Enterprise software companies rarely stop talking about their AI capabilities. What’s harder to find are companies proving, quarter after quarter, that AI actually works. Pilots often stall under integration headaches, while promised ROI remains largely theoretical. Only a handful of companies can point to consistent results showing AI driving real revenue, wider margins, and stickier customer relationships.
ServiceNow’s fourth-quarter (Q4) and full-year fiscal (FY25) results suggest it sits firmly in that smaller camp.
On January 28, the cloud-based software company closed Q4 with subscription revenue of $3.47 billion, up 21% year over year, and full-year subscription revenue of $12.88 billion, also up 21%. Both figures beat market expectations and analyst estimates. Moreover, current remaining performance obligations (cRPO) rose 25% year over year to $12.85 billion, signaling strong demand for ServiceNow’s platform and AI-driven workflows extending into 2026.
“We’ve architected our business to thrive in the AI era, and the results show it. Our outperformance came from three key drivers: a unified AI platform, disciplined capital allocation, and operational efficiencies powered by AI itself,” Amit Zavery, president, chief operating officer, and chief product officer at ServiceNow, told me. “Heading into 2026, our focus is to scale our customers through a secure, platform-first AI approach, deepen partner co-innovation and build vertical AI capabilities.”
ServiceNow also used the earnings announcement to underscore how partnerships — not just products — are becoming a force multiplier for its AI strategy. The company expanded its relationship with Anthropic to integrate Claude models more deeply into the ServiceNow AI Platform, positioning Claude as a core engine behind its enterprise-grade AI coding and development experience.
The goal is to let developers of all skill levels build and deploy agentic workflows with governance embedded by default, rather than bolted on after the fact. By bringing leading Claude models directly into the platform, ServiceNow is also targeting highly regulated industries — such as financial services, government and healthcare — that demand secure, compliant AI usage with clear guardrails.
Beyond software, ServiceNow announced a strategic commitment with Fiserv to embed AI directly into commerce and financial services operations, using agentic workflows to improve IT resilience and customer experiences at scale. In a very different but equally telling vertical, the company expanded its partnership with Panasonic Avionics Corporation to power in-flight engagement across more than 300 airline customers worldwide. Panasonic Avionics plans to deploy ServiceNow’s AI-driven CRM end-to-end, unifying customer operations on a single platform.
Zavery said partnerships matter only when they expand customer value and strengthen the platform’s economics, with each partner bringing distinct capabilities and differentiation.
“Anthropic helps us accelerate secure app development. OpenAI is co-innovating on things like voice AI and speech-to-speech. Fiserv embeds AI into financial ops. Panasonic powers airline service at global scale,” he explained. “We’ve built an open platform that works across hyperscalers, SIs, LLMs, and ISVs. Customers want choice with control, and we deliver both.”
AI as a Growth Engine Strategy
ServiceNow’s management credited the outperformance to AI-led simplification rather than cost-cutting. Net new annual contract value accelerated, renewal rates held at 98%, and customers expanded usage across more workflows. The platform’s hybrid pricing model — combining per-seat licenses with consumption-based AI usage — is beginning to reshape buying behavior.
AI adoption tied directly to workflows tends to scale faster and stick longer than standalone copilots. ServiceNow guided to the high end of 20% subscription revenue growth for 2026, alongside a 32% non-GAAP operating margin and a 36% free cash flow margin.
Executives describe the strategy as “radical simplification”: using AI to automate workflows, reduce operational friction and lower customer costs. Customers across multiple industries began purchasing Assist AI Packs in the fourth quarter, an early sign that consumption-based AI is moving from pilot to production.
“We’re seeing record deal sizes, expanding customer adoption, and AI deployments that are driving real measurable value. We’ve built our platform so that every innovation, whether it’s AI agents, industry solutions, or partner integrations, can scale across the enterprise with minimal friction,” said Zavery.
Now Assist Emerges as the Revenue Driver
If one product defined the quarter, it was ServiceNow’s AI assistant Now Assist. The product crossed $600 million in annual contract value (ACV) in Q4 and is tracking toward a $1 billion run rate in 2026. Deals larger than $1 million in ACV nearly tripled quarter over quarter, underscoring growing confidence among large enterprises.
Now Assist spans IT service management, customer service, CRM, HR, DevOps and sales, positioning it less as a chatbot and more as a unifying AI layer across the Now Platform. The acquisition of Moveworks — closed in December 2025 — strengthened enterprise search and conversational AI.
“We’re seeing especially strong demand in regulated industries, where our AI Control Tower and multi-model strategy help customers move fast and stay compliant,” Zavery told me.
AI agents can now automate as much as 89% of support workflows in certain implementations, allowing human operators to focus on exceptions and judgment calls. Internally, the company reports more than $350 million in cost savings over the past 12 months from AI-driven efficiencies.
Competing for the Front Door to Enterprise AI
ServiceNow’s results land amid intensifying competition for the “front door” to enterprise AI.
Microsoft continues to push Copilot deeper into Microsoft 365 and Teams. Salesforce is betting that Einstein and AI-powered CRM will anchor enterprise workflows. Atlassian, Zendesk, Freshservice and BMC are all layering AI into their platforms, often with simpler pricing and faster onboarding for midmarket customers.
ServiceNow’s counterargument is scale and unification. It holds more than 40% share of the IT service management market and serves roughly 85% of S&P 500 companies. Analyst firms including Gartner and Forrester continue to position the ServiceNow AI Platform as a leader in a variety of workflow markets, ranging from IT operations to customer engagement. Likewise, ServiceNow positions itself as the orchestration layer that connects systems in IT, HR, customer service, security, and operations. AI Control Tower and Workflow Data Fabric are designed to provide enterprises with centralized visibility and governance of AI agents, data and workflows, a critical differentiator as regulators and boards of directors begin to scrutinize AI risk.
Despite the momentum, ServiceNow’s challenges remain real as the platform’s breadth brings complexity. Customers, especially non-technical customers and smaller companies, still report high learning curves, heavy customization, and high costs. Performance issues, such as slow search and unresponsive user interfaces, have not gone away, despite the company’s heavy investment in infrastructure and optimization.
Competitors like Freshservice and Jira Service Management continue to win on simplicity and faster time to value, especially outside the largest enterprises. BMC Software, a Houston-based company also known as BMC, is a match for ServiceNow’s enterprise credibility in IT service management, but has not yet shown the same level of AI-driven growth. ServiceNow employs a strong mergers-and-acquisitions strategy, using targeted deals to expand its AI capabilities and strengthen its platform, but managing governance of legacy systems and third-party AI models remains a problem area for customers.
From a financial perspective, the company is balancing growth with long-term investment discipline. Commitments include a CA$110 million, multi-year push to support AI adoption in Canada’s public sector and the acquisitions of cybersecurity firms Armis and Veza — expected to close in 2026 — signal a broader push into AI-driven security and identity in an agentic AI world.
For now, the numbers suggest that ServiceNow’s AI-first approach is not only resonating with customers but reshaping the company’s financial trajectory.
“Our biggest risk is fragmentation. Without interoperability and governance, AI won’t scale safely. That’s why we’re so focused on security and control,” said Zavery. “Companies need governance that spans any cloud, any asset, any AI system, and any device if they want to scale AI long-term, and we feel like we are the only company who can offer that. The winners will be those who connect AI, workflows, and people into a single, adaptive system. That’s the future we’re building.”
