Santa Clara, CA — Shares of ServiceNow (NYSE: NOW) surged over 8% following the release of its first-quarter earnings report, which exceeded Wall Street expectations for both earnings and revenue.
The enterprise software giant posted adjusted earnings of $4.04 per share on revenue of $3.09 billion for the quarter ending March 31, representing year-over-year growth of 18% and 18.5%, respectively. Analysts had forecast earnings of $3.83 per share on revenue of $3.08 billion.
Despite the strong performance, some investors reacted cautiously to the company’s forward guidance. While ServiceNow projected second-quarter subscription revenue of $3.03 billion to $3.035 billion—slightly above consensus estimates—the company expects net new public sector annual contract value (ACV) to remain flat through the remainder of 2025.
This forward-looking commentary sparked mixed sentiment, even as the company reported 22% growth in current remaining performance obligations (CRPO), which reached $10.31 billion, beating the Street’s forecast of $10.11 billion.
Analysts were largely encouraged by the results. RBC Capital’s Matthew Hedberg described the report as a “solid quarter and outlook” that provided reassurance to investors amid broader concerns over enterprise software spending.
TD Cowen’s Derrick Wood echoed this sentiment, calling the earnings print the “best scenario,” highlighting strong Q1 upside and reduced risk in its federal business. Still, others noted that macroeconomic headwinds and reduced government spending could weigh on expectations in the coming quarters.
Investment firm Aristotle Atlantic Partners offered a more cautious take in its Q1 2025 investor letter, noting that ServiceNow had detracted from portfolio performance as guidance during its prior earnings call fell short of expectations.
The firm also highlighted investor concerns tied to economic softness and U.S. government budget cuts, which may limit software revenue growth across the sector this year. ServiceNow stock, which had retreated 24% year-to-date prior to the report, closed at $755.99 on April 21 with a market cap of $161.67 billion.
Even with short-term uncertainty, ServiceNow’s underlying growth metrics remain robust. The company’s subscription revenue climbed 19% to $3 billion, and it reported 72 customer transactions exceeding $1 million in net new ACV in Q1.
It now boasts 508 customers generating over $5 million in annual contract value, up 20% from the same period last year.
ServiceNow has also continued to expand its platform capabilities through strategic acquisitions. In March, the company announced its largest acquisition to date—the $2.85 billion purchase of AI software firm Moveworks.
The deal is expected to enhance ServiceNow’s generative AI capabilities, positioning it strongly in the competitive enterprise software market, especially as AI adoption becomes increasingly central to digital transformation strategies.
Heading into its upcoming Analyst Day on May 5, all eyes will be on how ServiceNow plans to maintain momentum in the face of evolving macroeconomic challenges.
Despite trimming revenue expectations modestly for the next three quarters, analysts believe the company’s differentiated platform, consistent execution, and strategic investments in AI could support long-term growth and share resilience.
With a recent bounce from its lows and increasing institutional interest—110 hedge funds held the stock at the end of Q4 2024 versus 78 in Q3—ServiceNow may still be one of the more compelling large-cap tech plays for investors seeking both innovation and scalability.