Summary
ServiceNow closed fiscal 2024 with fourth-quarter total revenue of $2,957 million, up 21.3% from the prior-year quarter. Subscription revenue of $2,866 million rose 21% year over year and made up 97% of full-year revenue. Full-year revenue reached $10,984 million, up 22.4%. Gross profit tracked the top line: $2,326 million in the quarter, up 21.1%, and $8,697 million for the year, up 23.4%. Gross margin was 78.7% in the quarter, down 0.2 percentage points from a year earlier, and 79.2% for the full year, up 0.6 percentage points.
Operating leverage improved sharply. Operating income of $374 million in the quarter was up 38.5%, and the 12.6% operating margin was 1.6 percentage points higher than the prior-year quarter. For the full year, operating income of $1,364 million rose 79.0% and the operating margin of 12.4% was up 3.9 percentage points. Fourth-quarter net income was $384 million, up 30.2%. On a non-GAAP basis, income from operations was $872 million in the quarter, a 29.5% margin, and net income was $769 million.
Full-year GAAP profit carries a tax distortion. Net income fell 17.7% to $1,425 million, and diluted earnings per share came to $6.84, down from $8.42 a year earlier. The prior year included a $1.05 billion release of a valuation allowance on deferred tax assets, which drove the 2023 effective tax rate to a negative 72%; the 2024 effective tax rate was 18%. That valuation allowance story is not finished either, since ServiceNow still carries an allowance against its California deferred tax assets.
Backlog keeps building. Remaining performance obligations were $22.3 billion at December 31, 2024, up 23.9%, and roughly 46% of that sits in current remaining performance obligations, which were $10.27 billion, up 19% and up 22% in constant currency. The current portion of deferred revenue rose 17.9% to $6,819 million. Customer counts expanded: 2,109 customers held more than $1 million in annual contract value, up 12%, and nearly 500 held more than $5 million, up 21%. The renewal rate was 98% for the year.
Cash generation was steady. Fourth-quarter operating cash flow of $1,635 million was up 1.9% from the prior-year quarter, and full-year operating cash flow of $4,267 million was up 25.6%. Free cash flow, a non-GAAP measure, was $1,400 million in the quarter and $3,455 million for the year, a 31.5% margin. Capital expenditures were $253 million in the quarter, down 3.1%, and $852 million for the year, up 22.8%. The board authorized an additional $3 billion for share repurchases, on top of roughly $266 million left from the original $1.5 billion authorization. The company repurchased about 293,000 shares for $296 million in the quarter.
Guidance for the first quarter of 2025 puts subscription revenue at $2,995 million to $3,000 million, growth of 18.5% to 19% on a GAAP basis and 19.5% to 20% in constant currency, with a non-GAAP operating margin of 30%. For the full year 2025, subscription revenue guidance is $12,635 million to $12,675 million, also 18.5% to 19% GAAP and 19.5% to 20% in constant currency, alongside a non-GAAP subscription gross margin of 83.5%, a non-GAAP operating margin of 30.5% and a free cash flow margin of 32%.
The outlook carries two deliberate drags. ServiceNow is shifting more of its model toward consumption-based monetization, folding new AI Agents into its Pro Plus and Enterprise Plus SKUs and forgoing upfront incremental new subscriptions to drive usage over time. It also assumes a more second-half weighted U.S. Federal business because of seasonality tied to the change in presidential administration. The company flagged a foreign exchange headwind of approximately $175 million for 2025 subscription revenues, including $40 million in the first quarter, plus $205 million for first-quarter cRPO. Beyond those items, the standard risk list applies: competition, cybersecurity events, data privacy and transfer rules, macroeconomic conditions, currency swings, and the work of converting remaining performance obligations into revenue. Product momentum was heavy in the quarter, with more than 150 new GenAI innovations released and Now Assist service desk deals up over 150% quarter over quarter. The AI Agent Orchestrator, thousands of pre-built AI agents and an AI Agent Studio arrive in March 2025.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2024 | Q3 FY2024 | QoQ | Q4 FY2023 | YoY |
|---|---|---|---|---|---|
| Revenue | $2.96B | $2.80B | +5.7% | $2.44B | +21.3% |
| Gross profit | $2.33B | $2.21B | +5.1% | $1.92B | +21.1% |
| Gross margin | 78.7% | 79.1% | -0.5 pp | 78.8% | -0.2 pp |
| Research & development | $668.0M | $626.0M | +6.7% | $562.0M | +18.9% |
| Sales & marketing | $1.03B | $944.0M | +8.8% | $847.0M | +21.3% |
| General & administrative | $257.0M | $225.0M | +14.2% | $242.0M | +6.2% |
| Total operating expenses | $1.95B | $1.79B | +8.7% | $1.65B | +18.2% |
| Operating income (loss) | $374.0M | $418.0M | -10.5% | $270.0M | +38.5% |
| Operating margin | 12.7% | 14.9% | -2.3 pp | 11.1% | +1.6 pp |
| Net income (loss) | $384.0M | $432.0M | -11.1% | $295.0M | +30.2% |
| Net margin | 13.0% | 15.4% | -2.5 pp | 12.1% | +0.9 pp |
| Diluted EPS | $1.84 | $2.07 | -$0.23 | $1.43 | +$0.41 |
Risks
ServiceNow is increasingly integrating AI into the Now Platform and expects AI to be an important growth driver, but it must make significant investments and faces rapid technological change, competitors that may move faster, and third-party hardware and software availability constraints. The EU AI Act adds new requirements that may require costly changes to data handling and compliance.
A substantial majority of U.S. government sales are indirect through distributors, resellers, or service provider partners, and ServiceNow disclosed an internal investigation and preliminary findings with U.S. government agencies, including a Department of Justice investigation. Government procurement is highly competitive, subject to bid protests, budget cycles, and termination for convenience, and federal business is concentrated with a small number of third-party distributors, resellers, or service providers.
ServiceNow has experienced security incidents, vulnerabilities, phishing attacks, and customer or company misconfigurations that made information more widely accessible than intended. It relies on third-party providers and public cloud infrastructure, and actual or perceived breaches could lead to litigation, regulatory investigations, fines, reputational damage, and loss of customers.
The company states customer deals are becoming more complex, involving larger enterprise customers, longer and more expensive sales cycles, increased pricing pressure, and more configuration and integration challenges. MD&A notes seasonality with a significantly higher percentage of agreements signed in Q4 and an increase in 12-month U.S. federal agreements that can cause variability in RPO and cRPO.
An increasing portion of revenues is generated through ServiceNow's network of partners, and the company relies on partners for professional services and implementations. If partners fail to perform, misrepresent platform functionality, or face regulatory issues, ServiceNow's ability to sell products and provide services may be harmed.
The company faces intense competition for technology talent, especially in AI and machine learning, sales, operations, and cybersecurity. It has experienced and may continue to experience increased compensation costs that may not be offset by productivity or sales, and sustained stock price declines reduce the retention value of equity awards.
Laws and customer expectations regarding the use, storage, and movement of data, including the EU Data Act and the Trans-Atlantic Data Privacy Framework, may restrict ServiceNow's ability to optimize its platform and offer region-specific services. Setting up and maintaining region-specific services requires significant investment and compliance with data residency and transfer laws.
Changes in ServiceNow's effective tax rate or disallowance of tax positions may adversely affect results. MD&A reports a $313 million income tax provision for 2024 versus a $723 million benefit for 2023, an 18% effective tax rate versus negative 72%, and a $220 million valuation allowance against California deferred tax assets as of December 31, 2024, with Pillar 2 global minimum tax rules being adopted across jurisdictions.
Global economic and political conditions, including inflation, interest rates, geopolitical conflicts, and trade barriers, could reduce customer spending and delay purchasing decisions. MD&A says ServiceNow is monitoring Russia/Ukraine and Middle East conflicts and does not currently believe they will have a material impact, but worsening conditions could materially affect results.
ServiceNow expects its revenue growth rate to decline over the long term due to increasing competition and a decrease in the growth rate of its overall market. MD&A expects subscription revenues to increase in absolute dollars but remain relatively flat as a percentage of revenue for 2025, and costs to increase.
ServiceNow has $1.5 billion of 1.40% fixed rate 2030 Notes due September 1, 2030. Debt service obligations and covenants may limit flexibility, and refinancing may be on less favorable terms or unavailable.
SaaS KPIs
All quarters →Non-GAAP operating margin
Free cash flow margin
Current remaining performance obligations (cRPO)
Remaining performance obligations (RPO)
Non-GAAP subscription gross margin
Customers with more than $5 million in ACV
Summary, forecast, risks and KPIs are extracted from ServiceNow, Inc.'s SEC filings for Q4 FY2024 (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.