$NOW (+0.09%) presented consistent and convincing results in the second quarter of 2025, underlining the company's leading role in the field of AI-supported enterprise software.
Financial highlights (Q2 2025 vs. Q2 2024):
Revenue:
- Total revenue: USD 3.215 billion (+22.5%).
- Subscription revenue: USD 3.113 billion (+22.5%).
Contract portfolio (RPO):
- Current RPO: USD 10.92 billion (+24.5%).
- Total RPO: USD 23.9 billion (+29%).
Customer growth:
- Clients with over USD 20 million ACV: +30%.
- 89 transactions with over USD 1 million net ACV.
Profitability (non-GAAP):
- Subscription gross margin: 83%.
- Operating margin: 29.5%.
- Diluted EPS: USD 4.09.
Cash flow:
- Free cash flow: USD 535 million (margin: 16.5%).
Strategic development:
AI integration: the "ServiceNow AI Platform" is positioning itself as the central operating system for business transformation. The "Now Assist" offering continues to be in high demand and is on track to reach an ACV of USD 1 billion by 2026.
Product focus areas: Focus on "Agentic AI", data management, CRM and workflow automation. Introduction of the "AI Control Tower" and "AI Agent Fabric".
Partnerships: Strengthening the ecosystem through partnerships with AWS, NVIDIA, UKG and Cisco.
Acquisitions: Completion of the acquisition of data.world to improve data catalog and governance capabilities.
Market recognition: Renewed positioning as a leader by leading analysts such as Forrester and IDC.
Outlook & assessment
Forecast 2025 (non-GAAP, raised):
- Subscription revenue: USD 12.775 billion to USD 12.795 billion (+19.5% to +20% in constant currencies).
- Operating margin: 30.5%.
- Free cash flow margin: 32%.
Q3 2025 forecast (non-GAAP):
- Subscription revenue: USD 3.260 bn to USD 3.265 bn (+19.5% in constant currencies).
- cRPO: +18% in constant currencies (taking into account renewal cycles in Q4).
Assessment: ServiceNow continues to show that its business model with high recurring revenues and significant profitability is working extremely well. The strategic focus on AI-driven enterprise solutions positions the company optimally in a growing market. The raised annual forecast signals management confidence and sustainable growth. ServiceNow remains an attractive core investment in the tech sector.
