TL;DR
ServiceNow reported a “beat-and-raise” Q2 2025: total revenue $3.215B (+22.5% YoY) and subscription revenue $3.113B (+22.5% YoY), lifted guidance for full-year subscription revenue, and doubled down on agentic AI and CRM expansion via the Moveworks acquisition. Results validate ServiceNow’s cloud-workflow + AI strategy but raise two clear tradeoffs: (1) margin upside from scale versus short-term integration & regulatory risk from large M&A, and (2) dependency on enterprise automation demand, which is rate-sensitive.
What the Quarter Delivered
- Total revenue: $3.215 billion, +22.5% YoY (21.5% cc).
- Subscription revenue: $3.113 billion, +22.5% YoY (21.5% cc).
- CRPO / RPO: Current remaining performance obligations $10.92B, +24.5% YoY (21.5% cc).
- Guidance move: Subscription revenue guidance raised by ~$125M to $12.775–12.795B (≈20% YoY).
The Beats: Where ServiceNow Outperformed
- Revenue and subscription growth exceeded consensus and internal guidance across product lines; management described the quarter as “spectacular.” Shares jumped on the release.
- Operating leverage and free cash flow improved, validating efficiency gains.
Cloud Expansion Strategy: AI and CRM Push
Agentic AI Platform
ServiceNow positions “Now Assist” and agentic AI as differentiators—autonomous agents across IT, HR, customer service, and security workflows.
Moveworks Acquisition
A $2.85B deal adds conversational AI, enterprise search, and assistant capabilities to the Now Platform. The deal accelerates CRM and employee-experience penetration.
Product Bundling and CRM Ambition
ServiceNow is targeting CRM and front-office automation, aiming to expand total addressable market.
Guidance and Management Messaging
- Subscription revenue outlook raised $125M. Focus on long-term margin expansion while investing in AI.
- Emphasis on $20M+ accounts and AI agent adoption over seat counts.
Technical and Momentum Snapshot
- Stock rallied post-earnings, trading ~$920–960 range.
- NOW trades around/above 50-day SMA (~$922) but near/below 200-day SMA (~$962).
- RSI provider variance: ~51–55 on some dashboards, intraday fluctuations common.
- Liquidity is strong: 1.5–1.8M shares/day, >$1B daily turnover.
Peer Context
Salesforce (CRM)
Direct competitor in CRM; ServiceNow differentiates through AI-driven workflow automation.
Workday (WDAY)
Overlap in HR workflows; ServiceNow integrating Moveworks for deeper employee experience automation.
Zendesk/Freshworks
Targeted in customer service automation as ServiceNow deploys AI to replace manual ticketing.
Key Risks from Filings
- Regulatory scrutiny: DOJ opened a probe into the Moveworks acquisition.
- Integration risk: Successful absorption of Moveworks critical for margins.
- Enterprise spend sensitivity: Deal timing impacts revenue cadence.
- Operational risk: Platform outages or incidents could harm retention.
Catalysts to Monitor
- Moveworks acquisition progress and DOJ updates.
- Subscription revenue cadence vs raised guidance.
- AI adoption metrics in $20M+ accounts.
- RPO/CRPO growth trends.
- Operating margin evolution post-acquisition.
Investor Takeaway
- Long-term thesis: ServiceNow is successfully scaling beyond ITSM into enterprise-wide AI workflows. The Moveworks deal increases TAM.
- Short-term risks: Regulatory scrutiny, integration costs, and macro-driven deal delays.
- Trading note: Confirm RSI, MACD, and moving average alignment on your charting platform before acting.
Sources
- ServiceNow Q2 2025 results press release.
- SEC filings (Form 10-Q/8-K).
- Earnings call transcript.
- Market commentary: Barron’s, Investopedia.
- Moveworks acquisition coverage: ServiceNow, TechCrunch, Fortune.
- Technical dashboards: TradingView, Barchart, GuruFocus.
