Summary
ServiceNow closed fiscal 2025 with strong top-line growth. Total revenue in Q4 was $3.568 billion, up 20.7% year over year. For the full year, revenue rose 20.9% to $13.278 billion. Current remaining performance obligations were $12.85 billion, up 25% year over year and 21% in constant currency. Remaining performance obligations were $28.2 billion, up 26.5% year over year and 22.5% in constant currency.
Profitability showed mixed trends. Q4 gross profit was $2.734 billion, up 17.5% year over year. Gross margin was 76.6%, down 2.0 percentage points. Operating income was $443 million, up 18.4%. Operating margin was 12.4%, down 0.2 percentage points. Net income was $401 million, up 4.4%. On a non-GAAP basis, operating margin was 31%. For the full year, gross profit rose 18.4% to $10.295 billion. Gross margin was 77.5%, down 1.6 percentage points. Operating income rose 33.7% to $1.824 billion. Operating margin was 13.7%, up 1.3 percentage points. Net income rose 22.7% to $1.748 billion. Diluted EPS was $1.67, up $0.30.
Cash generation remained a bright spot. Q4 operating cash flow was $2.238 billion, up 36.9% year over year. Capital expenditures were $238 million, down 5.9%. Free cash flow, a non-GAAP measure, was $2.032 billion. For the full year, operating cash flow rose 27.6% to $5.444 billion. Capital expenditures rose 1.9% to $868 million. Free cash flow was $4.636 billion. Deferred revenue rose 21.9% year over year to $8.314 billion.
Operational momentum was broad. ServiceNow signed 244 transactions over $1 million in net new ACV in Q4, nearly 40% growth. It ended the quarter with 603 customers with more than $5 million in ACV, approximately 20% growth. Now Assist net new ACV more than doubled year over year. The company closed the Moveworks acquisition on December 15, 2025. It announced intent to acquire Armis in the second half of 2026 and Veza in the first half of 2026. ServiceNow repurchased approximately 3.6 million shares for $597 million in Q4. It had $1.4 billion remaining under its repurchase program and authorized an additional $5 billion in January 2026. A $2 billion accelerated share repurchase is planned. A 5-for-1 stock split became effective on December 17, 2025.
Guidance points to continued growth. For Q1 2026, ServiceNow guided subscription revenue to $3,650-$3,655 million, up 21.5% year over year, or 18.5%-19% in constant currency. It guided non-GAAP operating margin to 31.5% and GAAP operating margin to 14%. For full-year 2026, subscription revenue guidance is $15,530-$15,570 million, up 20.5%-21%, or 19.5%-20% in constant currency. Full-year non-GAAP operating margin guidance is 32%, and non-GAAP free cash flow margin guidance is 36%. GAAP operating margin guidance is 15%, and GAAP subscription gross margin guidance is 78%. Risks include cybersecurity events, privacy and data transfer laws, competition, ability to convert RPO into revenue, macroeconomic conditions such as tariffs, inflation and armed conflicts, foreign currency fluctuations, and integration of acquisitions.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2025 | Q3 FY2025 | QoQ | Q4 FY2024 | YoY |
|---|---|---|---|---|---|
| Revenue | $3.57B | $3.41B | +4.7% | $2.96B | +20.7% |
| Gross profit | $2.73B | $2.63B | +3.8% | $2.33B | +17.5% |
| Gross margin | 76.6% | 77.3% | -0.7 pp | 78.7% | -2.0 pp |
| Research & development | $773.0M | $750.0M | +3.1% | $668.0M | +15.7% |
| Sales & marketing | $1.15B | $1.06B | +8.9% | $1.03B | +12.0% |
| General & administrative | $368.0M | $255.0M | +44.3% | $257.0M | +43.2% |
| Total operating expenses | $2.29B | $2.06B | +11.2% | $1.95B | +17.4% |
| Operating income (loss) | $443.0M | $572.0M | -22.6% | $374.0M | +18.4% |
| Operating margin | 12.4% | 16.8% | -4.4 pp | 12.7% | -0.2 pp |
| Net income (loss) | $401.0M | $502.0M | -20.1% | $384.0M | +4.4% |
| Net margin | 11.2% | 14.7% | -3.5 pp | 13.0% | -1.8 pp |
| Diluted EPS | $0.38 | $2.40 | -$2.02 | $1.84 | -$1.46 |
| Customers | 8,700 | — | — | — | — |
Risks
ServiceNow must make significant investments to integrate AI into its products amid rapid technological change, and competitors may develop or incorporate AI more quickly or obtain IP rights that limit ServiceNow's AI offerings. The EU AI Act and potential copyright or IP claims could increase compliance costs or hinder customer adoption.
The company disclosed an internal investigation and preliminary findings shared with certain U.S. government agencies, and the Department of Justice commenced its own investigation. Public sector contracting also carries risks of bid protests, contract termination for convenience, and debarment.
Customer deals are becoming more complex with larger enterprise customers, leading to longer and more expensive sales cycles, increased pricing pressure, and implementation and configuration 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 causes RPO and cRPO variability.
An increasing portion of revenues is generated through partners, and there may be insufficient qualified implementation partners. Partner ecosystem spend increased and contributed to professional services and other gross loss of 5% for FY2025 compared to 2% in the prior year.
The effective tax rate increased to 23% for FY2025 from 18% in the prior year. The One Big Beautiful Bill Act and OECD Pillar 2 global minimum tax rules are new and complex and could increase future tax obligations.
ServiceNow continues to acquire companies and technologies, including Armis Security Ltd, and expects to seek additional debt financing for that acquisition. Cash used in business combinations increased $971 million in FY2025, and integration may divert management attention or result in dilution.
There is intense competition for technology talent, particularly in AI and machine learning, and sustained stock price declines reduce the retention value of equity awards. Stock-based compensation increased 12% to $1.955 billion for FY2025.
Evolving data privacy, AI, and data sovereignty laws, including the EU Data Act and uncertainties around the Trans-Atlantic Data Privacy Framework, may restrict how ServiceNow offers services or increase compliance costs. Region-specific services and data residency requirements require significant investment.
Cybersecurity risk is expanded by AI-enabled threat actors, reliance on third-party providers and public cloud infrastructure, and past vulnerabilities and misconfigurations. ServiceNow has experienced security incidents, phishing attacks, and unauthorized access to confidential information.
ServiceNow has $1.5 billion of 1.40% fixed rate 2030 Notes and may seek additional debt financing to fund the Armis acquisition. Debt service obligations and covenant compliance could limit flexibility or adversely affect financial condition.
The weakening U.S. Dollar had a favorable impact on FY2025 revenues; if results had been translated at prior-year exchange rates, subscription revenues would have been $128 million lower. Foreign currency fluctuations remain difficult to forecast and may cause results to differ from expectations.
Global economic and political conditions, including inflation, interest rates, tariffs, trade barriers, and geopolitical instability, could reduce customer spending or delay purchasing decisions. MD&A states no material impact to date but continues to monitor these conditions.
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)
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 Q4 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.