Here’s our initial take on ServiceNow‘s (NOW) financial report.
Key Metrics
| Metric | Q2 2024 | Q2 2025 | Change | vs. Expectations |
|---|---|---|---|---|
| Revenue | $2.63 billion | $3.22 billion | 22.5% | Beat |
| Adjusted earnings per share (EPS) | $3.13 | $4.09 | 31% | Beat |
| Subscription revenue | $2.54 billion | $3.11 billion | 22.5% | n/a |
| Remaining performance obligations | $18.6 billion | $23.9 billion | 29% | n/a |
Agentic AI Is Leading the Way
In the second quarter, ServiceNow surpassed analyst predictions significantly, reporting a 22.5% increase in revenue and a 31% rise in adjusted earnings per share. Moreover, their Remaining Performance Obligations (RPO), which indicates future income from existing customer contracts, experienced a substantial jump of 29%, reaching an impressive $23.9 billion.
During the past quarter, artificial intelligence played a significant role in our growth and success. As stated by ServiceNow CEO Bill McDermott, “Our exceptional performance this quarter underscores the indispensable nature of the ServiceNow AI Platform. Every business process across all industries is being redesigned for intelligent AI.
In the second quarter, ServiceNow sealed 89 contracts, each worth a minimum of $1 million per year, and they now have 528 clients who spend at least $5 million annually. The company’s Now Assist AI product is doing well and is expected to reach an annual contract value of $1 billion by 2026.
In addition to releasing its financial report, ServiceNow unveiled a new capability called proactive workforce management, which is an extension of its existing end-to-end AI agent management functions. This innovative feature allows users to supervise and instruct an intelligent workforce directly from the ServiceNow platform itself.
Immediate Market Reaction
After-hours on Wednesday, ServiceNow’s shares rose approximately 7%, buoyed by their impressive second-quarter performance. Their revenue and earnings surpassed analyst predictions, and they offered optimistic projections for the third quarter. Prior to the release of the second-quarter report, ServiceNow’s stock had seen a 9% decline in value year to date.
What to Watch
In the third quarter, ServiceNow anticipates earning between $3.26 billion and $3.265 billion from subscriptions, marking a year-on-year increase of approximately 20% to 20.5%. Additionally, their projected remaining performance obligations, or contracted future revenue for the upcoming year, is expected to expand by around 18.5%. For the whole year, ServiceNow aims for a 20% growth in subscription revenue.
ServiceNow is experiencing robust growth due to its focus on artificial intelligence (AI) investments, with agentic AI identified as a significant long-term growth catalyst. Although there may be challenges stemming from potential budget revisions at U.S. federal government clients, the company’s projections take this trend into account.
- Full earnings report
- Investor relations page
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2025-07-24 01:48