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FY2025 Q3
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ServiceNow, Inc. earnings call
Buzzberg read
Now Assist on pace to exceed $500M ACV, beating expectations
ServiceNow reported a strong Q3 beat across all top-line and profitability metrics, raised full-year guidance, and highlighted accelerating AI adoption with NowAssist on track to exceed $500M ACV. Management expressed bullish demand trends but noted a potential Q4 headwind from a US government shutdown. Subscription revenue grew 20.5% YoY CC, 100bps above guide high end; CRPO growth 20.5%, 250bps beat.
Buzzberg read Now Assist on pace to exceed $500M ACV, beating expectations ServiceNow reported a strong Q3 beat across all top-line and profitability metrics, raised full-year guidance, and highlighted accelerating AI adoption with NowAssist on track to exceed $500M ACV. Management expressed bullish demand trends but noted a potential Q4 headwind from a US government shutdown. Subscription revenue grew 20.5% YoY CC, 100bps above guide high end; CRPO growth 20.5%, 250bps beat. Read full analysisCollapse analysis
ServiceNow reported a strong Q3 beat across all top-line and profitability metrics, raised full-year guidance, and highlighted accelerating AI adoption with NowAssist on track to exceed $500M ACV. Management expressed bullish demand trends but noted a potential Q4 headwind from a US government shutdown. Subscription revenue grew 20.5% YoY CC, 100bps above guide high end; CRPO growth 20.5%, 250bps beat.
- NowAssist net new ACV beat expectations again; AI products on pace to exceed $500M ACV in 2025, with $1B target for 2026.
- AI agent assist consumption surged 55x since May; AI Control Tower deal volume quadrupled QoQ.
- Full-year guidance raised: subscription revenues +$55M, operating margin +50bps to 31%, FCF margin +200bps to 34%.
Revenue$3.407BReported
EPS$0.96Reported
Gross margin77.28%Reported
Operating margin16.79%Reported
6 grounded callouts
What matters now
The highest-signal changes from the call.
AI
AI agent assist consumption up 55x since May
AI
AI control tower deal volume quadrupled quarter-over-quarter
Show 3 more callouts
Margins
Company raises full-year operating margin and FCF margin guidance
Demand
Federal business strong but Q4 impacted by government shutdown
Demand
Security and risk business crosses $1B ACV
Reported period
Actuals
| Metric | Reported | Change |
|---|---|---|
| Revenue | $3.407B | Reported |
| EPS | $0.96 | Reported |
| Gross margin | 77.28% | Reported |
| Operating margin | 16.79% | Reported |
| Free cash flow | $0.578B | Reported |
| Capex | $0.235B | Reported |
Forward-looking
Forward guidance
| Metric | Period | Range | Midpoint | Status |
|---|---|---|---|---|
| Free cash flow | FY2025 | 34% | 34% | Raised |
| Operating margin | FY2025 | 31% | 31% | Raised |
| Revenue | FY2025 | $12.835B–$12.845B | $12.84B | Raised |
| Revenue | FY2025 Q4 | $3.42B–$3.43B | $3.425B | Raised |
AI, capex & demand read
Management read
Upbeat
Management emphasized record-breaking results, raised guidance, and expressed strong confidence in future growth, using phrases like 'stunning quarterly results' and 'confidence in the future has never been stronger.'
Management AI read
Management highlighted accelerating AI demand, with Now Assist on pace to exceed $500M in ACV this year, 12 deals over $1M including one over $10M, and 55x growth in AI agent assist consumption since May. The AI control tower saw deal volume quadruple quarter-over-quarter, and the company is positioned as the AI platform for business transformation with a billion-dollar AI target for 2026.
Investment and capacity
Management noted lower CapEx due to data center spend rationalization as some workloads move to hyperscalers, contributing to incremental margin expansion potential. The company raised its full-year free cash flow margin target by 200 basis points to 34%.
all 5 named companies below
Companiesreturns since call
Customers
Customers
Bill McDermott
Pure Storage is a reference customer for ServiceNow's AI-powered CRM, signaling adoption in the storage space.
Evidence
“Customers like Thrive and Pure Storage are using ServiceNow CRM to personalize support, connect data, AI, and workflows”
Customers
Bill McDermott
AstraZeneca is an early adopter of ServiceNow's AI Control Tower, validating the product for large-scale governance.
Evidence
“they're using the control tower to manage and govern all their AI initiatives at scale”
Partners
Partners
Bill McDermott
NVIDIA is a marquee customer and partner, with ServiceNow building on NVIDIA Nemotron to deliver next-gen platform capabilities.
Evidence
“the great Nvidia, the world's first $5 trillion company. Congratulations, Jensen, our great friend”
Supply chain
Supply chain
Bill McDermott
AI Control Tower deal volume more than quadrupled quarter-over-quarter, becoming a major entry point for new security and risk management deals. — Rapid adoption of AI Control Tower suggests ServiceNow is gaining share in AI governance and security, pressuring incumbent security vendors.
Evidence
“Our AI control tower deal volume more than quadrupled quarter over quarter in Q3.”
External signals
Supply-chain alpha · 2returns since call
AI agent assist consumption has increased 55x since May 2025, indicating an accelerating adoption hockey stick for usage-based monetization.
Evidence
“AI agent assist consumption has increased over 55X. That's the foundation of a beautiful hockey stick that's coming to you.”
AI Control Tower deal volume more than quadrupled quarter-over-quarter, becoming a major entry point for new security and risk management deals.
Methodology & coverage
Management-only analysis. All 5 validated company mentions are shown. Reported actuals and forward guidance are kept separate. Public evidence is limited to eight short attributed quotes. AI-generated analysis can be incomplete or wrong; verify important claims against the original source.