ServiceNow’s third quarter results were well received by the market, with management attributing the positive outcome to accelerating adoption of its AI-powered workflow solutions and broad-based demand across key verticals. CEO William McDermott emphasized the company’s platform strength in integrating AI for business transformation, noting that the Now Assist suite and AI Control Tower both exceeded internal plans. President and CFO Gina Mastantuono highlighted that sectors like transportation, retail, and U.S. federal government led growth, while renewal rates remained high. McDermott pointed to high-profile customer wins and the rapid shift away from legacy systems as central to ServiceNow’s success.
Is now the time to buy NOW? Find out in our full research report (it’s free for active Edge members).
ServiceNow (NOW) Q3 CY2025 Highlights:
- Revenue: $3.41 billion vs analyst estimates of $3.36 billion (21.8% year-on-year growth, 1.4% beat)
- Adjusted EPS: $4.82 vs analyst estimates of $4.27 (13% beat)
- Adjusted Operating Income: $1.14 billion vs analyst estimates of $1.03 billion (33.5% margin, 11.1% beat)
- Operating Margin: 16.8%, up from 14.9% in the same quarter last year
- Annual Recurring Revenue: $13.2 billion vs analyst estimates of $13.04 billion (21.5% year-on-year growth, 1.2% beat)
- Billings: $2.97 billion at quarter end, up 14.3% year on year
- Market Capitalization: $184.2 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From ServiceNow’s Q3 Earnings Call
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Kash Rangan (Goldman Sachs) asked about integration and implementation of Agentic technology. CEO William McDermott explained that ServiceNow’s platform approach and forward-deployed engineers help customers quickly realize value without extensive outside integration.
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Samad Samana (Jefferies) inquired about the shift to broader AI sales and the impact on future results. McDermott noted Now Assist is now a standard sales motion, and that billions of AI assists deployed today will drive future monetization.
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Aleksandr Zukin (Wolfe Research) pressed for details on demand trends and the impact of renewal cohorts. Mastantuono responded that proactive renewal management pulled some deals into Q3, which strengthens momentum heading into the next quarter.
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Tyler Radke (Citi) asked about the drivers behind the 55x increase in AI consumption. COO Amit Zavery cited Agentic workflows unlocking new use cases and faster customer deployments, especially in complex environments like incident management.
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Bradley Sills (BofA Securities) questioned the success of the hybrid pricing model for Now Assist. Zavery said customers value the flexibility and predictability of combining subscription and consumption pricing, and cited lighthouse accounts as catalysts for broader adoption.
Catalysts in Upcoming Quarters
Looking ahead, the StockStory team will monitor (1) the pace of Now Assist and AI Control Tower adoption across enterprise and government customers, (2) operational leverage from increased AI-driven efficiencies and cloud migration, and (3) progress on integrating MoveWorks post-acquisition. We will also track expansion into industry-specific workflows and the impact of public sector procurement cycles on quarterly sales patterns.
ServiceNow currently trades at $881.50, down from $912.70 just before the earnings. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free for active Edge members).
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