ServiceNow Delivers Record Q2
ServiceNow NOW 0.00%↑ posted standout Q2 2025 results, beating guidance on both revenue and profitability and raising its full-year forecast, driven by surging demand for its AI-powered workflow solutions.
Headline Numbers
Subscription revenue: $3.113 billion, up 21.5% YoY in constant currency, beating guidance by 200 bps
Operating margin: 29.5%, over 250 bps above guidance
Remaining performance obligations (RPO): $23.9 billion, up 25.5% YoY
Free cash flow margin: 16.5%, up 3 points YoY
Cash & investments: $10.8 billion
Large enterprise deal activity surged: 89 deals topped $1 million in net new ACV, including 11 above $5 million. The number of customers generating $20 million+ ACV grew by more than 30% YoY.
AI-Fuelled Growth
CEO William McDermott hailed the quarter as “outstanding,” citing strong adoption of the Now Assist AI suite, which beat net new ACV expectations and closed a $20 million deal. “Our key AI Pro Plus deal count was up 50% quarter-over-quarter, and we are at the forefront of enterprise AI,” he said. Major client wins included ExxonMobil, Standard Chartered, Merck & Co., and the State of California.
The company also announced the acquisition of data.world and the launch of Agentic Workforce Management, extending its AI-driven product portfolio.
Guidance Raised
CFO Gina Mastantuono lifted 2025 subscription revenue guidance by $125 million to $12.775–$12.795 billion, targeting 20% YoY growth. Operating margin is now expected at 30.5%, with free cash flow margin of 32%.
For Q3, subscription revenue is projected at $3.260–$3.265 billion, up 20–20.5% YoY.
Management & Analyst Sentiment
Management struck a confident tone, describing the demand environment as “wide open for AI innovation.” Analysts congratulated the company on its execution, with questions focused on the sustainability of AI-driven growth and expansion into CRM and public-sector workflows.
Outlook
ServiceNow is targeting over $15 billion in subscription revenue by 2026, with $1 billion in Now Assist ACV, underscoring its ambition to lead in enterprise AI and workflow automation. Mastantuono concluded, “We significantly beat the high end of our guidance across all top line and profitability metrics… and we’re set up for continued success.”