ServiceNow Inc (NYSE:NOW) Reports Strong Q3 2025 Earnings, Beats Estimates and Announces Stock Split

ServiceNow Inc (NYSE:NOW) delivered a robust third-quarter performance that exceeded analyst expectations, with particular strength in subscription revenue growth and a significant announcement regarding its capital structure. The enterprise workflow automation company reported financial results for the quarter ended September 30, 2025, showcasing sustained momentum in its core business operations.

Financial Performance Versus Estimates

The company posted total revenues of $3.41 billion for the third quarter, representing a 22% year-over-year increase and surpassing analyst expectations of $3.39 billion. This performance was primarily driven by subscription revenues, which reached $3.30 billion and grew 21.5% compared to the same period last year.

On the profitability front, ServiceNow demonstrated even stronger results relative to expectations:

• Non-GAAP earnings per share of $4.82, exceeding estimates of $4.31 by approximately 13%
• Subscription gross margin of 80% on a GAAP basis and 83% on a non-GAAP basis
• Operating cash flow of $813 million, representing 24% of total revenues
• Free cash flow of $592 million with a 17.5% margin

The company's current remaining performance obligations (cRPO), which represents contract revenue to be recognized over the next 12 months, reached $11.35 billion, growing 21% year-over-year. This metric suggests continued strong demand for ServiceNow's platform in the coming year.

Market Reaction and Stock Split Announcement

Following the earnings release, ServiceNow shares showed positive momentum in after-hours trading, reflecting investor approval of the company's performance and future outlook. The market response appears to be driven by both the earnings beat and the company's forward guidance.

In a significant corporate action, ServiceNow's Board of Directors approved a five-for-one stock split, subject to shareholder approval at a Special Meeting scheduled for December 5, 2025. This move typically aims to make shares more accessible to a broader range of investors and often generates positive market sentiment.

Business Highlights and Strategic Initiatives

The quarter featured several notable developments across ServiceNow's business:

• The company completed 103 transactions exceeding $1 million in net new annual contract value
• Expanded its customer base with 553 clients generating over $5 million in ACV, representing 18% year-over-year growth
• Launched significant product innovations including AI Experience, a new user interface for enterprise AI
• Strengthened partnerships with NVIDIA, FedEx Dataworks, and the U.S. General Services Administration
• Made strategic investments in Zaelab to accelerate CRM-driven modernization and closed a $750 million investment in Genesys

Forward Guidance and Analyst Expectations

Looking ahead, ServiceNow provided fourth-quarter 2025 subscription revenue guidance of $3.42-$3.43 billion, representing approximately 19.5% year-over-year growth. This compares to analyst estimates of $3.54 billion for the quarter, suggesting a more conservative outlook that may reflect current macroeconomic conditions, particularly in the federal government sector where budget constraints and recent government shutdowns may impact deal timing.

For the full year 2025, the company expects subscription revenues of $12.835-$12.845 billion, aligning with its long-term growth trajectory. The guidance anticipates non-GAAP operating margin of 31% and free cash flow margin of 34%, indicating continued focus on profitability and cash generation.

Conclusion

ServiceNow's third-quarter results demonstrate the company's ability to maintain strong growth while expanding profitability, with particular strength in AI-driven workflow automation solutions. The combination of earnings beats, solid guidance, and strategic initiatives like the stock split and partnership expansions positions the company for continued success in the enterprise software market.

For more detailed earnings analysis and future estimates, readers can review additional information here.

Disclaimer: This article provides financial analysis for informational purposes only and should not be considered investment advice. All investment decisions should be based on individual research and consultation with financial advisors.