A Little More Than 30 Minutes from Earnings

NOW | ServiceNow Q2’25 Earnings Highlights:

• Adj. EPS: $4.13
• Revenue: $3.215B [✅]; UP +22.5% YoY
• Adj. Gross Margin: 77.5% [✅]; UP +50 bps YoY
• Net Income: $0.385B [✅]; UP +30% YoY

Q2’25 Outlook:

• Revenue: $3.260B – $3.265B [✅]
  • ServiceNow expects a year-over-year growth of 20% – 20.5% for subscription revenues in Q3 2025, with a constant currency growth of approximately 19.5%.
  • Management anticipates headwinds in cRPO growth due to a larger-than-average customer cohort scheduled to renew in Q4 2025.

Q2 Segment Performance:

• Subscription Revenues: $3.113B [✅]; UP +22.5% YoY
• Professional Services and Other Revenues: $0.102B [✅]; UP +19.5% YoY

Other Key Q2 Metrics:

• Adj. Operating Income: $0.358B [✅]; UP +11% YoY
• Free Cash Flow: $0.535B; UP +16.5% YoY
• Current Remaining Performance Obligations (cRPO): $10.92B; UP +24.5% YoY
• Remaining Performance Obligations (RPO): $23.9B; UP +29% YoY
• Net Cash Provided by Operating Activities: $0.716B; UP +22.5% YoY

CEO Commentary:

• Bill McDermott: “ServiceNow’s outstanding second quarter results continue our long track record of elite level execution. 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.”

CFO Commentary:

• Gina Mastantuono: “Q2 was a spectacular quarter across the board, as we significantly beat the high end of our guidance across all topline and profitability metrics. 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.”

Strategic Updates:

• ServiceNow introduced several innovative solutions including AI Control Tower and AI Agent Fabric, enhancing AI governance and orchestration capabilities.
• The company announced partnerships with AWS and NVIDIA to strengthen its AI capabilities and launched the ServiceNow Protected Platform Singapore to accelerate AI innovation.
• ServiceNow’s acquisition of data.world aims to enhance AI agent understanding and deepen enterprise data intelligence.

It’s a beat and raise for ServiceNow.

Subscription revenue is now forecast at $12.78 billion to $12.80 billion for the year. That’s above prior guidance of $12.64 billion to $12.68 billion.

Wall Street is looking for signs that ServiceNow’s AI products will accelerate revenue in the coming year,s so raised guidance is a welcome development for investors in the stock.

It looks like ServiceNow is the big after-hours winner in technology tonight.

Shares have come off their highs slightly, but are still up 6.4%.

That’s much stronger gains after-hours than other companies like Alphabet, Tesla, and IBM which are all flat or down.

And here’s a look at how growth rates compare across various financial metrics:

ServiceNow reported strong financial results for Q2 2025, with total revenues reaching $3.215 billion, a 22.5% year-over-year increase.

Subscription revenues were $3.113 billion, also up 22.5% from the previous year.

The company exceeded its guidance across all topline growth and profitability metrics. Non-GAAP earnings per share were $4.13, significantly surpassing the estimated EPS of $1.70.

The company highlighted substantial growth in its customer base, with a 30% increase in customers with more than $20 million in annual contract value.

ServiceNow’s CEO, Bill McDermott, emphasized the company’s differentiation as a full-stack agentic operating system for enterprises. The company also announced several strategic partnerships and innovations in AI, data, and CRM, positioning itself for continued growth in the second half of the year.

• ServiceNow Surpasses Q2 2025 Earnings Expectations with Strong Revenue Growth
• ServiceNow’s AI Platform Drives 22.5% Revenue Increase in Q2 2025
• ServiceNow CEO Highlights Company’s Differentiation in Enterprise AI Solutions
• ServiceNow’s Strategic Partnerships Fuel Q2 2025 Success
• ServiceNow Reports Robust Customer Growth in Q2 2025
• ServiceNow’s Q2 2025 Results Showcase Mission-Critical AI Platform

ServiceNow earnings are out and share have immediately jumped 8%.

We will continue posting analysis.

Alphabet just reported standout earnings but we’re still waiting for ServiceNow. Once their earnings hit the wires we’ll begin posting analysis.

The closing bell has rung and we’re watching for earnings. We’ll be continuing to update across the next 45 minutes with earnings analysis.

Plenty of analysts will be watching ServiceNow’s earnings as the company is one of the “bellwethers” for AI demand from enterprise clients. Here’s some of the figures the company announced last quarter in the AI space. Wall Street will be closely analyzing the commentary from William McDermott on demand for AI products.

Highlights from last quarter:

• Pro Plus
  • Deal Count grew more than fourfold year-over-year.
  • Featured in 15 of the 20 largest Q1 deals.
• ITSM Plus
  • Included in 15 of the top 20 deals
• ITOM Plus
  • Net-new ACV increased 70% quarter-over-quarter
• SecOps Plus
  • Net-new ACV grew 4X quarter-over-quarter
• Creator Plus
  • Average deal size grew 3X quarter-over-quarter

We’ll see if there are updates on any of these numbers when the company hosts its conference call.

Prior to earnings, ServiceNow received a downgrade from Erste Group, cutting the company from a ‘Buy’ to a ‘Hold.’

The main reason for the downgrade is ServiceNow trading at a premium valuation relative to peers.

Wall Street projects ServiceNow will deliver $16.58 in adjusted earnings in 2025. That leaves the company trading for about 58X 2025 adjusted earnings.

That’s certainly a steep price considering ServiceNow is guiding to subscription revenue growth of 19.5% (Non-GAAP). Of course, ServiceNow also has a unique position in many AI growth areas that create the premium the stock trades for relative to many of its peers.