ServiceNow (NOW) Q1 2025 earnings summary

Executive summary

• Q1 2025 subscription revenues reached $3.005 billion, up 19–20% year-over-year in constant currency, with total revenues at $3.09 billion and record net new ACV.

• Current RPO grew 22% to $10.31 billion, total RPO up 25% to $22.1 billion year-over-year.

• Free cash flow reached $1.48 billion (48% margin), with non-GAAP operating margin at 31% and renewal rate at 98%.

• AI-driven products and large deals fueled growth, with over 500 customers generating $5 million+ in ACV and 72 deals over $1 million in net new ACV.

• Announced acquisitions of Moveworks (~$2.9 billion) and Logik.ai to enhance AI and CRM capabilities.

Financial highlights

• Subscription revenues were $3.005–$3.01 billion, up 19–20% year-over-year; professional services and other revenues were $83 million, up 4–4.5%.

• Non-GAAP net income was $846 million ($4.04 diluted EPS), GAAP net income was $460 million ($2.20 diluted EPS).

• Non-GAAP operating margin was 31%; GAAP operating margin was 14.5–15%.

• Subscription gross margin was 81.5% GAAP and 84.5% non-GAAP; total gross margin was 79–82%.

• Ended Q1 with $10.9 billion in cash and investments.

Outlook and guidance

• FY 2025 subscription revenue guidance: $12.64–$12.68 billion, 18.5–19% year-over-year growth (19.5% constant currency).

• Q2 2025 subscription revenue expected at $3.030–$3.035 billion, 19–19.5% year-over-year growth.

• FY 2025 non-GAAP operating margin expected at 30.5%, free cash flow margin at 32%, and subscription gross margin at 83.5%.

• Guidance reflects currency tailwinds and incorporates caution for macroeconomic and geopolitical risks.

• Free cash flow and liquidity expected to remain strong, supporting ongoing investments and capital returns.