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ServiceNow Reports Second Quarter 2025 Financial Results
ServiceNow exceeds guidance across all Q2 2025 topline growth and profitability metrics Subscription revenues of $3,113 million in Q2 2025, representing 22.5% year-over-year growth, 21.5% in constant currency Total revenues of $3,215 million in Q2 2025, representing 22.5% year-over-year growth, 21.5% in constant currency Current remaining performance obligations of $10.92 billion as of Q2 2025, representing 24.5% year-over-year growth, 21.5% in constant currency Remaining performance obligations of $23.9 billion as of Q2 2025, representing 29% year-over-year growth, 25.5% in constant currency The number of customers with more than $20 million in ACV grew over 30% year-over-year SANTA CLARA, Calif., July 23, 2025--(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 program1, 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 20252, 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 Assessment3 and the inaugural IDC MarketScape: Worldwide FinOps Cloud Costs Optimization Multicloud 2025 Vendor Assessment4, 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, 20255. As a testament to ServiceNow's market outperformance, ServiceNow earned a spot on the Fortune 500® list6 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 (3) Source: IDC MarketScape: Worldwide Business Automation Platforms 2025 Vendor Assessment (doc #US52034624, May 2025) (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. Second Quarter 2025 GAAP and Non-GAAP Results: The following table summarizes our financial results for the second quarter 2025: Second Quarter 2025 GAAP Results Second Quarter 2025 Non-GAAP Results(1) Amount ($ millions) Year/Year Growth (%) Amount ($ millions)(3) Year/Year Growth (%) Subscription revenues $3,113 22.5% $3,086 21.5% Professional services and other revenues $102 19.5% $101 18% Total revenues $3,215 22.5% $3,187 21.5% Amount ($ billions) Year/Year Growth (%) Amount ($ billions)(3) Year/Year Growth (%) cRPO $10.92 24.5% $10.65 21.5% RPO $23.9 29% $23.3 25.5% Amount ($ millions) Margin (%) Amount ($ millions)(2) Margin (%)(2) Subscription gross profit $2,488 80% $2,590 83% Professional services and other gross profit $3 3% $14 14% Total gross profit $2,491 77.5% $2,604 81% Income from operations $358 11% $955 29.5% Net cash provided by operating activities $716 22.5% Free cash flow $535 16.5% Amount ($ millions) Earnings per Basic/Diluted Share ($) Amount ($ millions)(2) Earnings per Basic/Diluted Share ($)(2) Net income $385 $1.86 / $1.84 $854 $4.13 / $4.09 (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. 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: Third Quarter 2025 GAAP Guidance Third Quarter 2025 Non-GAAP Guidance(1) Amount($ millions)(3) Year/Year Growth (%)(3) Constant Currency Year/Year Growth (%) Subscription revenues $3,260 - $3,265 20% - 20.5% 19.5% cRPO 18.5% 18% Margin (%)(2) Income from operations 30.5% Amount (millions) Weighted-average shares used to compute diluted net income per share 210 (1) We report non-GAAP financial measures in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. See the section entitled "Statement Regarding Use of Non-GAAP Financial Measures" for an explanation of non-GAAP measures. (2) Refer to the table entitled "Reconciliation of Non-GAAP Financial Guidance" for a reconciliation of GAAP to non-GAAP measures. (3) Guidance for GAAP subscription revenues and GAAP subscription revenues and cRPO growth rates are based on the 30-day average of foreign exchange rates for June 2025 for entities reporting in currencies other than U.S. Dollars. The following table summarizes our guidance for the full-year 2025: Full-Year 2025 GAAP Guidance Full-Year 2025 Non-GAAP Guidance(1) Amount($ millions)(3) Year/Year Growth (%)(3) Constant Currency Year/Year Growth (%) Subscription revenues $12,775 - $12,795 20% 19.5% - 20% Margin (%)(2) Subscription gross profit 83.5% Income from operations 30.5% Free cash flow 32% Amount (millions) Weighted-average shares used to compute diluted net income per share 210 (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. 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 Statements of Operations (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 Revenues: Subscription $ 3,113 $ 2,542 $ 6,118 $ 5,065 Professional services and other 102 85 185 165 Total revenues 3,215 2,627 6,303 5,230 Cost of revenues (1): Subscription 625 469 1,186 910 Professional services and other 99 83 189 162 Total cost of revenues 724 552 1,375 1,072 Gross profit 2,491 2,075 4,928 4,158 Operating expenses (1): Sales and marketing 1,128 960 2,182 1,883 Research and development 734 643 1,437 1,249 General and administrative 271 232 500 454 Total operating expenses 2,133 1,835 4,119 3,586 Income from operations 358 240 809 572 Interest income 116 104 231 205 Other expense, net (3 ) (10 ) (14 ) (18 ) Income before income taxes 471 334 1,026 759 Provision for income taxes 86 72 181 150 Net income $ 385 $ 262 $ 845 $ 609 Net income per share - basic $ 1.86 $ 1.27 $ 4.08 $ 2.97 Net income per share - diluted $ 1.84 $ 1.26 $ 4.04 $ 2.93 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 (1) Includes stock-based compensation as follows: Three Months Ended Six Months Ended June 30, 2025 June 30, 2024 June 30, 2025 June 30, 2024 Cost of revenues: Subscription $ 76 $ 62 $ 144 $ 120 Professional services and other 11 12 22 24 Operating expenses: Sales and marketing 155 141 303 275 Research and development 196 170 381 329 General and administrative 61 59 119 118 ServiceNow, Inc. Condensed Consolidated Balance Sheets (in millions) June 30, 2025 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 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 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 % (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. ServiceNow, Inc. Reconciliation of Non-GAAP Financial Guidance Three Months Ending September 30, 2025 GAAP operating margin 14% Stock-based compensation expense as % of total revenues 15% Amortization of purchased intangibles as % of total revenues 1% Business combination and other related costs as % of total revenues —% Severance costs as % of total revenues —% Non-GAAP operating margin 30.5% Twelve Months Ending December 31, 2025 GAAP subscription gross margin 80.5% Stock-based compensation expense as % of subscription revenues 2% Amortization of purchased intangibles as % of subscription revenues 1% Severance costs as % of subscription revenues — % Non-GAAP subscription margin 83.5% GAAP operating margin 14% Stock-based compensation expense as % of total revenues 15% Amortization of purchased intangibles as % of total revenues 1% Business combination and other related costs as % of total revenues —% Impairment of assets as % of total revenues —% Severance costs as % of total revenues —% Non-GAAP operating margin 30.5% GAAP net cash provided by operating activities as % of total revenues 39% Purchases of property and equipment as % of total revenues (7%) Business combination and other related costs as % of total revenues —% Non-GAAP free cash flow margin 32% Note: Numbers are rounded for presentation purposes and may not foot. View source version on Contacts Media Contact: Johnna Hoff(408) 250-8644press@ Investor Contact: Darren Yip(925) 388-7205ir@ 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
Reuters
an hour ago
- Business
- Reuters
ServiceNow raises annual subscription revenue forecast on AI-driven tools demand
July 23 (Reuters) - ServiceNow (NOW.N), opens new tab raised its annual subscription revenue forecast on Wednesday, signaling robust demand for its artificial intelligence-enabled software designed to automate digital operations and sending its shares up more than 7% in extended trading. Businesses are widely adopting cloud-based enterprise solutions from vendors including ServiceNow, Salesforce (CRM.N), opens new tab and Freshworks (FRSH.O), opens new tab to streamline operations and boost productivity amid the ongoing AI boom. ServiceNow projected its third-quarter subscription revenue above Wall Street estimates, despite economic uncertainty due to changing U.S. trade policies and Trump administration's cost-cutting measures that led to contract cancellations and delays. The Santa Clara, California-based company, which in March announced the acquisition of AI firm Moveworks for $2.85 billion, said the ongoing budget constraints among U.S. federal agencies are expected to persist through the current quarter. ServiceNow has signed contracts with six new customers in the U.S. public sector, CEO Bill McDermott said in an interview. The company's planned Moveworks acquisition is under regulatory review by the U.S. Justice Department, he added. ServiceNow said it was following the relevant procedures as required and expects the deal to close in the second half of the year or early 2026. The company said that a larger-than-usual number of customer contracts are set to expire and will be renewed in the fourth quarter, adding that this is expected to have a 200 basis points negative impact on its current remaining performance obligations in the third quarter. The company raised its annual subscription revenue forecast to between $12.78 billion and $12.80 billion, compared with its prior expectations of between $12.64 billion and $12.68 billion. Its third quarter subscription revenue forecast of $3.26 billion to $3.27 billion exceeds analysts' average estimate of $3.20 billion, according to data compiled by LSEG. ServiceNow's revenue of $3.22 billion for the quarter ended June 30 surpassed estimates of $3.12 billion. Adjusted profit per share of $4.09 also beat estimates of $3.57 for the second quarter.
Yahoo
2 hours ago
- Business
- Yahoo
ServiceNow raises annual subscription revenue forecast on AI-driven tools demand
By Jaspreet Singh (Reuters) -ServiceNow raised its annual subscription revenue forecast on Wednesday, signaling robust demand for its artificial intelligence-enabled software designed to automate digital operations. Businesses are widely adopting cloud-based enterprise solutions from vendors including ServiceNow, Salesforce and Freshworks to streamline operations and boost productivity amid the ongoing AI boom. ServiceNow projected its third-quarter subscription revenue above Wall Street estimates, despite economic uncertainty due to changing U.S. trade policies and Trump administration's cost-cutting measures that led to contract cancellations and delays. The Santa Clara, California-based company, which in March announced the acquisition of AI firm Moveworks for $2.85 billion, said the ongoing budget constraints among U.S. federal agencies are expected to persist through the current quarter. ServiceNow has signed contracts with six new customers in the U.S. public sector, CEO Bill McDermott said in an interview. The company's planned Moveworks acquisition is under regulatory review by the U.S. Justice Department, he added. ServiceNow said it was following the relevant procedures as required and expects the deal to close in the second half of the year or early 2026. The company said that a larger-than-usual number of customer contracts are set to expire and will be renewed in the fourth quarter, adding that this is expected to have a 200 basis points negative impact on its current remaining performance obligations in the third quarter. The company raised its annual subscription revenue forecast to between $12.78 billion and $12.80 billion, compared with its prior expectations of between $12.64 billion and $12.68 billion. Its third quarter subscription revenue forecast of $3.26 billion to $3.27 billion exceeds analysts' average estimate of $3.20 billion, according to data compiled by LSEG. ServiceNow's revenue of $3.22 billion for the quarter ended June 30 surpassed estimates of $3.12 billion. Adjusted profit per share of $4.09 also beat estimates of $3.57 for the second quarter. Sign in to access your portfolio
Yahoo
2 hours ago
- Business
- Yahoo
ServiceNow and CapZone Announce a Strategic Partnership to Build a National Network of Next Generation Digital Solutions for Mission-Critical Manufacturing Facilities
Utilizing the ServiceNow AI Platform as the digital backbone, the companies will transform legacy shipbuilding and bolster U.S. naval operations along the Gulf Coast and beyond NORWALK, Conn. & SANTA CLARA, Calif., July 23, 2025--(BUSINESS WIRE)--ServiceNow (NYSE: NOW) today announced a strategic partnership with CapZone Impact Investments LLC, a leading Opportunity Zone investment management company, to develop a national network of next generation digital solutions for mission-critical manufacturing facilities, starting in Mobile, Alabama. The initiative will utilize the ServiceNow AI Platform as the digital backbone combined with CapZone's Opportunity Zone investment, analytics, and compliance solution to transform legacy shipbuilding and bolster U.S. naval operations along the Gulf Coast and beyond. The partnership aims to enable the Department of Defense to modernize faster, sustain readiness more effectively, and meet the demands of evolving competitive global environment with confidence. Together, the collaboration brings CapZone's nationally recognized expertise in long-term capitalization strategies, fund management, and regulatory compliance with ServiceNow's robust suite of solutions – including risk management, enterprise asset management, and AI-powered automation capabilities. The result will be a scalable solution to accelerate Industry 4.0 initiatives and critical infrastructure development, increase supply chain visibility, and modernize manufacturing from the ground up. "ServiceNow and CapZone aim to revitalize the Mobile Naval Yard into a state-of-the-art digital facility, designed to meet the demands of today's mission critical objectives," said Steve Walters, president, Americas, at ServiceNow. "By digitally transforming some of our country's most vital manufacturing infrastructure, we're not just driving operational efficiencies through boosted productivity, we're setting a new standard of innovation for building and maintaining naval vessels." "The complexity of Opportunity Zones demands AI-enabled tools to support fund structuring, compliance, and investment deployment," said Al Puchala, CEO of CapZone. "CapZone is proud to partner with ServiceNow to scale our integrated OZ solution and deliver long-term American capital to rebuild the U.S. Defense Industrial Base. Our public-private model launching in Mobile is just the beginning." In 2024, CapZone launched the United Submarine Alliance (USA) Fund, a private equity Opportunity Zone fund established in partnership with the U.S. Navy. CapZone plans to introduce "Anything-As-A-Service" in Mobile with technology-supported capabilities using software, hardware, and equipment, data, and human capital to provide consumption-based solutions. This effort is part of CapZone's broader mission to strengthen America's industrial and military readiness through place-based investment in the Defense Industrial Base (DIB). As part of the Industry 4.0 solution, the companies are also using the ServiceNow AI Platform to deliver regulatory compliance and reporting functions for Opportunity Zone funds and national security infrastructure investments nationwide. 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: About CapZone Impact Investments LLC CapZone Impact Investments LLC (CZII) is a leading national Opportunity Zone investment firm focused on making and managing equity investments that drive social impact at scale. With the Opportunity Zone program now made permanent through recent legislation, CapZone is well-positioned to deploy long-term private capital into critical national priorities. Its investment strategies align with U.S. objectives in infrastructure modernization, workforce development, and defense readiness — uniquely leveraging OZ 2.0 incentives to drive lasting economic and strategic impact. For more information, visit: View source version on Contacts ServiceNow Contact Lindsay Capurropress@ CapZone Contact Jason
Yahoo
2 hours ago
- Business
- Yahoo
ServiceNow CEO on big earnings beat: We are rocking
If corporations are feeling down about a US trade war, they aren't voicing their concerns by pulling back spending on software as a service. Or at least that's the line that software company ServiceNow (NOW) is hawking. The tech play smashed analyst profit estimates after the close on Wednesday on the back of brisk demand. "We are rocking," ServiceNow CEO Bill McDermott told me on Yahoo Finance. McDermott — a tech veteran who used to lead software giant SAP (SAP) — said companies continue to aggressively invest in generative AI products. Even in the face of considerable economic uncertainty, top execs are signing off on AI buildouts as a means to find margin boosting cost savings. Added McDermott, "AI spending will be up significantly into year end." Shares of ServiceNow rose slightly in after-hours trading. The stock has gained 25% over the past year, out1performing the S&P 500's (^GSPC) 15% advance. However, the stock has dropped 9% year to date. "We see ServiceNow's cost-savings messaging — enabling companies to do more with less via a quick time-to-value deployment — resonating in this challenging environment as companies are increasingly focused on the ROI their software stack delivers," said JPMorgan analyst Mark Murphy. Earnings analysis: Subscription revenue: +22.5% year over year to $3.10 billion, vs. $3.12 billion estimate; guidance $3.03 billion to $3.04 billion Adjusted diluted EPS: +31% to $4.09 vs. $3.58 estimate What else caught our attention: Q3 2025 guidance Subscription revenue: $3.26 billion to $3.3 billion vs. estimate for $3.3 billion FY 2025 guidance Subscription revenue: $12.78 billion to $12.80 billion vs. estimate for $12.78 billion (previous: $12.64 billion to $12.68 billion) Brian Sozzi is Yahoo Finance's Executive Editor and a member of Yahoo Finance's editorial leadership team. Follow Sozzi on X @BrianSozzi, Instagram, and LinkedIn. Tips on stories? Email 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
