Bill McDermott, CEO of ServiceNow Inc., at the Allen & Co. Media and Technology Conference on Thursday, July 10, 2025 in Sun Valley, Idaho, USA.
David Paul Morris | Bloomberg | Getty Images
ServiceNow reported third-quarter results Wednesday that far exceeded Wall Street expectations, and the company also approved a 5-for-1 stock split.
After the bell, the stock rose 4%.
The company’s results and LSEG estimates are as follows:
Earnings per share: $4.82 adjusted vs. $4.27 expected Revenue: $3.41 billion vs. $3.35 billion expected
Subscription revenue, which makes up the bulk of the enterprise software company’s revenue, totaled $3.3 billion in the third quarter, beating StreetAccount estimates of $3.26 billion. Overall revenue increased 22% year over year.
ServiceNow raised its full-year outlook, saying it expects full-year subscription revenue to be in the range of $12.84 billion to $12.85 billion. Last quarter, the company raised its fiscal year guidance to a range of $12.78 billion to $12.8 billion.
Like many software companies, ServiceNow is benefiting from the artificial intelligence revolution that is forcing more companies to adopt tools.
“Companies across every industry are looking to AI as the innovation opportunity of our generation,” CEO Bill McDermott said in a release. He called the results “the clearest demonstration” that companies rely on ServiceNow for these capabilities.
Finance chief Gina Mastatuono told CNBC that annual contract value for ServiceNow’s AI business is expected to exceed $500 million this year, and the company is on track to reach $1 billion by 2026, a goal it set on its investor day.
“The value that AI creates for businesses is something we haven’t seen in a very long time,” she said. “We have real customers. It’s not just hype. We have real values and we’re driving real outcomes for those customers.”
Net income reached $502 million, or $2.40 per share, up from $432 million, or $2.07 per share, in the same quarter in 2024. Current remaining performance obligations amounted to $11.35 billion.
ServiceNow said its fourth quarter guidance takes into account ongoing U.S. government uncertainty and the recent shutdown. The company expects subscription revenue to be between $3.42 billion and $3.43 billion.
“Government’s continued focus on cost efficiency and modernization as it reopens aligns directly with our strengths,” he said, adding that ServiceNow’s U.S. federal business grew more than 30% in the third quarter.
ServiceNow’s board also approved a 5-for-1 stock split scheduled for early December. Mastatuono said the split will make the stock available to more retail investors.
The stock price has fallen about 13% since the beginning of the year.
ServiceNow’s year-to-date stock price chart.
