ServiceNow’s first quarter results were well received by the market, reflecting management’s focus on broad-based workflow adoption and rapid expansion in artificial intelligence-driven solutions. CEO Bill McDermott credited the quarter’s growth to substantial increases in large enterprise deals, particularly within technology, CRM, and public sector workflows. The company highlighted significant acceleration in its Pro Plus and Now Assist AI products, noting that the number of Pro Plus deals more than quadrupled year over year. Management also emphasized strong renewal rates and customer expansion, with CFO Gina Mastantuono noting, “Our renewal rate remained best in class at 98%, underscoring the consistent value that ServiceNow delivers to our customers.”
Is now the time to buy NOW? Find out in our full research report (it’s free).
ServiceNow (NOW) Q1 CY2025 Highlights:
- Revenue: $3.09 billion vs analyst estimates of $3.08 billion (18.6% year-on-year growth, in line)
- Adjusted EPS: $4.04 vs analyst estimates of $3.83 (5.4% beat)
- Adjusted Operating Income: $953 million vs analyst estimates of $928 million (30.9% margin, 2.7% beat)
- The company provided subscription revenue guidance for the full year of $12.66 billion at the midpoint
- Operating Margin: 14.6%, up from 12.8% in the same quarter last year
- Market Capitalization: $208.5 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions ServiceNow’s Q1 Earnings Call
- Keith Weiss (Morgan Stanley) asked whether macro uncertainty or elongated sales cycles factored into guidance. CFO Gina Mastantuono replied that guidance incorporates a healthy degree of conservatism, but “demand that we’re seeing remains strong,” with comprehensive pipeline analysis supporting outlook.
- Kash Rangan (Goldman Sachs) inquired about the impact of the Moveworks acquisition and any changes to the sales playbook amid customer tariff concerns. President and Chief Product Officer Amit Zavery explained Moveworks will accelerate the roadmap and user experience, while CEO Bill McDermott emphasized continued strong demand despite macro variables.
- Mark Murphy (JPMorgan) questioned ServiceNow’s ambitions in CRM and whether the company intends to be a core system of record. McDermott confirmed broader aspirations, aiming to deliver a fully integrated, AI-powered front office that connects sales and service for improved customer productivity.
- Alex Zukin (Wolfe Research) asked about the quarterly mix shift in workflows and whether manufacturing and federal results reflected pull-forward demand. Mastantuono noted that all workflows continue to perform well and no material pull-forwards were seen, attributing results to strong execution.
- Kylie (Citi) asked about the adoption trajectory for Pro Plus and its importance to growth targets. Zavery said adoption is expected to continue accelerating, and Mastantuono reiterated Now Assist and AI as key contributors to ServiceNow’s multi-year growth goals.
Catalysts in Upcoming Quarters
In coming quarters, our analysts will watch (1) the adoption rate and customer expansion of AI-powered products like Pro Plus and AgenTek, (2) integration progress and customer impact from the Moveworks and Logic.ai acquisitions, and (3) continued momentum in public sector and regulated industry segments. Execution on these priorities, along with the rollout of new workflow automation features, will be critical markers of ServiceNow’s ability to sustain growth.
ServiceNow currently trades at $1,007, up from $814.07 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free).
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