ServiceNow (NOW.US) shares are up 10% in pre-market trading today, following the company’s stronger-than-expected first-quarter 2025 earnings report. As a leader in enterprise software, ServiceNow is well known for its AI-powered workflow solutions that streamline operations. The company beat market expectations across all key business metrics.
ServiceNow Q1 2025 Results
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Total Revenue: $3.09 billion, up 19% year-over-year (vs. $3.08 billion expected)
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Subscription Revenue: $3.005 billion, +19% YoY (20% in constant currency)
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Gross Profit: $2.44 billion (gross margin 79%, slightly down from 80% YoY due to higher costs)
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Operating Income: $451 million, up 36% YoY
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Net Income: $460 million, compared to $347 million a year earlier
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Diluted EPS: $2.20 vs. $1.67 in the same period last year
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Adjusted EPS: $4.04, exceeding market expectations
Revenue Composition and Geographic Breakdown
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Subscription Revenue Share: 97% of total revenue, with professional services contributing the remaining 3%
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North America: $1.96 billion
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EMEA: $782 million
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Asia and Other Regions: $343 million
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Revenue outside North America: 36% of total
Customer Base Expansion
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508 customers with annual contract value (ACV) over $5 million, up from 425 last year
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72 transactions with new ACV exceeding $1 million during Q1
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Contract Income (Remaining Performance Obligations): $10.31 billion, up 22% YoY
Strategic Initiatives Supporting Growth
ServiceNow’s results reflect its strong execution in meeting growing enterprise demand for AI-driven digital transformation tools. Key strategic developments include:
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The expansion of agentic AI tools across industries to support workflow automation
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The launch of the Government Transformation Suite
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Partnerships with Vodafone and NVIDIA to enhance AI integration
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Acquisitions of Moveworks and Logik.ai to expand the platform’s intelligent capabilities
The company remains optimistic about its outlook. Both subscription and professional services revenues are expected to grow in absolute terms while maintaining their current share of total revenue. Innovations in AI and global expansion are set to remain at the core of ServiceNow’s strategy. With a growing base of large enterprise clients and a stable stream of recurring revenue, ServiceNow is well-positioned to benefit from long-term AI-driven trends
ServiceNow Stock (Daily Chart)
Shares had previously fallen nearly 35% from their highs but have since rebounded strongly. An open near $900 suggests that the stock may test the critical 200-day exponential moving average (EMA200, red line) in today’s session.
Source: xStation5
ServiceNow’s valuation remains demanding, yet the company continues to demonstrate high-growth fundamentals. As a result, traditional valuation multiples such as price-to-earnings (P/E) do not appear to be a red flag for most long-term investors.
Source: XTB Resarch, Bloomberg Finance L.P.
