AI Takeaway
ServiceNow (NOW) delivered strong FY2025 results with revenue growing 20.9% to $13.28B and operating cash flow surging 27.6% to $5.44B, while operating margin expanded 130 bps to 13.7% despite a slight gross margin compression.
Revenue
$13.28B
++20.88% YoY
EPS (Basic)
$1.69
++22.46% YoY
Gross Margin
77.5%
-1.64% YoY
Operating Income
$1.82B
++33.72% YoY
Filed · Analysis updated · Source: SEC EDGAR 10-K filing
Revenue grew 20.9% year-over-year to $13.28B in FY2025, up from $10.98B in FY2024, reflecting continued strong enterprise demand for ServiceNow's cloud-based workflow automation and AI-powered platform solutions.
Source: Source: 10-K Income Statement
Operating income rose 33.7% to $1.82B, with operating margin expanding from 12.4% to 13.7%, demonstrating that revenue growth is outpacing operating expense growth even as R&D investment increased 16.4% to $2.96B.
Source: Source: 10-K Income Statement
Gross margin declined approximately 1.6 percentage points to 77.5% from 79.2%, as cost of revenue grew 30.4%—faster than revenue growth of 20.9%—likely reflecting increased infrastructure and cloud delivery costs associated with scaling AI capabilities.
Source: Source: 10-K Income Statement & Key Ratios
2 more insights available
Upgrade to unlockCost of revenue grew 30.4% in FY2025, significantly outpacing revenue growth of 20.9%, compressing gross margin by ~160 bps to 77.5%. As ServiceNow continues to embed AI capabilities into its platform, infrastructure and compute costs may continue to pressure gross margins if not offset by pricing power or efficiency gains.
Source: Source: 10-K Income Statement & Key Ratios
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Upgrade to unlockReported EPS of $0.92 versus the $0.89 analyst consensus — a +3.2% beat for FY2025.
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Revenue | $13.28B | $10.98B | +20.88% |
Cost of Revenue | $2.98B | $2.29B | +30.43% |
Gross Profit | $10.29B | $8.7B | +18.37% |
Operating Income | $1.82B | $1.36B | +33.72% |
Net Income | $1.75B | $1.43B | +22.67% |
EPS (Basic) | $1.69 | $1.38 | +22.46% |
EPS (Diluted) | $1.67 | $1.37 | +21.90% |
R&D Expense | $2.96B | $2.54B | +16.40% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Total Assets | $26.04B | $20.38B | +27.74% |
Current Assets | $10.47B | $9.19B | +13.98% |
Total Liabilities | $13.07B | $10.77B | +21.35% |
Current Liabilities | $10.44B | $8.36B | +24.95% |
Stockholders' Equity | $12.96B | $9.61B | +34.92% |
Cash & Equivalents | $3.73B | $2.3B | +61.72% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Cash Flow | $5.44B | $4.27B | +27.58% |
Investing Cash Flow | $-1.69B | $-2.5B | +32.47% |
Financing Cash Flow | $-2.34B | $-1.34B | -74.24% |
Share Buybacks | $1.84B | $696M | +164.37% |
D&A | $738M | $564M | +30.85% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Gross Margin | 77.5% | 79.2% | -1.64% |
Operating Margin | 13.7% | 12.4% | +1.32% |
Net Margin | 13.2% | — | — |
ROE | 13.5% | — | — |
ROA | 6.7% | — | — |
Current Ratio | $1.003 | — | — |
Debt to Equity | $1.008 | — | — |
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ServiceNow delivered strong FY2025 results with revenue of $13.28B, up 20.9% year-over-year, and net income of $1.75B, up 22.7%. Operating cash flow grew 27.6% to $5.44B, highlighting the company's high-quality, cash-generative business model.
ServiceNow's 20.9% revenue growth to $13.28B in FY2025 was driven by continued enterprise adoption of its cloud-based workflow automation and AI-powered platform. The company also significantly expanded its balance sheet, with total assets growing 27.7% to $26.04B, reflecting scale investments to support future growth.
ServiceNow's operating margin improved by approximately 1.3 percentage points to 13.7% in FY2025, reflecting operating leverage as revenue grew faster than operating expenses. However, gross margin declined about 1.6 percentage points to 77.5%, as cost of revenue grew 30.4%—faster than revenue—likely due to AI infrastructure scaling costs.
Key risks inferred from the FY2025 financial data include gross margin compression from rapidly rising infrastructure costs (cost of revenue up 30.4%), a tight current ratio of ~1.003 that leaves limited short-term liquidity buffer, and a debt-to-equity ratio of ~1.008 indicating meaningful leverage. Additionally, R&D spending of $2.96B (22.3% of revenue) carries execution risk if new AI initiatives do not monetize as expected.
ServiceNow repurchased $1.84B worth of shares in FY2025, a dramatic 164.4% increase from $696M in FY2024. This aggressive buyback program signals management's confidence in the company's long-term value but also contributed to financing cash outflows of $2.34B for the year.