ServiceNow Q4 2025 Earnings Release

ServiceNow topped Wall Street’s fourth-quarter estimates after the bell on Wednesday, but shares experienced a notable dip of over 3% in after-hours trading. This reaction underscores the market’s complex calculus when evaluating growth versus valuation in the fiercely competitive enterprise software landscape.

Here’s how the company performed against analyst expectations:

• Earnings per share: 92 cents adjusted, surpassing the LSEG consensus of 88 cents.
• Revenue: $3.57 billion, exceeding the anticipated $3.53 billion.

The company reported a robust revenue growth of 20.5% year-over-year, climbing from $2.96 billion in the same period last year. Net income saw a slight increase to $401 million, or 38 cents per share, up from $384 million, or 37 cents per share, in the prior year.

“We hope these results continue to demonstrate the unwavering strength of our business and our truly unique position in the software space,” stated finance chief Gina Mastantuono in comments to the media. This assertion highlights ServiceNow’s confidence in its market differentiation, particularly in a sector increasingly influenced by artificial intelligence.

Adding to shareholder value, the board authorized an additional $5 billion for share buybacks, signaling confidence in the company’s financial health and commitment to returning capital to investors.

Looking ahead, ServiceNow provided guidance for the first quarter, forecasting subscription revenues between $3.65 billion and $3.66 billion. For the full 2026 fiscal year, the company projects subscription revenues in the range of $15.53 billion to $15.57 billion. These projections offer a glimpse into the company’s strategic growth trajectory.

The enterprise software giant elaborated on its recent acquisition strategy, noting that the integration of artificial intelligence company Moveworks is expected to contribute approximately 100 basis points to both full-year and first-quarter subscription revenue growth. Furthermore, it is anticipated to boost first-quarter current remaining performance obligations growth, a key indicator of future revenue from existing contracts.

ServiceNow is actively executing a significant investment strategy aimed at enhancing its artificial intelligence and security capabilities, positioning itself as an “AI control tower” for enterprises. This strategic pivot acknowledges the transformative impact of AI across various business functions and the increasing demand for integrated solutions.

This ambitious acquisition spree has prompted some market scrutiny regarding whether the company is prioritizing inorganic growth to maintain momentum, especially amidst broader concerns about the software sector’s adaptation to the rapid advancements in AI. However, Mastantuono emphasized that these acquisitions are not a deviation from organic growth but rather an acceleration of it.

She further clarified that the company is strategically acquiring to integrate key capabilities that unlock substantial value for its customers and its platform.

In recent months, ServiceNow has made substantial moves in the market. Last month, the company announced its intention to acquire cybersecurity startup Armis for $7.75 billion, a move designed to significantly bolster its cybersecurity offerings and its identity security platform, Veza. This followed the recent closure of its nearly $3 billion acquisition of Moveworks. These strategic acquisitions underscore ServiceNow’s commitment to expanding its footprint in critical technology areas.

Subscription revenues, which represent a substantial portion of ServiceNow’s sales, demonstrated strong performance, rising 21% year-over-year to approximately $3.47 billion in the reported quarter, surpassing the StreetAccount expectation of $3.42 billion. For the entirety of fiscal 2025, subscription revenues grew by 21% to $12.88 billion, showcasing sustained top-line momentum.

The Santa Clara, California-based company also reported a notable increase in its fourth-quarter current remaining performance obligations, which jumped 25% from the previous year to $12.85 billion. This metric is a strong indicator of future revenue committed through contracts, reflecting robust customer demand and sales pipeline.

In parallel with its acquisition strategy, ServiceNow is forging key alliances to enhance its AI ecosystem. The company announced an expanded partnership with Anthropic to better integrate its Claude models for its client base. This initiative complements a similar, three-year deal established earlier this month with competitor OpenAI, demonstrating ServiceNow’s commitment to providing clients with diverse and advanced AI solutions through strategic collaborations. These partnerships are crucial for staying at the forefront of AI innovation and delivering comprehensive workflow automation.