Subscription Revenue: $3.113 billion, growing 21.5% year over year in constant currency.
Operating Margin: 29.5%, over 2.5 points above guidance.
Free Cash Flow Margin: 16.5%, up 3% year on year.
Remaining Performance Obligations (RPO): Approximately $23.9 billion, representing 25.5% year over year constant currency growth.
Current RPO: $10.92 billion, representing 21.5% year over year constant currency growth.
Renewal Rate: 98%.
Deals Greater Than $1 Million in Net New ACV: 89 deals, including 11 deals over $5 million.
Customers Generating Over $5 Million in ACV: 528 customers.
Cash and Investments: $10.8 billion.
Share Repurchase: Approximately 381,000 shares bought back, with $2.6 billion of authorization remaining.
Guidance for 2025 Subscription Revenue: Raised by $125 million to $12.775 billion to $12.795 billion, representing 20% year over year growth.
Q3 Subscription Revenue Guidance: Between $3.260 billion and $3.265 billion, representing 20% to 20.5% year over year growth.
Q3 Operating Margin Guidance: 30.5%.
Release Date: July 23, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
ServiceNow Inc (NYSE:NOW) reported a 21.5% growth in subscription revenue in constant currency, exceeding guidance by 2 percentage points.
The company achieved an operating margin of 29.5%, which is over 2.5 percentage points above their guidance.
Free cash flow margin increased by 3% year over year, reaching 16.5%.
ServiceNow Inc (NYSE:NOW) closed 89 deals greater than $1 million in net new ACV, with 11 deals exceeding $5 million.
The company is experiencing strong momentum in AI, with key AI Pro Plus deal count up over 50% quarter on quarter.
There is ongoing uncertainty in the US federal sector due to tightening budgets and evolving mission demands.
Despite strong performance, the company is maintaining prudence in its guidance due to potential margin headwinds from the Moveworks acquisition.
The demand environment remains challenging with geopolitical and economic uncertainties persisting.
The company is facing increased competition in the AI space, requiring continuous innovation and investment.
There are concerns about the cost of sales for AI, which may require more technical engineers to support customer adoption.
Q: Bill, some of your peers seem unclear if the demand environment has improved or changed since the start of the year. What is driving ServiceNow’s better-than-expected execution? Is it related to AI traction or competitive dynamics? A: Bill McDermott, CEO: The key change is AI, specifically agentic AI, which is transforming business models globally. ServiceNow’s AI platform is highly differentiated, integrating cross-functional work and providing exponential productivity improvements. This has led to increased customer consolidation and larger business cases across industries.
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