What are the key drivers of ServiceNow's revenue growth in the first quarter of 2025?

ServiceNow's revenue growth in Q1 2025 was primarily driven by a 19% increase in subscription revenues, which benefited from new customer acquisitions and expanded usage by existing customers. The company's strategy of digital transformation and workflow automation continues to resonate with enterprises, fueling demand for its platform and applications.

How is ServiceNow managing its expenses and profitability?

ServiceNow demonstrated improved profitability through disciplined expense management. While sales and marketing and R&D expenses increased in absolute dollars to support growth, they remained relatively flat as a percentage of revenue, indicating increased operating leverage. The company also saw a slight improvement in its gross profit percentage for subscription revenues, contributing to a 36% increase in GAAP income from operations.

What is the significance of the pending acquisition of Moveworks?

The pending acquisition of Moveworks for approximately $2.9 billion is a strategic move to enhance ServiceNow's AI capabilities, particularly in agentic AI assistants for enterprise systems. This acquisition is expected to strengthen the Now Platform's ability to automate business processes and improve employee experiences, aligning with ServiceNow's focus on AI for digital transformation. The deal is anticipated to close in the second half of 2025.

What is the company's outlook for liquidity and cash flow?

ServiceNow maintains a strong liquidity position with $10.9 billion in cash, cash equivalents, and investments as of March 31, 2025. The company generated $1.68 billion in cash from operating activities and $1.48 billion in free cash flow, representing a 21% increase year-over-year. Management expects these cash flows, along with existing liquidity, to be sufficient to meet its needs for at least the next 12 months.

NOW 10-Q Quarterly Report Q1 FY2025 — Revenue, Net Income, EPS

Summary

ServiceNow, Inc. (NOW) reported strong financial results for the first quarter of 2025, demonstrating robust revenue growth and improved profitability. Total revenues surged by 19% year-over-year to $3.09 billion, driven primarily by a 19% increase in subscription revenues, which now constitute 97% of total revenue. The company also saw a significant increase in operating income, up 36% to $451 million, with a non-GAAP operating income of $953 million, up 20%. This growth was supported by healthy increases in net income, rising to $460 million from $347 million in the prior year period, translating to diluted EPS of $2.20. Key operational metrics highlight continued customer expansion, with the number of customers with Annual Contract Value (ACV) greater than $5 million increasing by 15% to 508. Remaining Performance Obligations (RPO) grew by 25% to $22.1 billion, indicating a strong future revenue pipeline. The company also reported substantial free cash flow generation, increasing by 21% to $1.48 billion, underscoring its operational efficiency and financial strength. Management anticipates continued revenue growth and profitability for the full year, with strategic investments in R&D and sales and marketing to support long-term expansion.

Financial Highlights

52 data points

Beta

Revenue

$3.09B

0.8% Gross Margin

Net Income

$460.00M

0.1% Net Margin

EPS (Diluted)

$0.44

Total Assets

$20.97B

Cash & Equivalents

$3.38B

Free Cash Flow

$1.47B

Financial Statements

Beta

Revenue	$3.09B
Cost of Revenue	$651.00M
Gross Profit	$2.44B
R&D Expenses	$703.00M
Operating Expenses	$1.99B
Operating Income	$451.00M
Net Income	$460.00M
EPS (Basic)	$0.44
EPS (Diluted)	$0.44
Shares Outstanding (Basic)	1.03B
Shares Outstanding (Diluted)	1.05B

Key Highlights

1Total revenues grew 19% year-over-year to $3.09 billion, with subscription revenues comprising 97% of this total.
2Net income increased significantly to $460 million, resulting in diluted EPS of $2.20.
3Operating income saw a strong increase of 36% to $451 million, and non-GAAP operating income rose 20% to $953 million.
4The number of customers with Annual Contract Value (ACV) greater than $5 million increased by 15% to 508.
5Remaining Performance Obligations (RPO) grew by 25% to $22.1 billion, signaling robust future revenue.
6Free cash flow increased by 21% to $1.48 billion, demonstrating strong operational cash generation.
7Announced a definitive agreement to acquire Moveworks for approximately $2.9 billion, expected to close in the second half of 2025.

ServiceNow, Inc. Quarterly Report for Q1 Ended Mar 31, 2025

Summary

Financial Highlights

Key Highlights

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