ServiceNow(NOW) - 2025 Q3 - Quarterly Results

Financial Performance - Subscription revenues for Q3 2025 reached $3,299 million, reflecting a year-over-year growth of 21.5% and 20.5% in constant currency[2]. - Total revenues for Q3 2025 were $3,407 million, indicating a 22% year-over-year growth and 20.5% in constant currency[7]. - Net income for Q3 2025 was $502 million, up from $432 million in Q3 2024, representing a growth of 16.2%[46]. - Gross profit for Q3 2025 was $2,633 million, compared to $2,213 million in Q3 2024, indicating a 19% increase[46]. - Net income per share - diluted for Q3 2025 was $2.40, compared to $2.07 in Q3 2024, marking a 15.9% increase[46]. - Non-GAAP subscription gross profit reached $2.744 billion for the three months ended September 30, 2025, up from $2.305 billion in 2024, marking an increase of 19.1%[53]. - GAAP income from operations for the latest quarter was $572 million, up from $418 million year-over-year, with a non-GAAP income from operations of $1,140 million compared to $872 million[54]. - GAAP net income increased to $502 million from $432 million year-over-year, while non-GAAP net income rose to $1,010 million from $775 million[54]. - The GAAP operating margin improved to 17% from 15% year-over-year, with a non-GAAP operating margin of 33.5% compared to 31%[54]. - Free cash flow for the latest quarter was $592 million, with a non-GAAP free cash flow margin of 17.5%[55]. Guidance and Projections - The company raised its 2025 subscription revenue guidance, expecting a 250 basis points free cash flow margin expansion year-over-year[7]. - For Q4 2025, the company expects subscription revenues between $3,420 million and $3,430 million, representing a growth of 19.5% year-over-year[24]. - Full-year 2025 subscription revenues are projected to be between $12,835 million and $12,845 million, reflecting a growth of 20.5% year-over-year[26]. - The company expects a GAAP operating margin of 14% and a non-GAAP operating margin of 30% for the quarter ending December 31, 2025[58]. - Projected GAAP subscription gross margin for the twelve months ending December 31, 2025 is 80%, with a non-GAAP subscription margin of 83.5%[59]. - The effective non-GAAP tax rate is projected to be 20% for the upcoming reporting periods[55]. - The company’s GAAP net cash provided by operating activities as a percentage of total revenues is expected to be 41% for the twelve months ending December 31, 2025[59]. Operational Highlights - Current remaining performance obligations (cRPO) stood at $11.35 billion, representing a 21% year-over-year growth and 20.5% in constant currency[3]. - The company had 103 transactions exceeding $1 million in net new annual contract value (ACV) during Q3, with 553 customers having more than $5 million in ACV, an 18% year-over-year growth[3]. - Cash flows from operating activities for the nine months ended September 30, 2025, totaled $3.206 billion, compared to $2.632 billion in 2024, indicating a growth of 21.7%[51]. - Total current liabilities decreased to $7.867 billion as of September 30, 2025, down from $8.358 billion at the end of 2024, a reduction of 5.9%[48]. - Cash and cash equivalents at the end of the period were $2.734 billion, an increase from $1.893 billion at the end of September 2024, representing a growth of 44.5%[51]. - Stock-based compensation for the three months ended September 30, 2025, was $492 million, compared to $426 million in 2024, reflecting an increase of 15.5%[51]. - The company reported a total of $1.820 billion in goodwill as of September 30, 2025, up from $1.273 billion at the end of 2024, an increase of 43%[48]. - Net cash used in investing activities for the nine months ended September 30, 2025, was $1.191 billion, compared to $1.763 billion in 2024, a decrease of 32.4%[51]. Strategic Initiatives - ServiceNow introduced AI Experience, a new user interface for enterprise AI, enhancing user interaction with built-in governance and security[8]. - A new regional innovation hub and AI Institute in West Palm Beach, Florida, is projected to create over 850 jobs and deliver an economic impact of $1.8 billion over five years[8]. - ServiceNow is actively participating in upcoming investor conferences to enhance market presence and investor relations[32]. - The company emphasizes the importance of constant currency adjustments for revenue and performance obligations to facilitate year-over-year comparisons[36]. - ServiceNow's non-GAAP financial measures are designed to provide supplemental information to investors for better analysis of operating results[38]. Stock and Shareholder Information - ServiceNow's Board of Directors approved a five-for-one stock split, pending shareholder approval[4]. - The company plans to provide forward-looking guidance based on the 30-day average of foreign exchange rates for September 2025[2].