01—Abstract
Summary
Summary of the 8-K filed October 29, 2025. Cited figures are marked; the original filing is the authoritative source.
ServiceNow reported third-quarter 2025 results that beat its own guidance across all topline growth and profitability metrics.
Subscription revenue was $3,299 milliona, up 21.5% year over year (20.5% in constant currency), and total revenue was $3,407 million, up 22%. Current remaining performance obligations (cRPO) reached $11.35 billion, up 21% (20.5% constant currency), and total RPO was $24.3 billion, up 24%. Non-GAAP operating margin expanded to 33.5% from 31% a year earlier, GAAP operating margin rose to 17% from 15%, and GAAP net income was $502 million ($2.40 diluted EPS).
Free cash flow was $592 millionb, a 17.5% margin, and management said it expects 250 basis points of full-year free cash flow margin expansion. Management raised full-year 2025 guidance for subscription revenue, operating margin, and free cash flow. Full-year subscription revenue guidance is $12,835-$12,845 million, implying 20.5% GAAP growth.
Q4 subscription revenue guidance of $3,420c-$3,430 million implies 19.5% GAAP growth and 17.5%-18% constant-currency growth, which is a deceleration from Q3. Management attributed the more cautious Q4 outlook partly to U.S. Federal budget pressure and the recent government shutdown, which may delay deals in the near term. The Board approved a five-for-one stock split of common stock, with a proportionate increase in authorized shares.
The split requires shareholder approval at a Special Meeting scheduled for December 5, 2025. Separately, the company repurchased about 644,000 shares for $584 milliond in Q3 and has roughly $2 billion remaining under its buyback authorization. Investors should weigh the strong quarter and margin expansion against the Q4 deceleration and the execution risk in federal demand.
02—Key points
Key Highlights
- Q3 2025 subscription revenue of $3,299M grew 21.5% YoY (20.5% constant currency); total revenue of $3,407M grew 22%, both ahead of company guidance.
- cRPO of $11.35B grew 21% YoY and total RPO of $24.3B grew 24%, supporting visibility into future revenue.
- Non-GAAP operating margin expanded to 33.5% from 31% a year ago; GAAP operating margin rose to 17% from 15%.
- Full-year 2025 guidance raised for subscription revenue ($12.835B-$12.845B, 20.5% growth), operating margin (31% non-GAAP), and free cash flow (34% margin).
- Q4 2025 subscription revenue guidance of $3.42B-$3.43B implies 19.5% GAAP growth, a deceleration, with management citing U.S. Federal budget pressures and the government shutdown.
- Board approved a 5-for-1 common stock split, subject to shareholder approval at a December 5, 2025 Special Meeting.
- Q3 share repurchases of $584M (about 644,000 shares) with roughly $2B remaining authorization; Q3 free cash flow was $592M (17.5% margin).
03—Questions
Frequently Asked Questions
Why is the company splitting its stock five-for-one?
The filing does not give a detailed rationale. The release says the split is subject to shareholder approval at a Special Meeting on December 5, 2025, and that the proxy statement will provide more detail. A split increases the number of shares outstanding and typically lowers the per-share price, which can improve trading liquidity, but it does not change the company's underlying value.
Did ServiceNow beat its own guidance in Q3 2025?
Yes. The company says it exceeded guidance across all Q3 2025 topline growth and profitability metrics. Subscription revenue, total revenue, operating margin, and free cash flow all came in above the company's expectations.
Why did the company guide Q4 growth lower than Q3?
Q4 subscription revenue guidance implies 19.5% GAAP growth and 17.5%-18% constant-currency growth, compared with 21.5% and 20.5% in Q3. Management cited U.S. Federal budget constraints and the recent government shutdown, which may delay deal timing in the near term. These factors are reflected in the Q4 outlook.
Is the company generating more cash and expanding margins?
Yes. Non-GAAP operating margin rose to 33.5% in Q3 from 31% a year earlier, and full-year 2025 free cash flow margin guidance is 34%, up from 2024's 27% for the nine months. Q3 free cash flow was $592M, up from $471M a year earlier. Management expects 250 basis points of free cash flow margin expansion year over year.
How is the company returning capital to shareholders?
In Q3 2025, ServiceNow repurchased about 644,000 shares for $584M, primarily to offset dilution from employee equity programs. About $2 billion remains available under the repurchase program, which has no fixed expiration and can be suspended or discontinued at any time.
04—Continue