8-K: ServiceNow Exceeds Q3 Targets, Announces 5-for-1 Stock Split

ServiceNow reported strong third-quarter 2025 financial results, surpassing guidance across key metrics, and announced a five-for-one stock split subject to shareholder approval.

Summary

• Third quarter 2025 subscription revenues reached $3,299 million, representing 21.5% year-over-year growth (20.5% in constant currency).
• Total revenues for Q3 2025 were $3,407 million, an increase of 22% year-over-year (20.5% in constant currency).
• Current remaining performance obligations (cRPO) stood at $11.35 billion as of September 30, 2025, growing 21% year-over-year (20.5% in constant currency).
• Remaining performance obligations (RPO) totaled $24.3 billion, up 24% year-over-year (23% in constant currency).
• ServiceNow's Board of Directors authorized a 5-for-1 split of the company's common stock, which is subject to shareholder approval at a Special Meeting on December 5, 2025.
• The company raised its full-year 2025 guidance for subscription revenue, operating margin, and free cash flow, expecting 250bps of free cash flow margin expansion year-over-year.

Sentiment

Score: 9

Explanation: The company reported exceptional Q3 results, exceeding its own guidance across all key financial metrics. It also raised its full-year 2025 guidance, demonstrating strong confidence in future performance. Strategic initiatives in AI, significant partnerships, and a proposed stock split further enhance its market position and shareholder value. The only minor concern is the potential impact of the government shutdown on federal deal timing, which is already factored into guidance.

Positives

• Exceeded guidance across all Q3 2025 topline growth and profitability metrics.
• Raised 2025 subscription revenue, operating margin, and free cash flow guidance.
• Expects 250bps of free cash flow margin expansion year-over-year.
• Achieved 103 transactions over $1 million in net new annual contract value (ACV) in Q3.
• Ended the quarter with 553 customers having more than $5 million in ACV, an 18% year-over-year growth.
• Now Assist, U.S. Federal, Workflow Data Fabric, and RaptorDB performed ahead of plan.
• Unveiled AI Experience, a new user interface for enterprise AI, and delivered breakthrough innovations with the Zurich platform release.
• Announced a new regional innovation hub and AI Institute in West Palm Beach, Florida, projected to create over 850 new jobs and deliver $1.8 billion in economic impact over five years.
• Launched a statewide AI skills program in Brazil with SENAI-SP.
• Named the Official Workflow Partner of the DFL Deutsche Fußball Liga (Bundesliga).
• Secured a landmark OneGov agreement with the U.S. General Services Administration (GSA) for AI-first modernization.
• Deepened partnership with NVIDIA, introducing Apriel 2.0 AI model and integrating with NVIDIA AI Factory reference architectures.
• Collaborated with FedEx Dataworks to build AI-powered supply chain workflows.
• Made an investment in Zaelab to accelerate CRM and AI-driven modernization for manufacturing and technology customers.
• Closed on a $750 million investment in Genesys, a leader in AI-Powered Experience Orchestration.
• Repurchased approximately 644,000 shares of common stock for $584 million, with approximately $2 billion remaining under the program.
• Recognized as a Leader in multiple Gartner Magic Quadrant reports, including for Business Orchestration and Automation Technologies, AI Applications in IT Service Management, CRM Customer Engagement Center, and Enterprise Low-Code Application platforms.
• Recognized on Forbes Americas Best Employers for Company Culture, Fortune Best Workplaces in Technology, Glassdoors Best-Led Company, and Ethispheres Worlds Most Ethical Companies lists.

Negatives

• U.S. Federal agencies are navigating changes, from tightening budgets to evolving mission demands.
• The recent government shutdown may impact deal timing in the near-term for U.S. Federal agencies.

Risks

• Experiencing an actual or perceived cyber-security event or weakness.
• Ability to comply with evolving privacy laws, data transfer restrictions, and other foreign and domestic standards related to data and the Internet.
• Errors, interruptions, delays or security breaches in or of our service or data centers.
• Ability to maintain and attract key employees and manage workplace culture.
• Alleged violations of laws and regulations, including those relating to anti-bribery and anti-corruption and public sector contracting requirements.
• Ability to compete successfully against existing and new competitors.
• Ability to predict, prepare for and respond promptly to rapidly evolving technological, market and customer developments.
• Ability to grow our business, including converting remaining performance obligations into revenue, adding and retaining customers, selling additional subscriptions, selling to larger enterprises, government and regulated organizations, and entering new geographies and markets.
• Ability to develop and gain customer demand for and acceptance of existing, new and improved products and services, including products that incorporate AI technology.
• Ability to expand and maintain our partnerships and partner programs, and realize the anticipated benefits thereof.
• Global macroeconomic and political conditions including tariffs, inflation and armed conflicts.
• Changes in government spending and operating status.
• Fluctuations in the value of foreign currencies relative to the U.S. Dollar.
• Fluctuations in interest rates.
• Ability to consummate and realize the benefits of any strategic transactions or acquisitions.
• Ability to execute share repurchases, including the timing, manner, price, and amount of any repurchase.
• Fluctuations and volatility in our stock price.

Future Outlook

For the fourth quarter of 2025, ServiceNow expects non-GAAP subscription revenues to grow 17.5% 18% in constant currency, cRPO to grow 19% in constant currency, and a non-GAAP operating margin of 30%. For the full-year 2025, the company raised its non-GAAP guidance, expecting subscription revenues to grow 20% in constant currency, subscription gross profit margin of 83.5%, operating margin of 31%, and free cash flow margin of 34%, representing 250bps of expansion year-over-year. This guidance incorporates potential impacts from U.S. Federal agencies' tightening budgets and the recent government shutdown on deal timing.

Management Comments

• Bill McDermott (Chairman and CEO): "This outstanding Q3 performance is the clearest demonstration yet that ServiceNow is the AI platform for business transformation. Every enterprise in every industry is focused on AI as the innovation opportunity of our generation. Leaders work with ServiceNow because they trust this proven platform as the core of their technology estate for decades to come. From autonomous workflows to AI-driven CRM, ServiceNow is putting AI to work for people, driving massive value creation for customers and shareholders."
• Gina Mastantuono (President and CFO): "Q3 was an exceptional quarter, with standout performances across the board. Now Assist, U.S. Federal, Workflow Data Fabric, and RaptorDB were all ahead of plan. These results underscore the power of the ServiceNow AI Platform and our multiple growth vectors, from core workflow expansion to the accelerating adoption of our innovative new products. Massive platform demand, combined with AI-driven efficiencies, not only fueled fantastic results but also reinforced our ability to scale with accelerating margin expansion."

Industry Context

ServiceNow's strong performance, particularly in AI-driven solutions and workflow automation, aligns with the broader industry trend of enterprises prioritizing digital transformation and AI integration to enhance efficiency and innovation. The company's focus on an "AI platform for business transformation" positions it well within the competitive landscape where AI is seen as a critical differentiator and growth driver across all sectors. Partnerships with NVIDIA and FedEx Dataworks, along with the GSA agreement, demonstrate its ability to penetrate key markets and leverage strategic alliances to expand its ecosystem and offerings, reinforcing its leadership in enterprise AI.

Comparison to Industry Standards

• Recognized as a Leader in the inaugural 2025 Gartner Magic Quadrant for Business Orchestration and Automation Technologies.
• Recognized as a Leader in the 2025 Gartner Magic Quadrant for AI Applications in IT Service Management.
• Recognized as a Leader in the 2025 Gartner Magic Quadrant for the CRM Customer Engagement Center.
• Recognized as a six-time Leader in the 2025 Gartner Magic Quadrant for Enterprise Low-Code Application platforms.

Corporate Governance

Stakeholder Impact

• Shareholders: Potential for increased liquidity and broader investor appeal due to the 5-for-1 stock split. The share repurchase program indicates a commitment to returning value. Strong financial performance and raised guidance are positive for shareholder value.
• Employees: Creation of over 850 new jobs in the West Palm Beach innovation hub. An AI skills program with SENAI-SP aims for workforce development. The company received recognition as a top employer for culture and technology.
• Customers: New AI Experience UI and Zurich platform release offer advanced AI capabilities, autonomous workflows, and enhanced security. Partnerships with GSA, NVIDIA, and FedEx Dataworks aim to deliver more integrated and efficient solutions.
• Partners: Deepened collaborations with NVIDIA, FedEx Dataworks, and GSA, and an investment in Zaelab, indicate expanded ecosystem and joint solution development opportunities.

Next Steps

• Hold a Special Meeting of Shareholders on December 5, 2025, to approve the 5-for-1 stock split and increase in authorized common stock.
• Release a proxy statement relating to the Special Meeting with additional details.
• ServiceNow Senior Vice President and General Manager, Core Business Workflows Josh Kahn will participate in a fireside chat at the RBC Global TIMT Conference on November 18, 2025.
• ServiceNow President, Chief Product Officer, and Chief Operating Officer Amit Zavery will participate in a fireside chat at the UBS Global Technology and AI Conference on December 3, 2025.
• ServiceNow President and Chief Financial Officer Gina Mastantuono will participate in a keynote at the Barclays Global Technology Conference on December 10, 2025.

Key Dates

Recommendation

ServiceNow delivered exceptional Q3 2025 financial results, significantly exceeding guidance across all key metrics. The company also raised its full-year 2025 outlook, demonstrating strong momentum and confidence in its AI-driven platform. The proposed 5-for-1 stock split is a positive move to enhance liquidity and broaden investor access, while the ongoing share repurchase program underscores management's commitment to shareholder value. Strategic partnerships and continuous innovation in AI position ServiceNow for sustained growth in a high-demand market. Despite minor near-term risks related to government spending, the overall outlook is highly positive, making it a strong buy for long-term investors.

Keywords

ServiceNow, NOW, financial results, Q3 2025, stock split, AI platform, subscription revenue, cRPO, RPO, enterprise software, workflow automation, artificial intelligence, corporate governance, financial guidance, cloud computing, CRM, IT service management, low-code, digital transformation