Summary
ServiceNow reported total revenues of $3.41 billion for the fiscal 2025 third quarter, up 21.8% from the prior-year quarter. Gross profit rose 19.0% to $2.63 billion. Operating income climbed 36.8% to $572.00 million, and net income increased 16.2% to $502.00 million. Diluted earnings per share were $2.40, up 15.9%. The company generated $813.00 million in operating cash flow for the quarter, up 21.2%, and spent $235.00 million on capital expenditures, up 16.3%. Deferred revenue reached $6.35 billion, up 16.3% from a year earlier, while remaining performance obligations stood at $24.30 billion, up 24.6%. Gross margin slipped to 77.3% from 79.1%, but operating margin improved to 16.8% from 14.9%. On a non-GAAP basis, operating income was $1,140 million with a 33.5% margin, net income was $1,010 million, and diluted earnings per share were $4.82. Free cash flow for the quarter was $592 million, a 17.5% margin. The board authorized a five-for-one stock split, subject to shareholder approval at a special meeting on December 5, 2025.
The quarter featured strong execution across several product lines. Management said Now Assist, U.S. Federal, Workflow Data Fabric, and RaptorDB all performed ahead of plan. Current remaining performance obligations were $11.35 billion, up 21% year over year. The company signed 103 transactions over $1 million in net new annual contract value during the quarter. It ended with 553 customers with more than $5 million in ACV, an 18% year-over-year increase. RPO included 47% from cRPO. Renewal rate was 97% for the three months ended September 30, 2025 and 98% for the nine months ended September 30, 2025.
Guidance for the fourth quarter of 2025 includes a non-GAAP operating margin of 30% and expected cRPO growth of 23%. For the full year 2025, the company guides to a non-GAAP subscription gross profit margin of 83.5%, a non-GAAP operating margin of 31%, and a free cash flow margin of 34%. Management raised its 2025 subscription revenue, operating margin, and free cash flow guidance. The company noted that U.S. federal government shutdown dynamics and tightening budgets are reflected in the fourth-quarter guidance, which may impact deal timing.
For the nine months ended September 30, 2025, revenue was $9.71 billion, up 21.0%. Gross profit increased 18.7% to $7.56 billion. Operating income was $1.38 billion, up 39.5%. Net income was $1.35 billion, up 29.4%. Diluted earnings per share were $6.43, up 28.6%. Operating cash flow for the nine months was $3.21 billion, up 21.8%. Capital expenditures were $630 million, up 5.2%. Free cash flow for the nine months was $2,604 million. Gross margin for the year-to-date period was 77.9%, down 1.5 percentage points, while operating margin was 14.2%, up 1.9 percentage points.
ServiceNow repurchased approximately 644,000 shares of common stock for $584 million during the quarter. About $2 billion remains available under the share repurchase program. The company closed a $750 million investment in Genesys. It announced a OneGov agreement with the U.S. General Services Administration, deepened its partnership with NVIDIA on the Apriel 2.0 AI model, and formed a collaboration with FedEx Dataworks. Risks include foreign currency fluctuations, global inflation, tariffs, interest rates, and the U.S. government shutdown. The company also faces competition, cybersecurity threats, and the challenge of converting remaining performance obligations into revenue. Seasonality remains a factor, with a significantly higher percentage of customer agreements typically signed in the fourth quarter.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2025 | Q2 FY2025 | QoQ | Q3 FY2024 | YoY |
|---|---|---|---|---|---|
| Revenue | $3.41B | $3.21B | +6.0% | $2.80B | +21.8% |
| Gross profit | $2.63B | $2.49B | +5.7% | $2.21B | +19.0% |
| Gross margin | 77.3% | 77.5% | -0.2 pp | 79.1% | -1.8 pp |
| Research & development | $750.0M | $734.0M | +2.2% | $626.0M | +19.8% |
| Sales & marketing | $1.06B | $1.13B | -6.4% | $944.0M | +11.9% |
| General & administrative | $255.0M | $271.0M | -5.9% | $225.0M | +13.3% |
| Total operating expenses | $2.06B | $2.13B | -3.4% | $1.79B | +14.8% |
| Operating income (loss) | $572.0M | $358.0M | +59.8% | $418.0M | +36.8% |
| Operating margin | 16.8% | 11.1% | +5.6 pp | 14.9% | +1.8 pp |
| Net income (loss) | $502.0M | $385.0M | +30.4% | $432.0M | +16.2% |
| Net margin | 14.7% | 12.0% | +2.8 pp | 15.4% | -0.7 pp |
| Diluted EPS | $2.40 | $1.84 | +$0.56 | $2.07 | +$0.33 |
Risks
MD&A notes ongoing Russia/Ukraine and Middle East conflicts plus interest rates, global inflation, the U.S. government shutdown and tariffs create economic uncertainty; if conflicts continue or worsen, business and results of operations could be materially impacted.
An increasing percentage of contracts are in foreign currencies, particularly the Euro and British Pound Sterling; fluctuations in exchange rates as of the balance sheet date cause variability in RPO, though the movement of the U.S. Dollar had an immaterial impact on revenues and expenses for the three and nine months ended September 30, 2025.
RPO was $24.3 billion as of September 30, 2025, up 24% compared to September 30, 2024, and cRPO increased 21%; MD&A warns that a larger mix of 12-month U.S. federal government agreements entered in Q3, along with renewal timing and contract duration, will generally cause variability in RPO and cRPO in subsequent quarters until renewed.
Total gross margin declined to 77% for the three months ended September 30, 2025 from 79% a year earlier, and subscription gross profit percentage was 80% versus 82%; management expects subscription gross profit percentage to decrease slightly for the year ending December 31, 2025 due to increased headcount, data center capacity, and support for regulated markets.
Cost of subscription revenues increased 34% for the three months ended September 30, 2025, partly due to incremental costs to attract customers in regulated markets and increased support for new and evolving data residency requirements.
The effective tax rate rose to 28% for the three months ended September 30, 2025 from 16% a year earlier, and the One Big Beautiful Bill Act enacted July 4, 2025 introduced significant U.S. tax code amendments; the Company will monitor future changes that could affect its tax position.
Professional services and other gross loss percentage improved to break-even for the three months ended September 30, 2025 from 7% a year earlier, but management expects the professional services and other gross loss percentage to increase for the year ending December 31, 2025 compared to the prior year.
Renewal rate was 97% for the three months ended September 30, 2025, down from 98% for the nine months ended September 30, 2025 and each of the three and nine months ended September 30, 2024; period-to-period comparison may not be meaningful due to renewal timing.
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
Summary, forecast, risks and KPIs are extracted from ServiceNow, Inc.'s SEC filings for Q3 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 2, 2026.