Executive Summary

Q1 2025 delivered broad-based strength: total revenue $3.09B (+18.5% YoY), subscription revenue $3.01B (+19% YoY), cRPO $10.31B (+22% YoY), and non-GAAP operating margin 31%—all above guidance; non-GAAP diluted EPS was $4.04 .
Against Wall Street consensus, ServiceNow modestly beat revenue ($3.09B vs $3.086B*) and delivered a notable EPS beat ($4.04 vs $3.83*) in Q1 2025; Q4 2024 and Q3 2024 were also above EPS consensus* (see tables below). Values retrieved from S&P Global.
Full-year 2025 subscription revenue guidance was raised by ~$5M at the midpoint to $12.64–$12.68B; non-GAAP margins (subscription gross margin 83.5%, operating margin 30.5%, FCF margin 32%) were maintained. Q2 guidance introduced subscription revenue of $3.030–$3.035B and non-GAAP operating margin of 27% .
Catalysts: accelerating AI adoption (Pro Plus deals quadrupled QoQ; 39 deals with ≥3 Now Assist products), stronger large-deal mix (72 $1M+ ACV deals; 9 $5M+), and cRPO beat (150 bps above guidance), alongside announced acquisitions (Moveworks, Logik.ai) and deepening AI/data partnerships (NVIDIA, Google, AWS, Vodafone) .

What Went Well and What Went Wrong

What Went Well

Significant cRPO outperformance: “CRPO grew 22% YoY in constant currency, a stunning 150 basis points above our guidance” .
AI-driven commercial momentum: “The number of Pro Plus deals more than quadrupled YoY… including 39 deals with 3 or more Now Assist products” .
Large-deal strength and enterprise expansion: 72 $1M+ net new ACV deals; crossed 508 customers >$5M ACV; 9 $5M+ deals in Q1 .
Management quote: “ServiceNow’s position as the platinum standard for enterprise-grade AI drove these outstanding first quarter results” — Bill McDermott .
Profitability and cash generation: non-GAAP operating margin 31% and free cash flow $1.48B (48% margin), supported by AI-enabled OpEx efficiencies .

What Went Wrong

Timing headwinds in U.S. Federal: “unexpected shift of some on‑prem U.S. federal deals… impacts the timing of revenue recognition” (hosted deployment) .
Elevated macro caution embedded in outlook: management is “only flowing through part of those benefits” (FX tailwind and Q1 beat) to full-year guidance given geopolitical risks .
Professional services profitability remains dilutive on GAAP: professional services and other gross margin was -8.5% (GAAP) in Q1; non-GAAP 4% .
Federal seasonality/back-half weighted linearity persists (shape unchanged): trough in Q3, acceleration in Q4—team is prudently factoring this into guidance .

Financial Results

Core financials vs prior periods

Metric	Q3 2024	Q4 2024	Q1 2025
Total Revenues ($USD Millions)	$2,797	$2,957	$3,088
Subscription Revenues ($USD Millions)	$2,715	$2,866	$3,005
Professional Services & Other Revenues ($USD Millions)	$82	$91	$83
GAAP Diluted EPS ($USD)	$2.07	$1.83	$2.20
Non-GAAP Diluted EPS ($USD)	$3.72	$3.67	$4.04
GAAP Gross Margin %	79%	79%	79%
Non-GAAP Gross Margin %	83%	82.5%	82%
GAAP Operating Margin %	15%	13%	14.5%
Non-GAAP Operating Margin %	31%	29.5%	31%
Free Cash Flow ($USD Millions)	$471	$1,400	$1,477
Free Cash Flow Margin %	17%	47.5%	48%

Revenue and EPS vs Wall Street consensus (S&P Global)

Metric	Q3 2024	Q4 2024	Q1 2025
Revenue Consensus Mean ($USD Millions)	$2,746.	$2,962.	$3,086.
Revenue Actual ($USD Millions)	$2,797	$2,957	$3,088
Primary EPS Consensus Mean ($USD)	$3.45.	$3.66.	$3.83.
Non-GAAP Diluted EPS Actual ($USD)	$3.72	$3.67	$4.04

Notes: Consensus (estimate) values marked with asterisks (.) are from S&P Global and do not carry document citations; Values retrieved from S&P Global.

cRPO, RPO and deal metrics

Metric	Q3 2024	Q4 2024	Q1 2025
cRPO ($USD Billions)	$9.36	$10.27	$10.31
cRPO YoY Growth %	26%	19%	22%
RPO ($USD Billions)	$19.5	$22.3	$22.1
RPO YoY Growth %	36%	23%	25%
$1M+ Net New ACV Deals (#)	—	170	72
$5M+ Net New ACV Deals (#)	15	19	9
Customers >$5M ACV (#, end of period)	~500	~500	508
Renewal Rate %	—	98%	98%

Segment/revenue mix

Segment	Q3 2024 ($MM)	Q4 2024 ($MM)	Q1 2025 ($MM)
Subscription Revenues	$2,715	$2,866	$3,005
Professional Services & Other	$82	$91	$83
Total Revenues	$2,797	$2,957	$3,088

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Subscription Revenues ($MM)	FY 2025	$12,635–$12,675	$12,640–$12,680	Raised (midpoint +$5M)
Subscription Gross Margin (Non-GAAP)	FY 2025	83.5%	83.5%	Maintained
Operating Margin (Non-GAAP)	FY 2025	30.5%	30.5%	Maintained
Free Cash Flow Margin (Non-GAAP)	FY 2025	32%	32%	Maintained
Subscription Revenues ($MM)	Q2 2025	—	$3,030–$3,035	New
cRPO YoY Growth %	Q2 2025	—	19.5% (reported & CC)	New
Operating Margin (Non-GAAP)	Q2 2025	—	27%	New
Diluted Weighted Avg Shares (GAAP)	Q2 2025	—	209	New

Management noted FX tailwinds and a Q1 beat but flowed through only part of those benefits due to geopolitical risk prudence .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 2024, Q4 2024)	Current Period (Q1 2025)	Trend
AI/Agentic AI momentum	Q3: Introduced plans for Agentic AI; launched Workflow Data Fabric . Q4: Announced hybrid consumption model, 150% QoQ growth of Now Assist service desk deals; RaptorDB Pro traction (5 $1M+ by Q4) .	Pro Plus deals quadrupled YoY; 39 multi-product Now Assist deals; “biggest Q1 ever” for net new ACV; Yokohama release extends agentic AI .	Accelerating
Public sector/Federal	Q4: Public sector +~40% YoY; strong federal/state & local .	U.S. public sector +30% YoY; 11 federal $1M+ deals; prudent FY approach given budget dynamics; gov transformation suite launched .	Strong, with prudent guide
CRM/front-office expansion	Q4: CRM & industry workflows fastest-growing; Microsoft Copilot/AI agents collaboration .	Announced intent to acquire Logik.ai (AI CPQ); CRM momentum in EMEA/Japan; larger deals when CRM included .	Expanding
Consumption pricing & GTM	Q4: Hybrid subscription + consumption; meter-based agents usage .	Reiterated Now Assist packs and agentic usage drives “meter”; accelerated adoption strategy; clarity that subscription growth continues .	Adoption ramp underway
Data layer/RaptorDB	Q3: Workflow Data Fabric launch .	RaptorDB Pro continued ACV acceleration; 5 deals >$1M; faster analytics .	Building
Macro/Tariffs	—	CEOs reconfiguring supply chains to mitigate tariffs; example: auto OEM facing $10k/vehicle cost risk—AI agents reprioritize suppliers .	Heightened discussion

Management Commentary

Strategic posture: “Our platform is delivering real business transformation… ServiceNow is meeting the moment” — Bill McDermott .
AI and profitability: “Our use of AI internally… continues to drive meaningful opex efficiencies, yielding strong profitability and free cash flow” — Gina Mastantuono .
Large-enterprise momentum: “Average ACV deal sizes grew by 1/3 QoQ as Pro Plus products were included in 15 of our top 20 deals… RaptorDB saw… 5 deals over $1M” — Bill McDermott .
CRM ambition: “We’re delivering a fully integrated AI‑powered front office… configure, price, quote, sell, fulfill, service on one fully integrated architecture” — Bill McDermott .
Federal outlook: “We’re taking into account some conservatism… short-term headwinds, but mid and long term, the opportunity… remains stronger than ever” — Gina Mastantuono .

Q&A Highlights

Guidance conservatism and demand: Despite macro uncertainty, pipelines and coverage ratios remain strong; conservatism reflects federal and geopolitical risk .
Moveworks and Logik.ai rationale: Moveworks adds unified UX and enterprise search; Logik.ai accelerates AI-powered CPQ to expand CRM offerings on one platform .
Hybrid consumption model: Subscription remains foundational; agentic usage (assists) accelerates consumption packs over time, aiming at faster adoption and monetization of usage .
Federal seasonality: Backlog/CRPO shape unchanged (trough Q3, accel Q4), embedded in how management frames growth cadence .
AI efficiency: Internal Now Assist/agents materially improving lead-to-sale conversion (16x) and deflecting low-value work (86%) — informing customer value delivery .

Estimates Context

Q1 2025 beat: Revenue $3.09B vs $3.086B*; EPS $4.04 vs $3.83* — both above consensus. Q4 2024 and Q3 2024 also exceeded EPS consensus*. Values retrieved from S&P Global.
Implications: EPS outperformance combined with cRPO beat and sustained non-GAAP margin profile may support upward revisions to near-term EPS forecasts and confidence in FY margin delivery, while FX tailwinds and conservative flow-through temper guidance expansion .

Key Takeaways for Investors

Near-term: The combination of cRPO beat, strong non-GAAP EPS and elevated large-deal activity are positive for sentiment; watch Q2 delivery vs cRPO and subscription revenue guidance for confirmation of momentum .
AI monetization: Structural upside from agentic AI adoption—subscription remains robust while usage-based monetization ramps with Now Assist/agents; evidence of faster adoption (Pro Plus quadruple) suggests durable trajectory .
CRM expansion: Logik.ai and growing CRM wins in EMEA/Japan broaden TAM and can increase deal sizes when front-office workflows are included; this supports multi-workflow consolidation on one platform .
Public sector: Strong federal Q1 execution and government suite launch underpin mid/long-term opportunity; near-term cadence remains prudently guided amid budget dynamics .
Profitability discipline: Non-GAAP operating margin held at 31% in Q1, full-year maintained at 30.5%; internal AI efficiencies provide a buffer against macro and integration costs .
KPI watch: cRPO/RPO growth, Pro Plus attach, RaptorDB Pro adoption, renewal rate (98%), and $5M+ deal count are core indicators for sustained growth and mix quality .
Execution risks: Professional services margin drag, federal timing and macro/geopolitical risks persist; management’s conservative guide acknowledges these while maintaining structural growth vectors .

Additional Q1 2025 context and press releases:

Partnerships and AI announcements: deepened NVIDIA collaboration (Nemotron), Google Cloud Agent2Agent interoperability, AWS bi-directional integration, Vodafone Business AI service management, Devoteam CRM transformation .
Leadership update: Paul Smith resigned; Paul Fipps appointed President of Global Customer Operations .
Share repurchases: ~316K shares for $298M; ~$3B authorization remaining .

All quantitative and qualitative claims are sourced from Q1 2025 press release, 8-K, and Q1 2025/Q4 2024/Q3 2024 earnings materials as cited above.

ServiceNow, Inc. (NOW)·Q1 2025 Earnings Summary