ServiceNow Exceeds Q4 Expectations

• Q4 subscription revenues rose 21% year-over-year to $3.47 billion, beating the $3.42 billion estimate, while current remaining performance obligations jumped 25% to $12.85 billion
• The company issued strong guidance with fiscal 2026 subscription revenue projected at $15.53-$15.57 billion, and the board approved $5 billion for stock buybacks
• CFO Gina Mastantuono stated acquisitions are '100% not a pivot away from organic growth' but rather an acceleration, with the Armis deal expected to contribute 100 basis points to full-year subscription revenue growth

ServiceNow Q4 Earnings Summary

Financial Performance:

ServiceNow exceeded Q4 expectations, reporting revenue of $3.57 billion versus $3.53 billion expected, representing 20.5% growth year-over-year from $2.96 billion. Net income reached $401 million ($0.38 per share). Subscription revenues rose 21% to $3.47 billion, beating the $3.42 billion estimate. Full fiscal year 2025 subscription revenues grew 21% to $12.88 billion.

Guidance:

The company issued strong forward guidance with Q1 2026 subscription revenues projected between $3.65-$3.66 billion and full-year 2026 forecast of $15.53-$15.57 billion. Current remaining performance obligations (backlog) jumped 25% year-over-year to $12.85 billion.

Strategic Acquisitions:

ServiceNow is executing a major acquisition strategy focused on AI and security capabilities. Recent deals include cybersecurity startup Armis and identity security platform Veza. The Armis acquisition is expected to contribute 100 basis points to subscription revenue growth in both Q1 and full-year 2026. CFO Gina Mastantuono emphasized these acquisitions are "100% not a pivot away from organic growth" but rather an acceleration strategy.

Market Positioning:

The enterprise software company is positioning itself as an "AI control tower" for businesses. ServiceNow announced expanded partnerships with Anthropic to integrate Claude AI models and previously partnered similarly with other AI providers.

Capital Allocation:

The board approved $5 billion for share buybacks, demonstrating confidence in the company's financial position.

Market Implications:

Results demonstrate resilience in enterprise software amid concerns about AI disruption, with management emphasizing ServiceNow's "one-of-one" position in the software space.