ServiceNow (NYSE:NOW) executives used the company’s fourth-quarter and full-year 2025 earnings call to address investor concerns about AI disruption, pricing dynamics, and recent acquisitions, while pointing to accelerating net new ACV growth, strong profitability, and a 2026 outlook calling for roughly 20% subscription revenue growth.
Q4 results topped guidance as net new ACV accelerated
Chairman and CEO Bill McDermott said ServiceNow’s fourth-quarter results “beat expectations handily,” with net new ACV growth accelerating both sequentially and year over year. McDermott highlighted 21% subscription revenue growth in the quarter (19.5% in constant currency), which he said came in 1.5 points above the high end of guidance. He noted Moveworks’ contribution to subscription revenue in the quarter was “de minimis.”
The company cited continued large-deal activity, including 244 deals greater than $1 million in net new ACV during Q4, including nine with new logos. Mastantuono said ServiceNow posted a 98% renewal rate in the quarter. She also said the company ended 2025 with over 8,800 customers, including 603 generating more than $5 million in ACV, and that customers contributing $20 million or more increased more than 30% year over year.
AI products and “platform” positioning dominated the discussion
McDermott pushed back on a “speculation” theme that AI will “eat software companies,” arguing that “AI plus workflows” is required because workflow orchestration is deterministic and provides governance and predictability. He positioned ServiceNow as a semantic layer for embedding AI into enterprise workflows and described the company’s AI Control Tower as central to enterprise governance.
Management highlighted AI adoption metrics and monetization momentum. McDermott said monthly active users grew 25%, and that Now Assist net new ACV outperformed expectations in Q4 and surpassed $600 million in ACV. He said Now Assist net new ACV more than doubled year over year in Q4 and included 35 deals over $1 million in the quarter. Mastantuono added that Now Assist is tracking toward a $1 billion-plus target for 2026, and said Q4 deals greater than $1 million nearly tripled quarter over quarter, with customers spending more than $1 million up more than 40%.
Executives also described how AI monetization is expanding through a hybrid pricing approach. In Q&A, McDermott said customers are renewing and adding Assist packs “when they’re running out of tokens,” and he reiterated that the company has been expecting a “hockey stick” dynamic around token reloads as agentic use cases scale.
Product momentum: data, CRM, creator, and security workflows
McDermott called out strength across workflow businesses and emphasized adoption of products tied to data and automation. He said Workflow Data Fabric was in 16 of the top 20 Q4 deals and that attach rates increased in every quarter of 2025. He also said RaptorDB Pro more than tripled net new ACV year over year in Q4, including 13 deals above $1 million.
Mastantuono outlined performance by workflow category and product area, including:
- Technology Workflows: Net new ACV growth accelerated in Q4; ITOM net new ACV grew nearly 50% year over year. ServiceOps appeared in 16 of the top 20 deals and ITAM in 17.
- Security and Risk: Included in 19 of the top 20 deals and drove nearly 40% net new ACV growth year over year.
- CRM: Included in 16 of the top 20 deals, with sequential acceleration in net new ACV; McDermott said CRM had its largest quarter in history.
- Creator Workflows: Included in 19 of the top 20 deals, with 32 deals over $1 million in ACV.
The company also highlighted CPQ traction and referenced Logik.io as an example of M&A supporting product expansion. Mastantuono said Logik’s customer count as part of ServiceNow nearly quadrupled year over year in Q4, citing go-to-market synergies.
Profitability, cash flow, and share repurchases
ServiceNow reported continued margin expansion. McDermott said Q4 operating margin was 31%, one point above guidance. Mastantuono reported Q4 non-GAAP operating margin of 31% and said free cash flow margin was 57%, up 950 basis points year over year.
For full-year 2025, Mastantuono said operating margin was 31%, up 150 basis points year over year, and free cash flow margin was 35%, up 350 basis points and 100 basis points above raised guidance. Total 2025 free cash flow was $4.6 billion, up 34% year over year. The company ended 2025 with over $10 billion in cash and investments.
Management also announced additional capital returns. Mastantuono said ServiceNow repurchased about 3.6 million shares in Q4 (adjusted for the stock split) and had about $1.4 billion remaining on its authorization at quarter-end. The board authorized an additional $5 billion for repurchases and the company plans to launch a $2 billion accelerated share repurchase program.
2026 outlook: ~20% subscription revenue growth; investments in cloud and AI
For 2026, ServiceNow guided subscription revenues of $15.53 billion to $15.57 billion, representing 19.5% to 20% year-over-year constant-currency growth, including a 1% contribution from Moveworks. The company guided subscription gross margin of 82%, reflecting data center investments related to public cloud, geographic expansion, and AI. Operating margin is expected to be 32% (up 100 basis points year over year), and free cash flow margin is expected to be 36%.
For Q1, ServiceNow forecast subscription revenues of $3.65 billion to $3.655 billion (18.5% to 19% constant-currency growth), including a 1-point contribution from Moveworks. The company also cited a 1.5-point headwind from a mix shift of on-prem to hosted revenue, “partially driven by the strong adoption” of hyperscaler offerings. Q1 CRPO growth is expected to be 20% in constant currency, with an operating margin of 31.5%.
On acquisitions, McDermott said ServiceNow does not have “a large-scale M&A on the roadmap” after recent deals, emphasizing that prior transactions were targeted for “talent” and “technology,” not revenue. Mastantuono said the company expects to close Armis in the early second half of the year and, based on timing and estimated revenue adjustments, expects about a 1-point subscription revenue contribution in 2026, along with up to 50 basis points of operating margin headwind in 2026 that it expects to absorb in 2027 while continuing operating margin expansion.
About ServiceNow (NYSE:NOW)
ServiceNow (NYSE: NOW) is a cloud computing company that builds enterprise software to manage digital workflows and automate business processes. Its offerings are designed to replace manual work and legacy systems with cloud-based, service-oriented applications that support IT operations, customer service, human resources, security response and other enterprise functions.
The company’s flagship product family is the Now Platform, a suite of subscription software and platform services that includes IT Service Management (ITSM), IT Operations Management (ITOM), IT Business Management (ITBM), Customer Service Management (CSM), HR Service Delivery, Security Operations and Asset Management.
