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ServiceNow NOW reported first-quarter 2025 adjusted earnings of $4.04 per share, which beat the Zacks Consensus Estimate by 6.60% and increased 18.5% year over year.
Revenues of $3.09 billion surpassed the consensus mark by 0.18% and increased 18.6% year over year. At constant currency (cc), revenues increased 19.5% year over year to $3.12 billion.
Following the results, NOW shares jumped 9.2% in the pre-market trading.
ServiceNow’s earnings beat the Zacks Consensus Estimate in the trailing four quarters, the earnings surprise being 7.02%, on average. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)
ServiceNow, Inc. Price, Consensus and EPS Surprise
ServiceNow, Inc. price-consensus-eps-surprise-chart | ServiceNow, Inc. Quote
NOW’s Q1 Top-Line Details
Subscription revenues improved 19.1% year over year on a reported basis to $3.01 billion. On a cc basis, revenues increased 20% to $3.03 billion.
Professional services and other revenues increased 4.5% year over year on a reported basis to $83 million and 6% on a cc basis to $84 million.
At the end of the first quarter, the current remaining performance obligations were $10.31 billion, up 22% year over year on a cc basis. Remaining performance obligations, on a cc basis, rose 25.5% year over year to $22.2 billion.
ServiceNow had 72 transactions of more than $1 million in net new annual contract value (ACV) in the first quarter. The company expanded its customer relationships, reaching 508 customers with more than $5 million in ACV at the end of the reported quarter, which represents 20% year-over-year customer growth.
NOW’s Operating Details
In the first quarter, the non-GAAP gross margin was 82%, down 150 bps on a year-over-year basis.
The subscription gross margin was 84.5%, which contracted 100 bps year over year. Professional services and other gross margins were 4% compared with 15.5% in the year-ago quarter.
As a percentage of revenues, operating expenses decreased 300 bps on a year-over-year basis to 64.3%.
ServiceNow’s non-GAAP operating margin expanded 50 bps on a year-over-year basis to 30.9%.
AI Deals Boost NOW’s Global Growth Prospects
ServiceNow partnered with Vodafone Business to launch AI-powered service management solutions. This collaboration aims to enhance customer service by enabling faster query resolution, proactive anomaly detection and streamlined tool deployment.
A new partnership with Aptiv focuses on integrating ServiceNow's AI platform with edge intelligence to improve automation and efficiency across sectors such as telecommunications, automotive, aerospace, defense and industrial industries.
In early 2025, ServiceNow rolled out the "Yokohama" platform update, which focuses on artificial intelligence, data management and user experience enhancements. This release aims to help organizations streamline operations and enhance digital workflows.
Earlier this month, ServiceNow announced the acquisition of Logik.ai, a company specializing in AI-powered and Configure, Price, Quote solutions. This move is set to bolster ServiceNow's CRM offerings, particularly in sales and order management, by integrating advanced AI capabilities.