- Increased Full-Year Subscription Revenue Forecast: Now expects subscription revenue to be between $12.78 billion and $12.80 billion, up from the previous range of $12.64 billion to $12.68 billion, topping the $12.68 billion estimate.
- Steady Subscription Gross Margin: The subscription adjusted gross margin is projected at 83.5%, closely matching the estimate of 83.6%.
- Third Quarter Projections: Subscription revenue is anticipated to be in the range of $3.26 billion to $3.27 billion, ahead of the $3.21 billion estimate.
- Second Quarter Highlights:
- Adjusted EPS increased to $4.09 from $3.13 year-over-year, surpassing the $3.58 estimate.
- Total revenue was $3.22 billion, reflecting a 22% year-over-year growth and exceeding the $3.12 billion estimate.
- Subscription revenue reached $3.11 billion, a 22% year-over-year increase, above the estimated $3.04 billion.
- Professional Services & Other revenue reached $102 million, a 20% year-over-year increase, higher than the expected $88.5 million.
- Adjusted gross profit grew by 20% year-over-year to $2.60 billion, above the $2.54 billion estimate.
- Gross Margin Details:
- Overall adjusted gross margin stood at 81%, compared to 82.5% year-over-year and close to the 81.4% estimate.
- Subscription adjusted gross margin was 83% compared to 85% year-over-year, near the 83.5% estimate.
- Professional Services & Other adjusted gross margin achieved 14%, surpassing the 8.5% estimate.
- Performance Obligations: Remaining performance obligations totaled $23.9 billion, with a current remaining performance obligation of $10.92 billion, higher than the $10.49 billion estimate.
- Adjusted Free Cash Flow: Increased by 49% year-over-year to $535 million, above the $444.2 million estimate.
- Growth in ACV Expectations: “Now Assist” exceeded net new ACV expectations due to increased deal volume and size, maintaining trajectory towards a $1 billion ACV target by 2026.
- Market Positioning: The company is well-positioned for the second half of the year, supported by a solid pipeline and strong CRM market momentum.
- Customer Renewals: A larger-than-average customer cohort is set to renew in Q4 2025, with short-term headwinds expected to subside post-renewal.
- US Federal Market Conditions: US Federal agencies are adapting to changing budget and mission demands, a trend likely to persist into Q3 2025.
Servicenow Inc on Smartkarma
Analyst coverage of ServiceNow Inc on Smartkarma has been positive, with insights from top independent analysts like Baptista Research shedding light on the company’s growth prospects. In a report titled “ServiceNow Inc.: Government Transformation Suite Expansion & Key Growth Catalysts!“, Baptista Research highlighted the strong financial results for the first quarter of 2025, emphasizing substantial growth in key performance indicators despite a challenging macroeconomic environment. The focus on expanding artificial intelligence capabilities and enhancing customer relationships were key highlights, with subscription revenue seeing a 20% year-over-year increase in constant currency.
In another report by Baptista Research, titled “ServiceNow: Go-To-Market Strategy & Platform Innovation To Drive Transformative Business Solutions Globally! – Major Drivers“, ServiceNow’s robust financial and operational performance in the fourth quarter of 2024 was underscored. The company registered a notable 21% year-over-year growth in subscription revenue, reflecting a strong customer interest in its services. With a remaining performance obligation of nearly $23 billion, ServiceNow’s ability to capture and retain customers was highlighted as a key strength driving transformative business solutions globally.
A look at Servicenow Inc Smart Scores
| Factor | Score | Magnitude |
|---|---|---|
| Value | 2 | |
| Dividend | 1 | |
| Growth | 5 | |
| Resilience | 4 | |
| Momentum | 5 | |
| OVERALL SMART SCORE | 3.4 |
Smart Score is a compound score for the Company indicating its overall outlook. It is derived by taking an equally weighted average of underlying Factor scores computed by Smartkarma
ServiceNow Inc, a company providing enterprise IT management software, shows a promising long-term outlook based on Smartkarma Smart Scores. With strong scores in Growth and Momentum, indicating robust potential for expansion and a positive market trend, Servicenow Inc is positioned for continued success in the future. Additionally, the company demonstrates resilience in the face of challenges, as reflected in its high Resilience score. While the Value and Dividend scores are not as high, the overall outlook for ServiceNow Inc remains positive due to its stellar performance in key growth and momentum indicators.
ServiceNow Inc caters to customers across the United States with its prepackaged computer software and IT service management platform. The company’s focus on innovation and technology-driven solutions aligns well with its high Growth and Momentum scores, suggesting a bright future ahead. Despite moderate scores in Value and Dividend categories, ServiceNow Inc’s overall outlook remains strong, supported by its reputation for providing cutting-edge IT management solutions to a wide range of clients.
Disclaimer: This article by Smartkarma is general in nature and based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Note that our articles may not factor in the latest price-sensitive company announcements or qualitative material.
While all reasonable care has been taken in the preparation, Smartkarma makes no assurance about the accuracy of any generated data or content. All content is indicative only and should be independently checked for accuracy and confirmed before use. Smartkarma accepts no responsibility for any loss or damage caused as a result of any inaccuracy or error within the Lab online tools or generated data.
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