Summary
ServiceNow reported total revenues of $3,215 million for the second quarter of fiscal 2025, up 22.4% from the prior-year quarter. Gross profit was $2,491 million, up 20.0%. Operating income reached $358 million, up 49.2%, and net income was $385 million, up 46.9%. Diluted earnings per share came to $1.84, up 46.0%. The quarter's gross margin was 77.5%, down 1.5 percentage points, while operating margin was 11.1%, up 2.0 percentage points. Those figures show revenue growth running ahead of gross profit growth, but operating profit expanded faster than revenue.
Cash generation remained positive. Operating cash flow was $716 million for the quarter, up 15.5%. Capital expenditures were $190 million, down 27.5%. Deferred revenue was $6,802 million, up 21.1%. Remaining performance obligations were $23.9 billion, up 28.5%. Current remaining performance obligations were $10.92 billion, up 24.5% year over year and 21.5% in constant currency. The company's renewal rate held at 98%. It ended the quarter with 528 customers with more than $5 million in annual contract value, up approximately 19.5%, and 89 transactions over $1 million in net new annual contract value. Customers with more than $20 million in annual contract value grew over 30%. On a non-GAAP basis, income from operations was $955 million with a 29.5% margin, and free cash flow was $535 million with a 16.5% margin.
Operational momentum centered on AI and platform expansion. ServiceNow's Knowledge event more than doubled combined in-person and online attendance year over year and featured 800+ sessions. Product launches included AI Control Tower, AI Agent Fabric, AI agents for security and risk, Workflow Data Network, CRM AI Agents, Core Business Suite, Autonomous IT, ServiceNow University, and agentic workforce management. Partnerships expanded with AWS, NVIDIA, UKG, and Cisco. The company also announced plans to acquire data.world, a deal that closed in July 2025. ServiceNow repurchased approximately 381,000 shares for $361 million during the quarter, leaving approximately $2.6 billion available under its repurchase authorization. Recognition included a Leader position in The Forrester Wave for Low-Code Platforms for Professional Developers, Q2 2025, and Leader placements in multiple IDC MarketScape assessments.
Guidance points to continued growth but with a specific near-term headwind. For the third quarter of 2025, ServiceNow guided subscription revenues to $3,260 million to $3,265 million, representing 20% to 20.5% growth, or 19.5% in constant currency. It guided cRPO growth of 18.5% on a GAAP basis and 18% in constant currency. The third-quarter non-GAAP operating margin guidance is 30.5%, with GAAP operating margin guidance of 14%. For the full-year 2025, subscription revenue guidance is $12,775 million to $12,795 million, representing 20% growth, or 19.5% to 20% in constant currency. Full-year non-GAAP subscription gross margin guidance is 83.5%, non-GAAP operating margin guidance is 30.5%, free cash flow margin guidance is 32%, and GAAP operating margin guidance is 14%. The company said a larger than average customer cohort is scheduled to renew in the fourth quarter of 2025, which will create approximately 2 points of headwinds to cRPO growth in the third quarter of 2025. It also said U.S. Federal agencies are navigating budget and mission changes, and those dynamics are expected to continue into the third quarter of 2025.
Risks remain broad. The filings cite cybersecurity events, privacy and data transfer restrictions, service interruptions, competition, rapid technological change, the ability to convert remaining performance obligations into revenue, macroeconomic and political conditions, tariffs, inflation, armed conflicts, foreign currency fluctuations, interest rates, strategic transactions, and share repurchase execution. Seasonality also matters: ServiceNow signs a significantly higher percentage of customer agreements in the fourth quarter, and it continues to see more 12-month agreements with the U.S. federal government, with the highest number in the quarter ended September 30. Those factors can cause variability in RPO and cRPO in subsequent quarters.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2025 | Q1 FY2025 | QoQ | Q2 FY2024 | YoY |
|---|---|---|---|---|---|
| Revenue | $3.21B | $3.09B | +4.1% | $2.63B | +22.4% |
| Gross profit | $2.49B | $2.44B | +2.2% | $2.08B | +20.0% |
| Gross margin | 77.5% | 78.9% | -1.4 pp | 79.0% | -1.5 pp |
| Research & development | $734.0M | $703.0M | +4.4% | $643.0M | +14.2% |
| Sales & marketing | $1.13B | $1.05B | +7.0% | $960.0M | +17.5% |
| General & administrative | $271.0M | $229.0M | +18.3% | $232.0M | +16.8% |
| Total operating expenses | $2.13B | $1.99B | +7.4% | $1.83B | +16.2% |
| Operating income (loss) | $358.0M | $451.0M | -20.6% | $240.0M | +49.2% |
| Operating margin | 11.1% | 14.6% | -3.5 pp | 9.1% | +2.0 pp |
| Net income (loss) | $385.0M | $460.0M | -16.3% | $262.0M | +46.9% |
| Net margin | 12.0% | 14.9% | -2.9 pp | 10.0% | +2.0 pp |
| Diluted EPS | $1.84 | $2.20 | -$0.36 | $1.26 | +$0.58 |
Risks
MD&A says ServiceNow is monitoring Russia/Ukraine and Middle East conflicts plus interest rates, global inflation and tariffs, which have led to economic uncertainty. While no material impact to liquidity or current and projected operations has occurred, worsening global disruptions could materially affect business and results.
RPO and cRPO can vary due to foreign currency exchange rates, mix of offerings, subscription start dates, renewal timing and contract duration. ServiceNow also sees more 12-month U.S. federal agreements, with the highest number in the quarter ended September 30, which can cause variability in RPO and cRPO in subsequent quarters until renewed.
Gross margin was 77.5% for the quarter, down 1.5 percentage points from 79.0% in the prior-year quarter, and 78.2% year to date, down 1.3 percentage points from 79.5%. MD&A attributes pressure to increased headcount, data center capacity, third-party cloud services and support for regulated markets, and expects subscription gross profit percentage to decrease slightly for the year ending December 31, 2025.
MD&A expects the professional services and other gross loss percentage to increase for the year ending December 31, 2025 compared with the year ended December 31, 2024, driven by partner ecosystem spend to accelerate customer value realization increasing at a faster rate than revenue.
ServiceNow expects incremental costs to attract customers in regulated markets by adopting public cloud offerings and increased support for customers impacted by new and evolving data residency requirements, which is expected to increase cost of subscription revenues.
SaaS KPIs
All quarters →Non-GAAP operating margin
Free cash flow margin
Free cash flow
Renewal rate
Current remaining performance obligations (cRPO)
Remaining performance obligations (RPO)
Non-GAAP subscription gross margin
Transactions over $1 million in net new ACV
Non-GAAP income from operations
Customers with more than $5 million in ACV
Summary, forecast, risks and KPIs are extracted from ServiceNow, Inc.'s SEC filings for Q2 FY2025 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 1, 2026.