ServiceNow: Q1 Performance Shows Platform Strength and AI Momentum
TL:DR;
ServiceNow's Q1 2025 results exceeded expectations with 22% CRPO growth and 72 million-dollar deals. The company is seeing accelerated adoption of its AI solutions, strong growth in public sector and manufacturing verticals, and successful expansion beyond IT into CRM and business workflows. Despite macroeconomic uncertainties, ServiceNow maintained its full-year outlook, positioning itself as both a cost-saving tool and innovation enabler for enterprises navigating challenging economic conditions.
Introduction
In today's complex economic landscape, enterprises face the dual challenge of cutting costs while accelerating digital transformation. ServiceNow's Q1 2025 results demonstrate how the company is uniquely positioned to address these challenges, with its unified platform approach and AI capabilities driving continued growth despite broader market uncertainties.
Strong Performance Metrics
ServiceNow's Q1 results exceeded expectations, with Current Remaining Performance Obligations (CRPO) growth of 22% year-over-year, 150 basis points ahead of guidance. The company reported $3.03 billion in subscription revenue, representing 19.5% year-over-year growth. Particularly impressive was the company's ability to secure 72 deals worth over $1 million in net new Annual Contract Value (ACV), including 9 exceeding $5 million. The company now serves 508 customers with over $5 million in ACV, a 20% increase from the previous year.
GenAI Adoption Accelerating
ServiceNow's AI investments are clearly paying dividends. Now Assist and PRO+ solutions are seeing rapid customer uptake, with:
• Number of PRO+ deals up 4x year-over-year
• Average deal size up 33% compared to Q4
• 39 deals including three or more PRO+ products
• Strong growth across ITSM, ITOM, SecOps, and Creator workflows
Customers report significant operational improvements, with AI-powered case deflection rates ranging from 18% to 90%. The recent Moveworks acquisition further strengthens ServiceNow's AI capabilities, adding employee self-service and enterprise search functionality, while bringing 500 AI developers to support future innovation.
Expanding Beyond IT
ServiceNow continues to extend beyond its IT service management roots into adjacent enterprise domains. The company reported particularly strong momentum in:
• CRM and industry workflows, with notable success in EMEA, Japan, and the US markets
• Core business workflows, with Supply Chain offerings growing 60% year-over-year and HR Service Delivery growing 40%
• Public sector, where US Federal business grew 30% despite concerns about potential DOGE (Department of Government Efficiency) impacts
The acquisition of Logik.ai to enhance Configure, Price, Quote (CPQ) capabilities signals ServiceNow's serious intent to challenge established CRM players like Salesforce.
Platform Integration as a Key Differentiator
ServiceNow's ability to serve as a central system of action connecting diverse enterprise systems continues to resonate with large organizations. As one executive noted during the earnings call, "We are the OS for the enterprise," enabling companies to integrate processes at scale while leveraging AI and data. This comprehensive approach helps explain why 19 of ServiceNow's top 20 deals in Q1 included five or more products.
Outlook: Cautiously Optimistic
While acknowledging intensified macroeconomic uncertainty, ServiceNow maintained its full-year 2025 outlook. The company is taking a prudent approach, balancing Q1 upside and favorable currency trends with conservative assumptions around enterprise spending and potential short-term headwinds in the public sector.
Conclusion
ServiceNow appears well-positioned to weather current market uncertainties and potentially gain market share. Its integrated platform strategy—now enhanced with robust AI capabilities—continues to deliver tangible efficiency improvements and cost savings for enterprises, precisely the combination many organizations seek in today's challenging economic environment.
For technology leaders planning digital transformation initiatives in 2025, ServiceNow's expanding portfolio and AI-powered workflow automation capabilities warrant serious consideration, particularly for organizations looking to consolidate vendors and drive operational efficiencies at scale.
“In an era demanding both operational efficiency and strategic innovation, ServiceNow’s unified platform, increasingly supercharged by practical AI, is proving essential. We’re empowering enterprises to cut through complexity, automate intelligently, and unlock significant value across their entire business.”
