new workflow automation features, will be critical markers of ServiceNow's ability to sustain growth. ServiceNow currently trades at $1,007, up from $814.07 just before the earnings. At this price, is it a buy or sell? Find out in our full research report (it's free). Donald Trump's victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs. While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025). Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.
