ServiceNow, Inc.: Q3 FY2025 earnings call

What management said about Q3 FY2025, from the documents filed with the SEC on 29 October 2025: press release. Guidance figures: 4 raised, 1 lowered, 4 new, 2 kept. The quarter’s numbers.

Read the filing

Key takeaways

• Subscription revenue grew 21.5%: Subscription revenue was $3,299 million, up 21.5% year-over-year and 20.5% in constant currency. Total revenues were $3,407 million, up 22%. Source
• AI Experience interface unveiled: The company unveiled AI Experience, a context-aware interface that unites people, data and workflows, with built-in governance and security. Source
• Non-GAAP operating margin reached 33.5%: Non-GAAP operating margin was 33.5%, against 31% a year earlier. Non-GAAP income from operations was $1,140 million, against $872 million. Source
• CRPO grew 21% to $11.35 billion: Current remaining performance obligations reached $11.35 billion, up 21% year-over-year and 20.5% in constant currency, covering contract revenue due in the next 12 months. Source
• Large transactions and large customers: The company logged 103 transactions over $1 million in net new ACV in Q3, and 553 customers with more than $5 million in ACV, up 18%. Source
• Free cash flow margin reached 17.5%: Non-GAAP free cash flow was $592 million, or 17.5% of total revenues, against $471 million a year earlier. GAAP operating cash flow was $813 million. Source

“This outstanding Q3 performance is the clearest demonstration yet that ServiceNow is the AI platform for business transformation”

ServiceNow Chairman and CEO Bill McDermott

Guidance

What changed from last quarter

• Guidance raised: Full-year 2025 subscription revenue, non-GAAP operating margin and free cash flow margin guidance raised, with 250bps of free cash flow margin expansion year-over-year expected. Source
• New guidance: Q4 2025 guidance given this quarter for subscription revenue, cRPO growth, operating margin and diluted shares. Source
• Guidance lowered: Full-year GAAP subscription gross margin guidance moved from 80.5% to 80%. Source
• Guidance kept: Full-year non-GAAP subscription gross margin guidance of 83.5% and diluted share guidance of 210 million are unchanged from the previous quarter. Source
• New: Board approved a five-for-one split of common stock, subject to shareholder approval. Source
• New: OneGov agreement with the U.S. General Services Administration to provide a simplified licensing model for government agencies. Source

Quarter results and growth

• Subscription revenue grew 21.5%: Subscription revenue was $3,299 million, up 21.5% year-over-year and 20.5% in constant currency. Total revenues were $3,407 million, up 22%. Source
• Operating income rose to $572 million: GAAP income from operations was $572 million, against $418 million a year earlier, a 17% GAAP operating margin. Non-GAAP income from operations was $1,140 million. Source
• Diluted EPS rose to $2.40: GAAP net income was $502 million, or $2.40 per diluted share, against $432 million and $2.07 a year earlier. Non-GAAP diluted EPS was $4.82. Source
• Nine-month revenue also grew: Nine-month subscription revenue was $9,417 million, against $7,780 million, and total revenues were $9,710 million, against $8,027 million. Source

Products and AI momentum

• AI Experience interface unveiled: The company unveiled AI Experience, a context-aware interface that unites people, data and workflows, with built-in governance and security. Source
• Zurich release adds agent tooling: The September Zurich release added developer tools for natural-language app creation and agentic playbooks that blend AI and human input. Source
• Analyst placements across categories: The company reported Leader placements in several Gartner Magic Quadrant reports, including business orchestration, AI in IT service management and CRM customer engagement. Source

“Massive platform demand, combined with AI-driven efficiencies, not only fueled fantastic results but also reinforced our ability to scale with accelerating margin expansion.”

ServiceNow President and CFO Gina Mastantuono

Partnerships and ecosystem

• NVIDIA partnership deepened: The company and NVIDIA deepened their partnership, introducing Apriel 2.0, a reasoning and multimodal AI model. The release gives the timing as Q4. Source
• FedEx Dataworks supply chain workflows: FedEx Dataworks will integrate with ServiceNow procurement solutions to build AI-powered supply chain workflows, starting with real-time visibility into supply chain health. Source
• Brazil AI skills program launched: A statewide AI skills program with SENAI-SP offers trainings and certification pathways within ServiceNow University. Source

Costs, margins and profitability

• Non-GAAP operating margin reached 33.5%: Non-GAAP operating margin was 33.5%, against 31% a year earlier. Non-GAAP income from operations was $1,140 million, against $872 million. Source
• Subscription gross margin lower year over year: GAAP subscription gross margin was 80%, against 81.5% a year earlier. Non-GAAP subscription gross margin was 83%, against 85%. Source
• Operating expenses rose across functions: Total operating expenses were $2,061 million, against $1,795 million. Sales and marketing was $1,056 million and research and development was $750 million. Source
• Stock compensation excluded from non-GAAP: Stock-based compensation was $492 million in the quarter, and severance costs were $24 million; both are excluded from non-GAAP results. Source

“Q3 was an exceptional quarter, with standout performances across the board”

ServiceNow President and CFO Gina Mastantuono

Demand and the order book

• CRPO grew 21% to $11.35 billion: Current remaining performance obligations reached $11.35 billion, up 21% year-over-year and 20.5% in constant currency, covering contract revenue due in the next 12 months. Source
• Large transactions and large customers: The company logged 103 transactions over $1 million in net new ACV in Q3, and 553 customers with more than $5 million in ACV, up 18%. Source
• Remaining performance obligations up 24%: Total remaining performance obligations were $24.3 billion, up 24% year-over-year and 23% in constant currency. Source

Cash flow and capital returns

• Free cash flow margin reached 17.5%: Non-GAAP free cash flow was $592 million, or 17.5% of total revenues, against $471 million a year earlier. GAAP operating cash flow was $813 million. Source
• Buybacks of $584 million in Q3: The company repurchased about 644,000 shares for $584 million, with the primary objective of managing dilution. About $2 billion remains available under the program. Source
• Operating cash flow and deferred revenue: Operating cash flow was $813 million, against $671 million, while deferred revenue used $449 million in the quarter, against $263 million. Source

Strategy, investment and acquisitions

• Genesys investment closed: In September the company closed its $750 million investment in Genesys, building on the companies’ global partnership in customer and employee experience. Source
• Zaelab investment expands CRM: The investment supports joint CPQ and digital commerce capabilities, and Zaelab will add 350 certified professionals to deliver ServiceNow CRM offerings. Source
• West Palm Beach innovation hub: A new regional innovation hub and AI Institute in West Palm Beach, Florida is projected to create more than 850 new jobs and $1.8 billion in economic impact over five years. Source

Coming up, as management said on 29 October 2025

• Stock split shareholder vote: Shareholder approval of the five-for-one split will be sought at a special meeting on December 5, 2025. Source
• Investor conferences through December: Executives will speak at investor conferences, including the Barclays Global Technology Conference keynote on December 10, 2025, alongside RBC and UBS fireside chats. Source

Figures management reported

Risks management discussed

• Demand: Federal agency demand faces tightening budgets and changing mission needs, which the company says are reflected in Q4 guidance. Source
• External: The recent government shutdown may affect deal timing in the near term. Source

Earlier plans management reported on

• Ahead: Management said Q3 exceeded guidance on all topline growth and profitability metrics. Source
• Ahead: Management described these four areas as ahead of plan. Source

Other quarters

• Q2 FY2026 earnings call
• Q1 FY2026 earnings call
• Q4 FY2025 earnings call
• Q2 FY2025 results

Summarised with AI from the documents the company filed with the SEC. Every point is checked against the filing before it is shown: management’s own words word for word, figures against the line or table row they come from. A point that fails the check is left out. Source opens the filing at that line.