ServiceNow Q4 2025 Earnings Summary: Broad-Based Platform Strength and Accelerating AI Monetization
Platform Momentum Builds as AI Monetization Accelerates
ServiceNow delivered another beat-and-raise quarter, reinforcing its position as a durable enterprise platform rather than a feature-oriented SaaS vendor. Q4 revenue reached $3.57 billion, modestly ahead of expectations, while subscription revenue of $3.47 billion grew 21% year-over-year (19.5% constant currency), landing above the high end of guidance. Forward-looking demand indicators were equally strong, with current RPO up ~25% year-over-year (21% constant currency) and operating margin expanding to ~31%, again above guidance. Free cash flow generation was exceptional, with Q4 FCF of approximately $2.0 billion and a standout 57% quarterly FCF margin. For full-year 2025, the company generated $4.6 billion in free cash flow, translating to a 35% FCF margin - above its already-raised target.
Key Financial Highlights
Revenue: $3.57B
Subscription Revenue: $3.47B (+21% YoY; +19.5% CC)
cRPO Growth: ~25% YoY (+21% CC)
Operating Margin: ~31% (above guidance)
Q4 Free Cash Flow: ~$2.03B (57% FCF margin)
FY 2025 Free Cash Flow: $4.6B (35% margin)
Renewal Rate: 98%
What’s Driving Results
Performance in Q4 was broad-based, reflecting strength across core workflows and newer growth vectors. The company closed 244 deals greater than $1 million in net new ACV, including seven deals exceeding $10 million, while CRM posted its largest quarter ever with accelerating net new ACV. Emerging products continued to move from optional add-ons to material contributors: RaptorDB Pro more than tripled net new ACV year-over-year, Workflow Data Fabric appeared in 16 of the top 20 deals, and CPQ stood out with several high-profile competitive takeouts. Renewal rates remained exceptionally high, underscoring the company’s role as mission-critical enterprise infrastructure rather than discretionary software.
AI Momentum and Platform Strategy
Management also emphasized a clear and differentiated AI narrative: enterprise AI does not replace workflows - it depends on them. ServiceNow is positioning itself as the orchestration and governance layer that embeds AI directly into business processes, with its AI Control Tower acting as the operating system for agentic deployments. AI monetization is now tangible. NOW Assist surpassed $600 million in ACV, with Q4 seeing 35 deals over $1 million and growing adoption of multi-product AI “packs.” Usage metrics reinforced this momentum, with workflows and transactions both growing more than 30% year-over-year. Customer scale continues to deepen, with over 8,800 total customers, 603 generating more than $5 million in ACV, and customers at $20 million-plus ACV up over 30% year-over-year - classic signals of a platform expanding inside large enterprises.
Guidance and Financial Outlook
Management guided to subscription revenue of $15.53–$15.57 billion, representing approximately 19.5%–20% growth, alongside an operating margin of ~32% and a free cash flow margin of ~36%. Q1 subscription revenue guidance of $3.65–$3.655 billion came in above consensus, despite a modest mix headwind from customers shifting from on-prem to hosted and hyperscaler offerings. Capital returns were also highlighted, with an additional $5 billion share repurchase authorization announced and plans for a $2 billion accelerated share repurchase, signaling confidence following the recent stock pullback.
Here’s Our Take
ServiceNow’s Q4 results underscore its evolution into a true enterprise platform with multiple growth engines firing simultaneously. Subscription growth remains strong, forward demand metrics are accelerating, margins continue to expand, and AI monetization is transitioning from promise to measurable contribution. The key risks to monitor include the pace of AI-driven infrastructure investment on gross margins, whether seat compression becomes more than noise as pricing shifts toward usage-based models, and execution around recent acquisitions in security and agentic AI. That said, fundamentals and guidance remain firmly intact. The company continues to execute like a platform company — strong growth, improving profitability, and real AI monetization — making it one of the higher-quality long-term compounders in enterprise software.
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