ServiceNow Inc (NYSE:NOW) delivered another strong quarter, with revenue of $3.99 billion, up 24.5% year over year and ahead of expectations, while adjusted EPS of $0.90 comfortably beat consensus. Subscription revenue rose 24.5% to $3.88 billion, continuing to demonstrate resilient enterprise demand despite a more cautious IT spending environment. Current remaining performance obligations (cRPO) increased 21% to $13.2 billion, providing healthy revenue visibility, while renewal rates remained exceptionally strong at 98%, highlighting the stickiness of the platform.
AI continues to emerge as the primary growth catalyst. ServiceNow surpassed $1 billion in annual contract value (ACV) for its AI portfolio, a meaningful milestone that demonstrates customers are paying to embed AI directly into existing enterprise workflows rather than replacing them. This quarter reinforces the view that the biggest AI beneficiaries are likely to be established software platforms with deep customer relationships, proprietary enterprise data, and mission-critical workflows. Instead of large language models displacing enterprise software, AI is making platforms like ServiceNow more valuable, increasing automation, productivity, and customer stickiness while creating new monetization opportunities.
Management also reiterated its ambition to build a $1+ billion cybersecurity business, leveraging the recently completed Armis and Veza acquisitions to broaden its end-to-end security offering. Investors should expect these acquisitions to provide an incremental contribution to revenue going forward, while also creating a modest headwind to margins as integration costs are absorbed over the next several quarters.
Management reinforced confidence by raising full-year subscription revenue guidance while maintaining industry-leading profitability targets, including a 31.5% operating margin and 35% free cash flow margin.
For more details, key highlights, and commentary, check out the high-level earnings summary.
