ServiceNow (NOW) Q2 2025 earnings summary

Executive summary

• Q2 2025 delivered outstanding results, with all top-line and profitability metrics exceeding guidance, driven by strong AI adoption, workflow expansion, and major customer wins across industries.

• Subscription revenues reached $3.113B, up 22.5% year-over-year; total revenues were $3.22B, with significant growth in large customers and over 85% of the Fortune 500 as clients.

• Major product launches and partnerships, including Now Assist, AI Control Tower, AI Agent Fabric, and acquisitions of Logic.ai and data.world, enhanced platform capabilities.

• Strategic partnerships with NVIDIA, UKG, Zoom, AWS, Cisco, and Ferrari expanded AI and industry reach.

• Free cash flow for Q2 was $535M (16.5% margin), with robust operating performance and continued share repurchases.

Financial highlights

• Q2 subscription revenues were $3.113B, up 22.5% year-over-year; total RPO reached $23.9B, up 29%, and cRPO was $10.92B, up 24.5%.

• Non-GAAP operating margin was 29.5%; free cash flow margin was 16.5%; non-GAAP net income was $854M; GAAP net income was $385M.

• Diluted EPS was $4.09 non-GAAP and $1.84 GAAP; non-GAAP subscription gross margin was 83.5%.

• 528 customers generated over $5M in ACV, with a 30%+ increase in those contributing $20M+.

• Share repurchases totaled 381,000 shares in Q2, with $2.6B authorization remaining.

Outlook and guidance

• Full-year 2025 subscription revenues guided to $12.775–$12.795B, up 20% year-over-year; Q3 expected at $3.260–$3.265B.

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

• Q3 cRPO growth to face a 2-point headwind due to renewal timing, expected to normalize in Q4.

• Guidance incorporates prudence for U.S. federal sector headwinds and excludes Moveworks contribution.

• On track for $15B+ subscription revenue and $1B Now Assist ACV by 2026.