Digital workflow solutions specialist ServiceNow (NOW 6.34%) reported financial results for fiscal 2025's first quarter on Wednesday, April 23, that exceeded analysts' consensus expectations. Adjusted earnings per share (EPS) of $4.04 beat the forecasted $3.83, driven by strong subscription revenue growth. Overall revenue of $3.09 billion was just ahead of expectations and rose 18.5% year over year.
These results reflect a positive quarter for ServiceNow, underscoring its strategic initiatives in AI and subscription-based services.
| Metric | Q1 2025 | Q1 Estimate | Q1 2024 | Change (YOY) |
|---|---|---|---|---|
| Adjusted EPS | $4.04 | $3.83 | $3.41 | 18.5% |
| Revenue | $3.09 billion | $3.083 billion | $2.6 billion | 18.5% |
| Subscription revenue | $3.03 billion | N/A | $2.52 billion | 20% |
| cRPO | $10.31 billion | $10.11 billion | $8.45 billion | 22% |
Source: ServiceNow. Note: Analysts' consensus estimates for the quarter provided by FactSet. YOY = Year over year. cRPO = current remaining performance obligation.
ServiceNow specializes in enterprise cloud computing, providing platforms that streamline and automate digital workflows. Its Now Platform delivers solutions for IT service management, operational efficiency, and enhanced user experiences enterprise-wide. The company emphasizes AI-driven enhancements, where its AI-powered solutions have been crucial in maintaining competitive advantage and driving new growth avenues.
ServiceNow focuses on expanding its AI capabilities and strategic partnerships to bolster its services. It successfully integrates AI technologies to enable operational efficiencies and increase its market reach across various sectors. These initiatives reflect ServiceNow's commitment to innovation and meeting the evolving demands of digital transformation in enterprises.
ServiceNow posted $3.005 billion in subscription revenue in Q1, just above the $2.998 billion that analysts tracked by FactSet forecast. ServiceNow's current remaining performance obligation (cRPO), which measures future subscription and services revenue, increased by 22% in Q1 to $10.31 billion. This aligns closely with broader strategic objectives to nurture subscription and AI competencies.
Highlights from the quarter include significant advancements in AI integration with the launch of its agentic AI service, a platform designed to enhance service management solutions. Strategic partnerships, notably with Aptiv and Vodafone Business, played a pivotal role in ServiceNow's continued AI-driven transformation efforts.
The company also addressed one-time external factors depicting cautious navigation through geopolitical uncertainties. Achievements during Q1 2025 underscore ServiceNow's robust positioning and adaptive strategy.
The outlook for Q2 2025 is optimistic, with ServiceNow forecasting subscription revenue in the range of $3.03 billion to $3.035 billion, translating into 19%-19.5% year-over-year growth. ServiceNow raised full-year subscription guidance and now expects $12.64 billion to $12.68 billion (its prior forecast called for $12.635 billion to $12.675 billion). Management said it remains committed to other full-year guidance metrics and plans strategic initiatives and investment in AI leadership.
Looking further, key areas for investor attention include the ongoing execution of its hybrid pricing model and the impact of macroeconomic conditions such as geopolitical events. ServiceNow also flags its goal to exceed $15 billion in revenue by 2026 and aspires to reach $30 billion, supported by AI-driven workflows and strategic growth plans.
Revenue and net income are presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
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