Core Insights - Stocks with an artificial intelligence (AI) theme have seen significant increases, with notable tech stocks like Alphabet (Google's parent company) and ServiceNOW reinforcing this trend by 2025 [1] Group 1 - AI-themed stocks have experienced a rise in performance, indicating a strong market interest and potential for growth [1] - Major technology companies such as Alphabet and ServiceNOW are leading the charge in this upward trend, showcasing their robust earnings [1]

Core Insights - NowVertical Group Inc. is participating in the Qlik AI Reality Tour in São Paulo, Brazil on July 29, 2025, highlighting its role in the enterprise AI landscape [1][2] - The company was recently recognized as Qlik's 2024 Latin America Channel Growth Partner of the Year, indicating its expanding global presence and commitment to technology partnerships [2] - NowVertical will showcase a case study on Natural One, demonstrating how its collaboration with Qlik transformed the company's data architecture and operational processes [2][3] - The event allows NowVertical to engage with enterprise customers and peers, emphasizing its capability in delivering measurable results through data intelligence [3][4] - CEO Sandeep Mendiratta stated that NowVertical is positioned to help organizations operationalize AI effectively, enhancing its role as a trusted transformation partner [4] Company Overview - NowVertical is a global data and analytics company focused on transforming data into business value using AI [5] - The company offers a comprehensive suite of solutions that enable clients to harness their data for improved decision-making and operational efficiency [5] - NowVertical is pursuing growth both organically and through strategic acquisitions, enhancing its capabilities in the data analytics and AI sectors [5]

Group 1 - Major stock indices futures are up, with Dow futures rising by 0.50%, S&P 500 futures by 0.39%, and Nasdaq futures by 0.20% [1] - The Trump administration has announced an AI action plan, leading to a surge in chip stocks, with Broadcom up 2.6%, Nvidia up 1.5%, and AMD up 1.29% [1] - Tesla reported Q2 revenue of $22.5 billion, a 12% year-over-year decline, with earnings per share at $0.40, down 23% from the previous year, resulting in a stock drop of 6.56% [1] Group 2 - Google reported Q2 revenue of $96.4 billion and earnings per share of $2.31, exceeding analyst expectations, leading to a stock increase of 3.1% [2] - IBM's Q2 revenue was $73.9 billion, slightly below analyst expectations of $74.3 billion, resulting in a stock decline of 5.35% [3] - T-Mobile added 1.7 million postpaid customers in Q2, achieving its best quarterly performance, with stock rising by 5.20% [3] - Nokia's Q2 results fell short of expectations, with projected operating profit for the year revised down to between €1.6 billion and €2.1 billion [3] - ServiceNow reported Q2 profit of $385 million and revenue growth of approximately 23% to $3.22 billion, leading to a stock increase of 7.17% [4]

Group 1 - The core point of the article is that ServiceNow's stock rose over 7% in pre-market trading after the company raised its annual subscription revenue forecast [1] Group 2 - ServiceNow is identified as a SaaS giant, indicating its significant presence in the Software as a Service industry [1]

Market Overview - The markets experienced a strong trading session, driven by a new trade deal with the Japanese auto industry, with the Dow gaining 507 points (+1.14%) and the S&P 500 reaching a new all-time closing high of 6358 (+0.78%) [1] Existing Home Sales - Existing Home Sales fell to 3.93 million, the lowest since September of the previous year, while the average sale price rose to a record high of $435,300 for June [2] Q2 Earnings Reports - **Alphabet (GOOGL)**: Reported earnings of $2.31 per share, exceeding expectations of $2.15, with revenues of $81.7 billion, up 14% year over year [3] - **YouTube**: Ad revenue increased by nearly 13% to $9.8 billion, with a services margin above 40% [4] - **Tesla (TSLA)**: Reported earnings of 33 cents per share, missing the consensus of 39 cents, with revenues of $22.5 billion, slightly above estimates [5] - **IBM**: Earnings of $2.80 per share surpassed estimates of $2.64, with revenues of $16.98 billion, exceeding expectations of $16.58 billion [6] - **Chipotle (CMG)**: Earnings of 33 cents per share beat estimates by a penny, but revenues were flat at $3.10 billion, with comparable sales down 4% [7] - **ServiceNow (NOW)**: Achieved earnings of $4.09 per share, significantly above the projected $3.54, with revenues of $3.22 billion, up 22.5% year over year [8] Upcoming Economic Indicators - Anticipated reports include Weekly Jobless Claims, flash S&P Services and Manufacturing PMI for July, and New Home Sales for June [9]

PART I [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents ServiceNow, Inc.'s unaudited condensed consolidated financial statements for the periods ended June 30, 2025, and December 31, 2024 (balance sheets), and for the three and six months ended June 30, 2025 and 2024 (income, equity, and cash flow statements), along with detailed notes explaining significant accounting policies, business operations, investments, debt, equity, and other financial commitments [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20as%20of%20June%2030%2C%202025%20and%20December%2031%2C%202024) | Assets/Liabilities & Equity | June 30, 2025 (in millions) | December 31, 2024 (in millions) | | :-------------------------- | :-------------------------- | :---------------------------- | | **Assets:** | | | | Cash and cash equivalents | $3,124 | $2,304 | | Short-term investments | $3,008 | $3,458 | | Accounts receivable, net | $1,696 | $2,240 | | Total current assets | $9,275 | $9,187 | | Long-term investments | $4,655 | $4,111 | | Property and equipment, net | $1,985 | $1,763 | | Goodwill | $1,778 | $1,273 | | Total assets | $22,051 | $20,383 | | **Liabilities:** | | | | Current portion of deferred revenue | $6,802 | $6,819 | | Total current liabilities | $8,495 | $8,358 | | Long-term debt, net | $1,490 | $1,489 | | Total liabilities | $11,119 | $10,774 | | **Stockholders' Equity:** | | | | Total stockholders' equity | $10,932 | $9,609 | | Total liabilities and stockholders' equity | $22,051 | $20,383 | [Condensed Consolidated Statements of Comprehensive Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20for%20the%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) | Metric (in millions, except per share data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | **Revenues:** | | | | | | Subscription | $3,113 | $2,542 | $6,118 | $5,065 | | Professional services and other | $102 | $85 | $185 | $165 | | Total revenues | $3,215 | $2,627 | $6,303 | $5,230 | | **Gross Profit:** | | | | | | Gross profit | $2,491 | $2,075 | $4,928 | $4,158 | | **Operating Expenses:** | | | | | | Sales and marketing | $1,128 | $960 | $2,182 | $1,883 | | Research and development | $734 | $643 | $1,437 | $1,249 | | General and administrative | $271 | $232 | $500 | $454 | | Total operating expenses | $2,133 | $1,835 | $4,119 | $3,586 | | **Income from Operations:** | | | | | | Income from operations | $358 | $240 | $809 | $572 | | **Net Income:** | | | | | | Net income | $385 | $262 | $845 | $609 | | Net income per share - basic | $1.86 | $1.27 | $4.08 | $2.97 | | Net income per share - diluted | $1.84 | $1.26 | $4.04 | $2.93 | | **Comprehensive Income:** | | | | | | Comprehensive income | $406 | $252 | $864 | $568 | [Condensed Consolidated Statements of Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity%20for%20the%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) | Metric (in millions) | Balance at Dec 31, 2024 | Common Stock & Treasury Stock Issued | Common Stock Repurchased | Taxes Paid Related to Net Share Settlement | Stock-based Compensation | Issuance of Common Stock for Business Combinations | Other Comprehensive Income (Loss), Net of Tax | Net Income | Balance at June 30, 2025 | | :------------------- | :---------------------- | :----------------------------------- | :----------------------- | :----------------------------------------- | :----------------------- | :------------------------------------------------- | :-------------------------------------------- | :--------- | :----------------------- | | Common Stock | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | | Treasury Stock | $(1,219) | $7 | $(659) | $0 | $0 | $0 | $0 | $0 | $(1,871) | | Additional Paid-in Capital | $7,402 | $146 | $0 | $(438) | $969 | $434 | $0 | $0 | $8,513 | | Retained Earnings | $3,494 | $0 | $0 | $0 | $0 | $0 | $0 | $845 | $4,339 | | Accumulated Other Comprehensive Loss | $(68) | $0 | $0 | $0 | $0 | $0 | $19 | $0 | $(49) | | Total Stockholders' Equity | $9,609 | $153 | $(659) | $(438) | $969 | $434 | $19 | $845 | $10,932 | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) | Cash Flow Activity (in millions) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $2,393 | $1,961 | | Net cash used in investing activities | $(640) | $(1,105) | | Net cash used in financing activities | $(944) | $(580) | | Foreign currency effect on cash, cash equivalents and restricted cash | $14 | $(13) | | Net change in cash, cash equivalents and restricted cash | $823 | $263 | | Cash, cash equivalents and restricted cash at beginning of period | $2,310 | $1,904 | | Cash, cash equivalents and restricted cash at end of period | $3,133 | $2,167 | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) [Description of the Business](index=9&type=section&id=(1)%20Description%20of%20the%20Business) ServiceNow operates an intelligent, cloud-based platform called the Now Platform, which is an AI platform for digital transformation. It helps enterprises digitize workflows across four primary areas: Technology, CRM and Industry, Core Business, and Creator, aiming to improve business outcomes and user experiences - ServiceNow's core business is the Now Platform, an AI-driven cloud solution for digital workflow transformation across Technology, CRM, Core Business, and Creator areas[24](index=24&type=chunk) [Summary of Significant Accounting Policies](index=9&type=section&id=(2)%20Summary%20of%20Significant%20Accounting%20Policies) This section outlines the basis of presentation for the unaudited condensed consolidated financial statements, prepared in accordance with SEC rules and GAAP, emphasizing the use of management estimates and assumptions. It also confirms no significant changes to accounting policies from the prior annual report and details the company's approach to credit risk and significant customer concentrations - No significant changes to accounting policies from the December 31, 2024 Annual Report on Form 10-K[29](index=29&type=chunk) - One U.S. federal channel partner accounted for **16% of accounts receivable** as of June 30, 2025 (vs. 12% at Dec 31, 2024) and **11% of total revenues** for the three and six months ended June 30, 2025 (vs. 10% for the same periods in 2024)[30](index=30&type=chunk) [Investments](index=10&type=section&id=(3)%20Investments) The company's investment portfolio primarily consists of available-for-sale debt securities and non-marketable equity investments. As of June 30, 2025, total available-for-sale debt securities had an estimated fair value of $7,663 million, with unrealized gains of $35 million and losses of $18 million. Non-marketable equity investments totaled $601 million, measured at cost with immaterial adjustments | Metric | June 30, 2025 (millions) | December 31, 2024 (millions) | | :--------------------------------- | :----------------------- | :------------------------- | | Total Amortized Cost | $7,646 | $7,576 | | Total Gross Unrealized Gains | $35 | $18 | | Total Gross Unrealized Losses | $(18) | $(25) | | Total Estimated Fair Value | $7,663 | $7,569 | - Non-marketable equity investments in privately-held companies increased to **$601 million** as of June 30, 2025, from $469 million as of December 31, 2024[34](index=34&type=chunk) [Fair Value Measurements](index=12&type=section&id=(4)%20Fair%20Value%20Measurements) This note details the fair value hierarchy for assets measured on a recurring basis, categorizing them into Level 1 (quoted prices in active markets) and Level 2 (observable inputs other than quoted prices). As of June 30, 2025, total assets measured at fair value were $9,952 million, predominantly in Level 2 | Category | June 30, 2025 (millions) | December 31, 2024 (millions) | | :--------------------------------- | :----------------------- | :------------------------- | | Level 1 | $2,230 | $1,748 | | Level 2 | $7,722 | $7,610 | | Total | $9,952 | $9,358 | [Business Combinations](index=13&type=section&id=(5)%20Business%20Combinations) ServiceNow completed the acquisition of Logik.io Inc. on May 30, 2025, for $506 million, primarily to enhance its CRM and sales capabilities. The company also completed other immaterial acquisitions and has a pending acquisition of Moveworks, Inc. for approximately $2.9 billion, expected to close in Q4 2025 or later, to strengthen its AI platform - Acquired Logik.io Inc. on May 30, 2025, for **$506 million** (0.4 million shares of common stock valued at $434 million and $62 million cash) to expand CRM and sales capabilities[38](index=38&type=chunk) - Preliminary purchase price allocation for Logik.io Inc. included **$85 million** for developed technology, **$14 million** for customer-related assets, and **$404 million** for goodwill[39](index=39&type=chunk) - Signed a definitive agreement to acquire Moveworks, Inc. for approximately **$2.9 billion**, expected to close in Q4 2025 or later, to strengthen the AI platform with agentic AI assistants[43](index=43&type=chunk) [Goodwill and Intangible Assets](index=14&type=section&id=(6)%20Goodwill%20and%20Intangible%20Assets) Goodwill increased to $1,778 million as of June 30, 2025, primarily due to $434 million acquired goodwill from business combinations and $71 million from foreign currency translation adjustments. Net intangible assets also increased to $319 million, with estimated future amortization expense of $319 million through 2029 and thereafter | Metric | Carrying Amount (in millions) | | :--------------------------------- | :---------------------------- | | Balance as of December 31, 2024 | $1,273 | | Goodwill acquired | $434 | | Foreign currency translation adjustments | $71 | | Balance as of June 30, 2025 | $1,778 | | Metric | June 30, 2025 (in millions) | December 31, 2024 (in millions) | | :--------------------------------- | :-------------------------- | :---------------------------- | | Intangible assets, gross | $834 | $675 | | Less: accumulated amortization | $(515) | $(466) | | Intangible assets, net | $319 | $209 | - Estimated future amortization expense for intangible assets is **$319 million**, with **$58 million** remaining in 2025, **$80 million** in 2026, **$69 million** in 2027, **$59 million** in 2028, **$41 million** in 2029, and **$12 million** thereafter[47](index=47&type=chunk) [Property and Equipment](index=15&type=section&id=(7)%20Property%20and%20Equipment) Net property and equipment increased to $1,985 million as of June 30, 2025, from $1,763 million at December 31, 2024. This increase was primarily driven by investments in computer equipment and construction in progress. Depreciation expense for the six months ended June 30, 2025, was $232 million, up from $168 million in the prior year | Metric | June 30, 2025 (in millions) | December 31, 2024 (in millions) | | :--------------------------------- | :-------------------------- | :---------------------------- | | Property and equipment, gross | $3,683 | $3,271 | | Less: Accumulated depreciation | $(1,698) | $(1,508) | | Property and equipment, net | $1,985 | $1,763 | - Depreciation expense for the six months ended June 30, 2025, was **$232 million**, an increase from $168 million for the same period in 2024[48](index=48&type=chunk) [Derivative Contracts](index=15&type=section&id=(8)%20Derivative%20Contracts) ServiceNow uses derivative contracts, including forward contracts, to hedge foreign currency denominated revenues (cash flow hedges) and monetary assets/liabilities (not designated as hedges). As of June 30, 2025, outstanding cash flow hedges had a notional value of $1.8 billion, and derivatives not designated as hedges had a notional value of $2.5 billion - Outstanding cash flow hedges had total notional values of **$1.8 billion** as of June 30, 2025, up from $1.7 billion at December 31, 2024[49](index=49&type=chunk) - Approximately **$76 million** of pre-tax derivative losses from accumulated other comprehensive income (loss) are expected to be recognized in subscription revenues within the next 12 months[50](index=50&type=chunk) - Foreign currency forward contracts not designated as hedging instruments had total notional values of **$2.5 billion** as of June 30, 2025, up from $2.2 billion at December 31, 2024[53](index=53&type=chunk) [Supply Chain Finance Program](index=16&type=section&id=(9)%20Supply%20Chain%20Finance%20Program) The company participates in a supply chain finance (SCF) program, allowing suppliers to sell their receivables to a financial institution for early payment. As of June 30, 2025, outstanding payment obligations to participating suppliers totaled $49 million, included in accounts payable - Outstanding payment obligations to suppliers participating in the SCF program totaled **$49 million** as of June 30, 2025[55](index=55&type=chunk) [Deferred Revenue and Performance Obligations](index=16&type=section&id=(10)%20Deferred%20Revenue%20and%20Performance%20Obligations) Revenues recognized from beginning period deferred revenue were $2.8 billion for the three months and $4.7 billion for the six months ended June 30, 2025. Total remaining performance obligations (RPO) as of June 30, 2025, were $23.9 billion, with approximately 46% expected to be recognized as revenue in the next 12 months | Period | 2025 (in millions) | 2024 (in millions) | | :--------------------------------- | :----------------- | :----------------- | | Three Months Ended June 30 | $2,800 | $2,400 | | Six Months Ended June 30 | $4,700 | $3,900 | - Total non-cancellable remaining performance obligations (RPO) were **$23.9 billion** as of June 30, 2025[58](index=58&type=chunk) - Approximately **46% of RPO** is expected to be recognized as revenue over the next 12 months, with the majority of non-current RPO recognized over the subsequent 13 to 36 months[58](index=58&type=chunk) [Debt](index=16&type=section&id=(11)%20Debt) The company's outstanding debt, primarily 1.40% fixed rate ten-year notes due September 1, 2030 (the "2030 Notes"), had a carrying value of $1,490 million as of June 30, 2025. The estimated fair value of these notes was $1,300 million at June 30, 2025 | Metric | June 30, 2025 (in millions) | December 31, 2024 (in millions) | | :--------------------------------- | :-------------------------- | :---------------------------- | | Carrying value of outstanding debt | $1,490 | $1,489 | | Estimated fair value of 2030 Notes | $1,300 | $1,247 | - The 2030 Notes have an aggregate principal amount of **$1.5 billion**, a **1.40% fixed interest rate**, and mature on September 1, 2030[61](index=61&type=chunk) [Accumulated Other Comprehensive Income (Loss)](index=17&type=section&id=(12)%20Accumulated%20Other%20Comprehensive%20Income%20(Loss)) Accumulated other comprehensive loss improved to $(49) million as of June 30, 2025, from $(68) million at December 31, 2024. This change was primarily driven by positive foreign currency translation adjustments and unrealized gains on investments, partially offset by unrealized losses on derivative instruments | Component | Dec 31, 2024 (in millions) | June 30, 2025 (in millions) | | :--------------------------------- | :------------------------- | :-------------------------- | | Unrealized Gains (Losses) on Derivative Instruments | $50 | $(101) | | Unrealized Gains (Losses) on Investments | $(27) | $(8) | | Foreign Currency Translation Adjustment | $(91) | $60 | | Total | $(68) | $(49) | [Stockholders' Equity](index=18&type=section&id=(13)%20Stockholders%27%20Equity) As of June 30, 2025, the company had 208 million shares of common stock outstanding. The board authorized an additional $3.0 billion for the share repurchase program in January 2025, bringing the total available for future repurchases to approximately $2.6 billion. During the six months ended June 30, 2025, the company repurchased 0.7 million shares for $659 million - As of June 30, 2025, there were approximately **208 million shares** of common stock outstanding[64](index=64&type=chunk) - In January 2025, the board authorized an additional **$3.0 billion** for the Share Repurchase Program, with approximately **$2.6 billion** remaining available as of June 30, 2025[66](index=66&type=chunk)[67](index=67&type=chunk) | Period | Shares Repurchased (thousands) | Amount (in millions) | | :--------------------------------- | :----------------------------- | :------------------- | | Three Months Ended June 30, 2025 | 400 | $361 | | Six Months Ended June 30, 2025 | 700 | $659 | | Six Months Ended June 30, 2024 | 200 | $175 | [Equity Awards](index=18&type=section&id=(14)%20Equity%20Awards) The company operates several equity incentive plans, including the 2021 Equity Incentive Plan, which governs most current grants. During the six months ended June 30, 2025, 2.2 million RSUs were granted, and 1.5 million vested. Total unrecognized compensation cost for unvested RSUs was $3.8 billion, with a weighted-average remaining vesting period of approximately three years | Metric (in thousands) | Number of Shares | Weighted-Average Grant Date Fair Value Per Share | | :--------------------------------- | :--------------- | :--------------------------------------- | | Outstanding as of Dec 31, 2024 | 5,788 | $630.10 | | Granted | 2,217 | $991.45 | | Vested | (1,474) | $623.39 | | Forfeited | (297) | $663.89 | | Outstanding as of June 30, 2025 | 6,234 | $758.55 | - Total unrecognized compensation cost for unvested RSUs was **$3.8 billion** as of June 30, 2025, with a weighted-average remaining vesting period of approximately three years[81](index=81&type=chunk) - The fourth tranche of the 2021 CEO Performance Award and 2021 Performance Awards vested during the six months ended June 30, 2025, based on achievement of performance and market conditions[75](index=75&type=chunk) [Net Income Per Share](index=20&type=section&id=(15)%20Net%20Income%20Per%20Share) Basic net income per share for the six months ended June 30, 2025, was $4.08, up from $2.97 in the prior year, while diluted net income per share increased to $4.04 from $2.93. The calculation includes adjustments for potentially dilutive securities like stock options, RSUs, and ESPP obligations | Metric (in millions, except per share data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income | $385 | $262 | $845 | $609 | | Net income per share - basic | $1.86 | $1.27 | $4.08 | $2.97 | | Net income per share - diluted | $1.84 | $1.26 | $4.04 | $2.93 | [Provision for Income Taxes](index=21&type=section&id=(16)%20Provision%20for%20Income%20Taxes) The income tax provision for the six months ended June 30, 2025, was $181 million, up from $150 million in the prior year, primarily due to the mix of earnings and losses across jurisdictions, offset by excess tax benefits from stock-based compensation. The company maintains a valuation allowance against California deferred tax assets | Metric (in millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Income tax provision | $86 | $72 | $181 | $150 | - The income tax provision is primarily influenced by the mix of earnings/losses in different countries and excess tax benefits from stock-based compensation[85](index=85&type=chunk) [Commitments and Contingencies](index=21&type=section&id=(17)%20Commitments%20and%20Contingencies) ServiceNow has non-cancellable operating lease liabilities totaling $919 million as of June 30, 2025, with a weighted-average remaining lease term of nine years. The company also has significant contractual commitments for cloud services ($4.8 billion through 2030) and IT equipment ($1.9 billion through 2028) to support data center expansion. Legal proceedings are ongoing, including an internal investigation into potential compliance issues related to a government contract, which led to the resignation of the President and COO | Metric (in millions) | Amount | | :--------------------------------- | :------- | | Total operating lease payments | $1,085 | | Less: imputed interest | $(166) | | Present value of operating lease liabilities | $919 | - Committed to spend approximately **$4.8 billion** on cloud services through 2030 and **$1.9 billion** on capital expenditures for data center expansion through 2028[93](index=93&type=chunk) - An internal investigation into potential compliance issues related to a government contract led to the resignation of the President and Chief Operating Officer and another individual. The Department of Justice has commenced its own investigation[97](index=97&type=chunk) [Segment and Geographic Information](index=23&type=section&id=(18)%20Segment%20and%20Geographic%20Information) The company operates as a single operating and reportable segment, with the CEO managing business activities at a consolidated level. Geographically, North America remains the largest revenue contributor, accounting for $3,969 million (63%) of total revenues for the six months ended June 30, 2025, followed by EMEA and Asia Pacific - ServiceNow manages its business activities as a single operating and reportable segment[100](index=100&type=chunk) | Geographic Area | Six Months Ended June 30, 2025 (in millions) | Six Months Ended June 30, 2024 (in millions) | | :--------------------------------- | :------------------------------------------- | :------------------------------------------- | | North America | $3,969 | $3,302 | | EMEA | $1,616 | $1,337 | | Asia Pacific and other | $718 | $591 | | Total revenues | $6,303 | $5,230 | [Subsequent Event](index=23&type=section&id=(19)%20Subsequent%20Event) On July 4, 2025, the "One Big Beautiful Bill Act" was enacted, amending the U.S. tax code. The company is currently evaluating the impact of this new legislation on its consolidated financial statements - The "One Big Beautiful Bill Act" was enacted on July 4, 2025, amending the U.S. tax code, and the company is evaluating its impact[103](index=103&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on ServiceNow's financial condition, operational results, and cash flows for the periods ended June 30, 2025 and 2024. It highlights the company's cloud-based Now Platform as an AI platform for digital transformation, discusses key business metrics, revenue and expense components, and analyzes liquidity and capital resources. The company is monitoring macroeconomic events and ongoing conflicts but does not anticipate a material impact on its business [Overview](index=24&type=section&id=Overview) ServiceNow's core business revolves around its AI-powered Now Platform, a cloud solution for digitizing workflows across various enterprise functions. The company is monitoring global conflicts and macroeconomic events but currently expects no material impact on its operations or financial results - The Now Platform is positioned as the AI platform for digital transformation, automating business processes across enterprises[107](index=107&type=chunk) - The company is monitoring ongoing conflicts and macroeconomic events but does not believe they will have a material impact on business and results of operations as of June 30, 2025[108](index=108&type=chunk) [Key Business Metrics](index=25&type=section&id=Key%20Business%20Metrics) This section details key performance indicators including Remaining Performance Obligations (RPO), customer count with Annual Contract Value (ACV) greater than $5 million, non-GAAP free cash flow, non-GAAP consolidated income from operations, and renewal rate. RPO increased by 29% year-over-year, and free cash flow grew by 27% - Remaining Performance Obligations (RPO) as of June 30, 2025, were **$23.9 billion**, with current RPO (cRPO) representing **46%**. RPO and cRPO increased by **29%** and **24%** respectively, compared to June 30, 2024[113](index=113&type=chunk) - The number of customers with ACV greater than **$5 million** increased to **528** as of June 30, 2025, from 442 as of June 30, 2024[114](index=114&type=chunk) | Metric (in millions) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | % Change | | :--------------------------------- | :----------------------------- | :----------------------------- | :------- | | GAAP net cash provided by operating activities | $2,393 | $1,961 | 22% | | Purchases of property and equipment | $(395) | $(397) | (1%) | | Business combination and other related costs | $14 | $20 | (30%) | | Non-GAAP free cash flow | $2,012 | $1,584 | 27% | | Metric (in millions) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | % Change | | :--------------------------------- | :----------------------------- | :----------------------------- | :------- | | GAAP income from operations | $809 | $572 | 41% | | Stock-based compensation | $969 | $866 | 12% | | Amortization of purchased intangibles | $46 | $48 | (4%) | | Business combination and other related costs | $25 | $25 | 0% | | Impairment of assets | $30 | $0 | 100% | | Severance costs | $29 | $0 | 100% | | Non-GAAP income from operations | $1,908 | $1,511 | 26% | - The renewal rate was **98%** for both the three and six months ended June 30, 2025 and 2024[118](index=118&type=chunk) [Components of Results of Operations](index=27&type=section&id=Components%20of%20Results%20of%20Operations) This section outlines the composition of ServiceNow's revenues (subscription and professional services) and expenses (cost of revenues, sales and marketing, R&D, G&A). Subscription revenues, recognized ratably, constitute the vast majority of total revenues, primarily sold through a direct sales organization. The company experiences seasonality, with a higher percentage of agreements signed in the fourth quarter - Subscription revenues are primarily from cloud-based offerings, recognized ratably over the subscription term, typically 12 to 36 months[119](index=119&type=chunk) - Direct sales organization accounted for **78%** of total revenues for the three and six months ended June 30, 2025[121](index=121&type=chunk) - The company experiences seasonality, with a significantly higher percentage of new and expansion agreements signed in the fourth quarter, driven by enterprise buying patterns and commission plans[122](index=122&type=chunk) [Comparison of the Three and Six Months Ended June 30, 2025 and 2024](index=29&type=section&id=Comparison%20of%20the%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) This section provides a detailed comparison of financial performance for the three and six months ended June 30, 2025, versus 2024. Total revenues increased by 22% and 21% for the three and six-month periods, respectively, driven by subscription revenue growth. Operating expenses, including sales & marketing and R&D, also increased due to headcount and program investments, while net income and EPS saw significant growth | Metric (in millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | % Change | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | % Change | | :--------------------------------- | :------------------------------- | :------------------------------- | :------- | :----------------------------- | :----------------------------- | :------- | | Subscription revenues | $3,113 | $2,542 | 22% | $6,118 | $5,065 | 21% | | Professional services and other revenues | $102 | $85 | 20% | $185 | $165 | 12% | | Total revenues | $3,215 | $2,627 | 22% | $6,303 | $5,230 | 21% | | Metric (in millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | % Change | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | % Change | | :--------------------------------- | :------------------------------- | :------------------------------- | :------- | :----------------------------- | :----------------------------- | :------- | | Total cost of revenues | $724 | $552 | 31% | $1,375 | $1,072 | 28% | | Total gross profit percentage | 77% | 79% | -2% pts | 78% | 80% | -2% pts | | Metric (in millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | % Change | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | % Change | | :--------------------------------- | :------------------------------- | :------------------------------- | :------- | :----------------------------- | :----------------------------- | :------- | | Sales and marketing | $1,128 | $960 | 18% | $2,182 | $1,883 | 16% | | Research and development | $734 | $643 | 14% | $1,437 | $1,249 | 15% | | General and administrative | $271 | $232 | 17% | $500 | $454 | 10% | | Metric (in millions, except per share data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income | $385 | $262 | $845 | $609 | | Net income per share - diluted | $1.84 | $1.26 | $4.04 | $2.93 | [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) ServiceNow maintains strong liquidity, with $10.8 billion in cash, cash equivalents, and investments as of June 30, 2025. The company generated $2,393 million in net cash from operating activities for the six months ended June 30, 2025, an increase from $1,961 million in the prior year, primarily due to revenue growth. Capital requirements include data center expansion, workforce costs, and business acquisitions - Cash, cash equivalents, short-term investments, and long-term investments totaled **$10.8 billion** as of June 30, 2025[157](index=157&type=chunk) | Cash Flow Activity (in millions) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $2,393 | $1,961 | | Net cash used in investing activities | $(640) | $(1,105) | | Net cash used in financing activities | $(944) | $(580) | | Net increase in cash, cash equivalents and restricted cash | $823 | $263 | - Net cash provided by operating activities increased by **$432 million (22%)** for the six months ended June 30, 2025, compared to the same period in 2024, driven by higher collections from revenue growth[164](index=164&type=chunk) - Net cash used in investing activities decreased by **$465 million** for the six months ended June 30, 2025, primarily due to a **$506 million** decrease in net purchases of investments[165](index=165&type=chunk) - Net cash used in financing activities increased by **$364 million** for the six months ended June 30, 2025, mainly due to a **$484 million** increase in common stock repurchases[166](index=166&type=chunk) [Critical Accounting Policies and Significant Judgments and Estimates](index=35&type=section&id=Critical%20Accounting%20Policies%20and%20Significant%20Judgments%20and%20Estimates) There have been no significant changes to the company's critical accounting policies and estimates since the Annual Report on Form 10-K for the year ended December 31, 2024 - No significant changes to critical accounting policies and estimates since the Annual Report on Form 10-K filed on January 30, 2025[167](index=167&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=35&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) There have been no material changes in the company's market risk compared to the disclosures in its Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes in market risk compared to the Annual Report on Form 10-K for the year ended December 31, 2024[168](index=168&type=chunk) [Item 4. Controls and Procedures](index=35&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of June 30, 2025. There were no material changes to internal control over financial reporting during the quarter - Disclosure controls and procedures were effective at the reasonable assurance level as of June 30, 2025[169](index=169&type=chunk) - No material changes to internal control over financial reporting occurred during the quarter ended June 30, 2025[170](index=170&type=chunk) PART II [Item 1. Legal Proceedings](index=36&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in certain litigation and legal proceedings, but management does not believe their ultimate resolution will have a material adverse effect on its business, financial position, results of operations, or cash flows - Management does not believe the ultimate resolution of current legal proceedings will have a material adverse effect on the company's business or financial results[172](index=172&type=chunk) [Item 1A. Risk Factors](index=36&type=page&id=Item%201A.%20Risk%20Factors) There have been no material changes to the company's risk factors since its Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes to the company's risk factors since the Annual Report on Form 10-K for the year ended December 31, 2024[174](index=174&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=36&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) On May 30, 2025, ServiceNow issued 468,525 shares of common stock as partial consideration for the Logik.io Inc. acquisition, relying on Section 4(a)(2) of the Securities Act. The company also repurchased 381,000 shares for $361 million during the second quarter of 2025 under its share repurchase program, which has $2.61 billion remaining - Issued **468,525 shares** of common stock on May 30, 2025, for the Logik.io Inc. acquisition, under Section 4(a)(2) exemption[175](index=175&type=chunk) | Period | Total Number of Shares Purchased (in thousands) | Average Price Paid Per Share | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (in billions) | | :--------------------------------- | :-------------------------------------------- | :--------------------------- | :--------------------------------------------------------------------------------------- | | Second Quarter 2025 | 381 | $947.39 | $2.61 | [Item 5. Other Information](index=37&type=section&id=Item%205.%20Other%20Information) This section discloses Rule 10b5-1 trading plans adopted by Section 16 officers. For example, General Counsel Russell Elmer adopted a plan on May 21, 2025, for the sale of common stock and net shares from RSU vesting - General Counsel Russell Elmer adopted a Rule 10b5-1 trading plan on May 21, 2025, for the sale of **110 shares** of common stock and **100%** of net shares from vesting RSUs[177](index=177&type=chunk) [Item 6. Exhibits](index=38&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including the Restated Certificate of Incorporation, Restated Bylaws, certifications under the Sarbanes-Oxley Act, and Inline XBRL documents - The exhibit index includes corporate governance documents (Restated Certificate of Incorporation, Restated Bylaws), certifications (Section 302 and 906 of Sarbanes-Oxley Act), and Inline XBRL documents[179](index=179&type=chunk) [Signatures](index=39&type=section&id=Signatures) The report is duly signed on behalf of ServiceNow, Inc. by its Chief Executive Officer, William R. McDermott, President and Chief Financial Officer, Gina Mastantuono, and Chief Accounting Officer, Kevin McBride, as of July 23, 2025 - The report is signed by William R. McDermott (CEO), Gina Mastantuono (President and CFO), and Kevin McBride (Chief Accounting Officer) on July 23, 2025[185](index=185&type=chunk)[186](index=186&type=chunk)

Group 1 - ServiceNow reported $3.22 billion in revenue for the quarter ended June 2025, a year-over-year increase of 22.4% [1] - The EPS for the same period was $4.09, compared to $3.13 a year ago, indicating a significant growth [1] - The reported revenue exceeded the Zacks Consensus Estimate of $3.12 billion, resulting in a surprise of +3.02% [1] Group 2 - The company delivered an EPS surprise of +15.54%, with the consensus EPS estimate being $3.54 [1] - Current Remaining Performance Obligations (cRPO) were $10.92 billion, surpassing the $10.48 billion average estimate [4] - Remaining Performance Obligations (RPO) totaled $23.90 billion, compared to the $22.11 billion average estimate [4] Group 3 - Revenues from Professional services and other reached $102 million, exceeding the $88.78 million estimated by analysts [4] - Subscription revenues were $3.11 billion, compared to the $3.03 billion estimated by analysts, reflecting a +22.5% change year-over-year [4] - Gross Profit (Non-GAAP) from Subscription was $2.59 billion, slightly above the $2.53 billion estimated by analysts [4]

Core Viewpoint - ServiceNow reported quarterly earnings of $4.09 per share, exceeding the Zacks Consensus Estimate of $3.54 per share, and up from $3.13 per share a year ago [1][2] Financial Performance - The earnings surprise for the quarter was +15.54%, with the company having surpassed consensus EPS estimates in all four of the last quarters [2] - ServiceNow's revenues for the quarter reached $3.22 billion, surpassing the Zacks Consensus Estimate by 3.02%, and up from $2.63 billion year-over-year [3] Stock Performance - ServiceNow shares have declined approximately 9.2% since the beginning of the year, contrasting with the S&P 500's gain of 7.3% [4] - The current Zacks Rank for ServiceNow is 3 (Hold), indicating expected performance in line with the market in the near future [7] Future Outlook - The consensus EPS estimate for the upcoming quarter is $4.21 on revenues of $3.29 billion, and for the current fiscal year, it is $16.55 on revenues of $13.01 billion [8] - The industry outlook is critical, with the Computers - IT Services sector currently in the bottom 29% of Zacks industries, which may impact stock performance [9]

Financial Data and Key Metrics Changes - Subscription revenue for Q2 was $3,113 million, growing 21.5% year-over-year in constant currency, exceeding guidance by 200 basis points [26] - Remaining Performance Obligations (RPO) ended at approximately $23,900 million, representing 25.5% year-over-year constant currency growth [26] - Current RPO was $10,920 million, reflecting 21.5% year-over-year constant currency growth, also a 200 basis point beat versus guidance [26] - Operating margin was 29.5%, over 250 basis points above guidance, while free cash flow margin was 16.5%, up 300 basis points year-over-year [31] Business Line Data and Key Metrics Changes - Technology workflows had 40 deals over $1 million, including four over $5 million [7] - CRM and industry workflows showed strong momentum with 17 of the top 20 deals over $1 million [7] - ITAM Now Assist net new ACV surged nearly six times quarter-over-quarter, with average deal sizes more than tripling [29] - ITSM Plus and CSM Plus deal volume quadrupled year-over-year, while ITOM Plus tripled and HRSD Plus doubled [30] Market Data and Key Metrics Changes - Transportation and logistics delivered over 100% year-over-year net new ACV growth [26] - Technology, media, and telecom sectors grew over 70% year-over-year, while retail and hospitality, and energy and utilities each grew over 50% year-over-year [27] - The company achieved a robust 98% renewal rate, showcasing its strategic importance as an AI platform for business transformation [27] Company Strategy and Development Direction - The company is focused on AI, data, and workflows as key growth drivers, with a strong emphasis on integrating AI across all business functions [8][10] - The CRM opportunity is viewed as massive, with a shift towards autonomous front-end agents expected to render traditional CRM obsolete [14] - The acquisition of Logic AI is aimed at reimagining CRM and delivering a fully integrated AI-powered front office [15] Management's Comments on Operating Environment and Future Outlook - Management noted that the global environment is rapidly changing, with AI transformation being a top priority for enterprises [9] - The company remains confident in its guidance for Q3 and the remainder of 2025, despite challenges in the U.S. federal sector [33][49] - The outlook for 2025 has been raised, with subscription revenue expected to be between $12,775 million and $12,795 million, representing 20% year-over-year growth [34] Other Important Information - The company closed 89 deals greater than $1 million in net new ACV during the quarter, with 11 deals over $5 million [28] - The company ended Q2 with approximately $10,800 million in cash and investments, and bought back approximately 381,000 shares as part of its share repurchase program [31] Q&A Session Summary Question: What is driving the better-than-expected execution? - Management attributed the success to a strong culture and the transformative impact of AI on business models, leading to larger business cases across industries [40][42] Question: How is the federal sector performing? - Despite challenges, the federal team executed well, closing six new logos in Q2, and management is building prudence into their assumptions for the U.S. federal sector [48][49] Question: What are the immediate opportunities in front office workflows? - The CRM opportunity is significant, with a focus on sales and order management, and the company is addressing pain points in the market with its integrated solutions [62][64] Question: How is the demand environment changing? - Management indicated that the demand environment remains open for AI innovation, with companies needing an agentic AI layer to adapt to changing market conditions [85][88] Question: What is the outlook for operating margins? - Management is maintaining a conservative outlook for operating margins while investing in growth to meet demand for AI transformation [102][103]

Financial Data and Key Metrics Changes - Subscription revenues for Q2 reached $3,113 million, growing 21.5% year over year in constant currency, exceeding guidance by 200 basis points [27] - Remaining Performance Obligations (RPO) ended at approximately $23,900 million, representing 25.5% year over year constant currency growth [27] - Current RPO was $10,920 million, reflecting 21.5% year over year constant currency growth, also a 200 basis point beat versus guidance [27] - Operating margin was reported at 29.5%, over 250 basis points above guidance, while free cash flow margin was 16.5%, up 300 basis points year over year [26][32] Business Line Data and Key Metrics Changes - Technology workflows had 40 deals over $1 million, including four over $5 million, while ITSM, ITOM, ITAM, Security, and Risk were involved in at least 15 of the top 20 deals [7] - CRM and industry workflows maintained strong momentum with 17 of the top 20 deals exceeding $1 million [7] - The Now Assist product line saw significant growth, with net new ACV for ITAM surging nearly six times quarter over quarter [30] Market Data and Key Metrics Changes - Transportation and logistics delivered over 100% year over year growth in net new ACV, while technology, media, and telecom grew over 70% year over year [28] - Retail and hospitality, as well as energy and utilities, also showed strength, each growing over 50% year over year [28] - The company achieved a robust 98% renewal rate, highlighting its strategic importance as an AI platform for business transformation [28] Company Strategy and Development Direction - The company is focused on integrating AI into its workflows, emphasizing the importance of cross-functional work in AI applications [9][45] - The acquisition of Logic AI is aimed at reimagining CRM, with a strong push into the front office and significant growth in CPQ [15][30] - The company is positioning itself as a leader in enterprise AI, with a vision of embedding AI agents into everyday tools rather than traditional CRM screens [14][67] Management's Comments on Operating Environment and Future Outlook - Management noted that the global environment is rapidly changing, with AI transformation being a top priority for enterprises across all industries [8][9] - The company remains confident in its guidance for Q3 and the remainder of 2025, despite navigating challenges in the U.S. federal sector [34][53] - The outlook for 2025 has been raised, with subscription revenue expected to reach between $12,775 million and $12,795 million, representing 20% year over year growth [34] Other Important Information - The company ended Q2 with approximately $10,800 million in cash and investments, and bought back approximately 381,000 shares as part of its share repurchase program [32] - The company is investing in AI talent and technical selling to meet the growing demand for AI transformation [110] Q&A Session Summary Question: What is driving the better-than-expected execution? - Management attributed the success to a strong culture and the transformative impact of AI, which has led to larger business cases across all industries [41][44] Question: How is the pipeline for federal activity? - Management indicated that despite uncertainties, the federal team executed well, closing six new logos in Q2, and they are building prudence into their assumptions for the U.S. federal sector [51][53] Question: Are customers using AI Control Tower as a central control plane? - Management confirmed that the AI Control Tower is designed to manage all agents, including third-party agents, and is expected to enhance collaboration across business processes [55][60] Question: What are the immediate opportunities in front office workflows? - Management highlighted significant opportunities in sales and order management, particularly in public sector entities looking to replace fragmented legacy CRM systems [66][69] Question: What drove the robust upside in revenue guidance? - Management noted strong net new ACV performance and better-than-expected on-prem performance, largely due to early renewals [120]