Analyst(s): Keith Kirkpatrick, Daniel Newman
Publication Date: July 25, 2025
ServiceNow delivered a beat-and-raise quarter in Q2 2025, driven by standout subscription revenue growth, robust margin expansion, and surging AI-led demand—cementing its position as the AI platform for business transformation heading into the second half of the year.
What is Covered in this Article:
- Strong Q2 2025 financial results with year-over-year growth across revenue and profitability metrics.
- Breakthrough AI platform adoption and ongoing innovation across workflows and CRM.
- Momentum in strategic partnerships, industry expansion, and agentic AI capabilities.
- Sustained margin improvement through operational efficiency and AI-driven productivity gains.
- Robust Q2 current remaining performance obligations (cRPO) of $10.92 billion, representing 21.5% year-over-year growth in constant currency, a 200 bps beat over guidance.
- Forward-looking guidance, Q3/FY expectations, and management’s outlook.
The News: ServiceNow reported Q2 2025 subscription revenues of $3.11B, up 22.5% year over year (21.5% in constant currency), exceeding the high end of guidance by 200 basis points. Total Q2 revenues reached $3.22B, also up 22.5% year-over-year. Wall Street consensus for total revenue was $3.17B, resulting in a beat of 1.6%.
Non-GAAP operating margin was 29.5%, more than 250 basis points above guidance. Free cash flow margin rose to 16.5%, up 300 basis points from the prior year. Current remaining performance obligations (cRPO) ended at $10.92B, up 24.5% year over year, and remaining performance obligations (RPO) finished at $23.9B, up 29%. Both beat company guidance by 200 basis points.
The company closed 89 deals worth more than $1M in net new annual contract value (ACV), including 11 deals above $5M. In addition, deals with customers above $20M in ACV increased by more than 30% year over year. ServiceNow’s renewal rate remained robust at 98%, highlighting ServiceNow’s ability to continue to meet or exceed customer expectations. In terms of profitability, non-GAAP net income was $854M with diluted EPS of $4.09, ahead of consensus estimates of $3.95, a beat of 3.5%.
CEO Bill McDermott commented: “Our beat-and-raise quarter showcases the mission-critical nature of the ServiceNow AI Platform. Every business process in every industry is being refactored for agentic AI. ServiceNow has never been more differentiated as a full-stack agentic operating system for the enterprise.”
ServiceNow Q2 2025 Results Beat Expectations as AI and Data Innovations Drive Accelerated Growth
Analyst Take: ServiceNow’s Q2 2025 results affirm the company’s elite execution and further its reputation as the AI platform for business transformation. The company not only consistently beats guidance but is also setting the innovation pace for the enterprise software sector as agentic AI and workflow data platforms reshape customer expectations. The numbers reveal that AI-led adoption is translating directly into both top-line acceleration and step-function margin improvement—a rare combination for a company at ServiceNow’s scale.
AI Platform Momentum
AI is the single most consequential driver of ServiceNow’s growth trajectory. ServiceNow’s Q2 results included net new ACV from Now Assist and Plus products, beating internal expectations, with AI Pro Plus deal count (including ITSM, CSM, and HR) up more than 50% sequentially. Notably, 21 deals included five or more Now Assist products, and AI offerings appeared in nearly all top 20 customer transactions.
The AI Control Tower—designed for enterprise-grade agent orchestration—exceeded full-year net new ACV expectations within just 60 days of launch. ServiceNow’s narrative as the “agentic operating system” for the enterprise is resonating, as evidenced by customer wins across deployment footprints and verticals.
Business Workflow and CRM Acceleration
All workflow businesses posted robust results with 40 technology workflow deals over $1M and 17 CRM and industry workflow deals surpassing $1M. The acquisition of logic.ai ignited CPQ momentum with nine deals closed in June alone, and ServiceNow is reimagining CRM for the AI era with agent-powered sales and service solutions. The company’s push into front-office workflows is broadening its addressable market, while marquee customer wins such as ExxonMobil, Standard Chartered, Merck, the state of California, Intuit, and Starbucks showcase the breadth and impact of its AI-driven transformation initiatives.
Expanding Partner Ecosystem and Industry Reach
ServiceNow delivered major partnership announcements—deepening strategic ties with AWS, NVIDIA, Cisco, and UKG, amongst others. The integration of NVIDIA’s Nemotron 15B model enables lower latency and faster AI agentic execution, while new offerings with Cisco address governance, security, and risk reduction for AI deployments.
The acquisition of data.world, which closed in July 2025, will likely enhance ServiceNow’s position in data intelligence and governance, providing the only knowledge-graph-based platform with category-leading user adoption and setting a stronger foundation for AI agent comprehension and decisioning.
Margin Expansion and Operational Efficiency
Non-GAAP operating and free cash flow margins expanded materially, attributed to top-line outperformance and disciplined cost control. The company’s “Now on Now” initiative—deploying ServiceNow’s own AI capabilities internally—has freed significant capacity and contributed to an improved margin profile. Share buybacks continued during the quarter (381,000 shares of its common stock for $361 million), with $2.6B remaining for future share repurchases, underpinning ServiceNow’s shareholder-friendly capital allocation.
Guidance and Final Thoughts
ServiceNow provided Q3 2025 guidance for subscription revenues of $3.26B–$3.27B (up 20–20.5% YoY, or 19.5% in constant currency), with cRPO growth of 18–18.5%. Full-year 2025 subscription revenues are now guided to $12.78B–$12.80B (up 20%), with non-GAAP income from operations margin of 30.5% and free cash flow margin projected at 32%.
Management acknowledged headwinds in the U.S. federal business segment and large renewal cohort timing, but expressed confidence that continued AI innovation, a robust pipeline, and expanding global opportunities will offset near-term variabilities. Indeed, ServiceNow’s cRPO figures are nothing short of astounding and reflect the company’s strength in terms of drowning pessimistic sentiment around the economy, trade issues, or enterprise buying trepidation.
Most notably, we spoke with CEO Bill McDermott, and he noted that the company’s story continues to improve each quarter. In essence, ServiceNow is setting itself up to deliver a “ChatGPT” experience for enterprise. In sum, ServiceNow’s Q2 featured several high notes, and the company is well-positioned to capitalize on the agentic AI shift and drive superior returns for customers and shareholders.
See the full press release on ServiceNow’s Q2 2025 financial results on the company website.
Declaration of generative AI and AI-assisted technologies in the writing process: During the preparation of this work, the author(s) used Futurum’s generative AI tool, to summarize the earnings data, the earnings call transcript, and incorporate the data from the prior quarter’s earnings release. After using this tool/service, the author(s) reviewed and edited the content as needed and take full responsibility for the publication’s content.
Disclosure: Futurum is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.
Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of Futurum as a whole.
Other insights from Futurum:
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Author Information
Keith Kirkpatrick is VP & Research Director, Enterprise Software & Digital Workflows for The Futurum Group. Keith has over 25 years of experience in research, marketing, and consulting-based fields.
He has authored in-depth reports and market forecast studies covering artificial intelligence, biometrics, data analytics, robotics, high performance computing, and quantum computing, with a specific focus on the use of these technologies within large enterprise organizations and SMBs. He has also established strong working relationships with the international technology vendor community and is a frequent speaker at industry conferences and events.
In his career as a financial and technology journalist he has written for national and trade publications, including BusinessWeek, CNBC.com, Investment Dealers’ Digest, The Red Herring, The Communications of the ACM, and Mobile Computing & Communications, among others.
He is a member of the Association of Independent Information Professionals (AIIP).
Keith holds dual Bachelor of Arts degrees in Magazine Journalism and Sociology from Syracuse University.
Daniel is the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise.
From the leading edge of AI to global technology policy, Daniel makes the connections between business, people and tech that are required for companies to benefit most from their technology investments. Daniel is a top 5 globally ranked industry analyst and his ideas are regularly cited or shared in television appearances by CNBC, Bloomberg, Wall Street Journal and hundreds of other sites around the world.
A 7x Best-Selling Author including his most recent book “Human/Machine.” Daniel is also a Forbes and MarketWatch (Dow Jones) contributor.
An MBA and Former Graduate Adjunct Faculty, Daniel is an Austin Texas transplant after 40 years in Chicago. His speaking takes him around the world each year as he shares his vision of the role technology will play in our future.
