ServiceNow (NOW)·Q4 2025 Earnings Summary
ServiceNow Beats Q4, Guides Strong FY26, But Stock Dips on $8B+ Acquisition Spree
January 28, 2026 · by Fintool AI Agent
ServiceNow delivered a strong Q4 2025, beating estimates on both revenue and EPS while issuing "exceptional" 2026 guidance per CEO Bill McDermott. Subscription revenues grew 21% YoY to $3.47B, with current remaining performance obligations (cRPO) accelerating to 25% growth. Despite the beat, shares fell ~3% in after-hours trading as investors digested the company's aggressive M&A strategy, including announced acquisitions of Armis and Veza totaling over $8B.
Did ServiceNow Beat Earnings?
Yes. ServiceNow exceeded guidance across all Q4 topline and profitability metrics:
Key operational highlights:
- cRPO of $12.85B (+25% YoY, +21% constant currency)
- RPO of $28.2B (+26.5% YoY) — representing nearly 8 quarters of forward visibility
- 244 transactions over $1M in net new ACV (~40% YoY growth)
- 603 customers with more than $5M in ACV (~20% YoY growth)
- Now Assist net new ACV more than doubled YoY
Ask Fintool AI AgentWhat Did Management Guide?
ServiceNow provided FY 2026 guidance that CEO McDermott called "exceptional," maintaining the Rule of 55+ profile (revenue growth + FCF margin > 55%):
Q1 2026 Guidance
Full-Year 2026 Guidance
Note: Q1 guidance includes ~150bps headwind from self-hosted to hosted revenue mix shift, and both Q1 and FY26 guidance include ~100bps contribution from Moveworks.
What Changed From Last Quarter?
Acquisition Spree
ServiceNow announced a significant expansion of its M&A strategy:
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Armis (Cybersecurity): Creates unified security exposure and operations stack; expected to "more than triple" ServiceNow's security and risk market opportunity. Expected close H2 2026.
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Veza (Identity Security): Strengthens identity management for AI-driven workflows across people, applications, data, and AI agents. Expected close H1 2026.
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Moveworks (Closed Dec 15, 2025): Creates "AI-native front door for employee engagement" with combined strengths in agentic AI and enterprise search.
Capital Return Acceleration
- Board authorized additional $5B for share repurchase program
- Plans $2B accelerated share repurchase imminently
- Repurchased ~3.6M shares for $597M in Q4
- 5-for-1 stock split effective December 17, 2025
Partnership Expansion
Major AI partnerships announced or expanded:
- Anthropic: Integrating Claude models into ServiceNow AI Platform
- OpenAI: New collaboration for agentic AI experiences
- Microsoft: Integration with Microsoft Agent 365 for AI orchestration
- Figma: Design-to-app development solution
Ask Fintool AI AgentHow Did the Stock React?
Despite the strong beat and guidance, ServiceNow shares declined in after-hours trading:
Why the disconnect? The market appears concerned about:
- Acquisition integration risk — Three major deals in rapid succession
- Dilution from M&A — Despite $5B buyback authorization, large acquisitions may offset
- High bar already priced in — Stock had rallied significantly going into earnings
- Security market competition — Armis enters a crowded space with CrowdStrike, Palo Alto, Zscaler
Key Management Quotes
Bill McDermott, Chairman & CEO:
"The speculation of AI will eat software companies is out there. Let's clear it up with the facts. Enterprise AI will be the largest driver of return on the multi-trillion-dollar super cycle of investment in AI infrastructure. ServiceNow is the gateway to this shift, serving as the semantic layer that makes AI ubiquitous in the enterprise."
"This is a 1 trillion-dollar company in the making. I can't fathom a better entry point for what ServiceNow is building."
Gina Mastantuono, President & CFO:
"Q4 was another strong quarter, concluding a remarkable year of AI innovation. Net new ACV growth accelerated both quarter-over-quarter and year-over-year. We exceeded our top-line growth and operating margin guidance metrics, showcasing our team's consistent execution and unwavering strength of our business."
AI Product Momentum
Now Assist and AI products significantly outperformed in Q4:
Now Assist 2026 Target: On track for $1B+ ACV in 2026
Industry & Segment Performance
Strong performance across verticals and product lines:
Industry NNA CV Growth (YoY)
Product Highlights
- Security & Risk: In 19 of top 20 deals; ~40% NNA CV growth YoY
- CRM: NNA CV accelerated Q/Q; largest quarter in history
- RaptorDB Pro: More than tripled NNA CV YoY; 13 $1M+ deals
- Workflow Data Fabric: In 16 of top 20 deals; attach rates increased every quarter
- ITOM: Grew NNA CV nearly 50% YoY
- Creator Workflows: 32 deals over $1M in ACV
Q&A Highlights
On Federal Business & Government Shutdown
"Even with the shutdown and less days to do business... we were still able to get very, very nice deals. What didn't happen in 2025 is only good news for 2026. The public sector more broadly is growing, not just US Fed, but also state and local. The global government business was up 80% year over year." — Bill McDermott
On AI Monetization & Consumption
"We already have been selling this hybrid pricing model, and we're already seeing a lot of customers now add assist packs... many customers with average deal size of $500K and some in multi 7-figure range, renewing and adding more assist packs when they're running out of tokens." — Amit Zavery, President & CPO
On Gross Margin Outlook
"The bulk of [gross margin headwind] is actually our very strategic focus on moving more towards hyperscalers that have slightly lower gross margins... As we continue to scale up those hyperscaler deals, margins get even better." — Gina Mastantuono
On M&A Strategy Going Forward
"We do not have a large-scale M&A on the roadmap... We now have them in the family, and we're gonna grow them like we do everything else. I wanted to make one thing clear: we chose assets also that were heavily integrated with ServiceNow already." — Bill McDermott
On LLM Partnerships (OpenAI, Anthropic)
"These models are eating enterprise software may be true in some cases, but obviously, it's not true in our case. They're actually leaning into us because of the innovation on our platform and the broad reach of our go-to-market global engine." — Bill McDermott
Ask Fintool AI AgentFull-Year 2025 Results
Historical Beat/Miss Trend
ServiceNow has maintained a consistent track record of beating estimates:
*Values retrieved from S&P Global
Customer ROI Examples
Management highlighted several customer wins demonstrating AI-driven ROI:
Strategic AI Partnerships
ServiceNow announced expanded partnerships with major AI providers:
Microsoft: Integration connecting copilots, agents, and data across Microsoft 365 and ServiceNow AI Platform. Introduces Microsoft Agent 365 integration anchored by ServiceNow's AI Control Tower.
Anthropic: Expanded partnership integrating Claude models into ServiceNow AI Platform. Using Claude for "Build Agent" AI coding tool that enables customers to build workflows on ServiceNow.
OpenAI: New collaboration for direct customer access to frontier model capabilities. OpenAI models become "preferred intelligence capability" for agentic use cases, including voice AI with speech-to-speech, real-time multimodal, and multilingual capabilities.
Forward Catalysts to Watch
- Armis/Veza Integration — Expected ~1 point revenue contribution in 2026; up to 50bps operating margin headwind
- Now Assist $1B Target — Tracking toward $1B+ ACV in 2026
- Moveworks Synergies — "AI-native front door" for employee engagement
- Federal Recovery — Pipeline from government shutdown delays flows into 2026
- Security Expansion — OT business just closed largest quarter ever; customers excited about Armis/Veza roadmap
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