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What changed in ServiceNow's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of ServiceNow's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+435 added−402 removedSource: 10-K (2026-01-29) vs 10-K (2025-01-30)

Top changes in ServiceNow's 2025 10-K

435 paragraphs added · 402 removed · 271 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeTo deliver on this promise, we follow a Global People Strategy that serves as the foundation for how we plan and deliver on employee programming and experiences: People Led Data Driven AI Powered Deliver on the People Pact through a product mindset that puts the user at the center of all program, process, and service delivery design Recruit and retain an inclusive and agile workforce through data use that accelerates growth and mitigates bias Make it easy to create and use AI to maximize talent impact and value 11 Table of Contents Culture and Inclusion Our culture is grounded in our values.
Biggest changeTo deliver on this commitment, we follow a global people strategy that serves as the foundation for how we plan and deliver on employee programming and experiences, built on three principles: People Led Data Driven AI Powered We apply a product mindset that puts the user at the center of program, process and service design.
Employees in certain countries are represented by workers’ councils or employee representatives or have the benefits of collective bargaining arrangements at the national and/or sector level. We have not experienced interruptions of operations or work stoppages due to labor disagreements.
In certain countries, employees are represented by workers’ councils or employee representatives or have the benefits of collective bargaining arrangements at the national and/or sector level. We have not experienced interruptions of operations or work stoppages due to labor disagreements.
Available Information You can obtain copies of our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and other filings with the SEC, and all amendments to these filings, free of charge from our website at www.servicenow.com/company/investor-relations/sec-filings.html as soon as reasonably practicable after we file or furnish them with the SEC.
Available Information You can obtain copies of our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and other filings with the SEC, and all amendments to these filings, free of charge through our website at www.servicenow.com/company/investor-relations/sec-filings.html as soon as reasonably practicable after we file or furnish them with the SEC.
Investors and others should note that we announce material financial information to our investors using our investor relations website (https://www.servicenow.com/company/investor-relations.html), SEC filings, press releases, public conference calls, webcasts and social media. We use these channels, including our website and social media, to communicate with our investors and the public about our company, our products and solutions and other issues.
Investors and others should note that we announce material financial information through our investor relations website (https://www.servicenow.com/company/investor-relations.html), SEC filings, press releases, public conference calls, webcasts and social media. We use these channels, including our website and social media, to communicate with our investors and the public about our company, our products and solutions and other issues.
The SEC maintains an Internet site that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC at www.sec.gov. The contents of, or accessible through, these websites are not incorporated into this filing. Our references to the URLs for these websites are intended to be inactive textual references only.
The SEC maintains a website at www.sec.gov that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. The contents of, or information accessible through, these websites are not incorporated into this filing. Our references to the URLs for these websites are intended to be inactive textual references only.
In support of this, all our employees are eligible to participate in our annual cash bonus plan or, for those in quota-carrying roles, our sales commission plan, in addition to their base pay. We also have a broad-based discretionary equity incentive program and an employee stock purchase plan, which enable employees to share in our success.
All our employees are eligible to participate in our annual cash bonus plan or, for those in quota-carrying roles, our sales commission plan, in addition to base salary. We also have a broad-based discretionary equity incentive program and an employee stock purchase plan, which enable employees to share in our success.
We enter into confidentiality and proprietary rights agreements with our employees, partners, vendors, consultants and other third parties and limit access to our IP and other proprietary information. We also purchase or license IP and technology that we incorporate into our products or services. We continue to grow our global patent portfolio and IP rights that relate to our business.
We enter into confidentiality and proprietary rights agreements with employees, partners, vendors, consultants and other third parties, and we limit access to our IP and other proprietary information. We also purchase or license IP and technology for incorporation into our products or services. We continue to expand our global patent portfolio and other IP rights relevant to our business.
It is possible that the information we post on social media could be deemed to be material information. Therefore, we encourage investors, the media and others interested in our company to review the information we make available on our website and the social media channels listed on our website. 13 Table of Contents
It is possible that the information we post on social media could be deemed to be material information. Therefore, we encourage investors, the media and others interested in our company to review the information we make available on our website and the social media channels listed there. 2025 Annual Report 21 Table of Contents Part I
As our business expands and the industries in which we operate evolve, we increasingly find ourselves in competition with solutions and alternative approaches to solving customer needs, including, among others: • enterprise application software vendors (including cloud-based and traditional on-premises vendors) such as Oracle, SAP, Salesforce and Workday; • new technologies and entrants (including both point-solutions and platform solutions covering a wide range of functionalities); • custom development and in-house solutions; • technology consultants; • systems integrators; and • software resellers.
As our business expands and the industries in which we operate continue to evolve, we compete with a broad range of solutions and alternative approaches, including: • enterprise application software vendors, both cloud-based and on-premises, such as Microsoft, Oracle, SAP, Salesforce and Workday; • new technologies and entrants, including point-solutions and platform solutions, particularly those related to AI; • custom-developed and in-house solutions; • technology consulting firms; • systems integrators; and • software resellers.
Our success depends in part upon our ability to protect our core technology and IP. As of December 31, 2024, we had over 2,000 U.S. and foreign patents, including patents acquired from third parties, and over 600 pending patent applications. We do not believe that our proprietary technology is dependent on any single patent or group of related patents.
Our ability to protect our core technology and IP is an important factor to our success. As of December 31, 2025, we had over 2,000 issued U.S. and foreign patents, including patents acquired from third parties, and had over 580 pending patent applications.
Customer Support, Professional Services and ServiceNow Impact Customer Support We offer our customers standard and enhanced support, from technical resources located around the globe, on a subscription-based model, as well as self-service technical support through our support portal, which provides access to documentation, knowledge-based articles, online training, online support forums and online case creation.
Customer Support We provide customers with standard and enhanced support through subscription-based services delivered by technical resources located worldwide. Customers also have access to self-service resources through our support portal, which includes documentation, knowledge-based articles, online training, support forums and case creation tools.
Competition Our business is highly competitive, rapidly evolving and fragmented, and subject to disruptive technologies with low barriers to entry, to shifting customer needs and to frequent introductions of new products and services.
Competition We operate in a highly competitive and rapidly evolving market characterized by fragmentation, low barriers to entry, shifting customer needs and frequent introductions of new products and services.
App Engine Our App Engine product empowers our customers’ employees to create enterprise-class workflows using low-code and no-code development tooling and does not require formal coding experience. App Engine delivers intuitive and intelligent development experiences, designed for speed, security and scale.
App Engine App Engine enables organizations to create enterprise-class workflows using low-code and no-code development tools, supported by AI. App Engine does not require formal coding experience and is designed for scale, security and rapid deployment.
Our Technology and Operations We operate a multi-instance architecture that provides each customer with its own dedicated application logic and databases. This architecture is designed to deliver high-availability, scalability, performance, security and control. Our cloud infrastructure primarily consists of industry-standard servers, networks and storage components.
This architecture is designed to support availability, scalability, performance, security and customer control. Our cloud infrastructure consists primarily of industry-standard servers, networks and storage components. We deliver our software-as-a-service offering through our own private cloud as well as public cloud service providers, who provide infrastructure-as-a-service, including servers, storage, databases and networking.
We strive to deliver the best customer experiences and innovations. • Win as a team: We share the same goals and have clear roles in achieving them.
We strive to deliver the best customer experiences and innovations. We share the same goals and have clear roles in achieving them. We deliver results as a team and enjoy the journey. We do not take success for granted. We are always ready to learn and evolve. We grow together, bringing fresh ideas and new perspectives.
We have made, and will continue to make, significant investments in research and development to broaden our platform capabilities, strengthen our existing applications, expand the number of applications on our platform, enhance our user experience and develop additional mobile, automation, AI and machine intelligence technologies.
We have made, and expect to continue to make, significant investments in research and development to expand our Platform capabilities, strengthen existing applications, increase the number of applications on our platform, and advance mobile, automation, AI and machine intelligence technologies. 2025 Annual Report 17 Table of Contents Part I Acquisitions and Investments We have acquired and invested in companies and technologies as part of our business strategy and expect to continue to evaluate and enter into potential strategic transactions.
For additional information about competition, see “Risk Factors—A failure to innovate in response to rapidly evolving technological changes and in the midst of an intensely competitive market may harm our competitive position and business prospects.” 10 Table of Contents Intellectual Property We rely upon a combination of U.S. and international copyright, trade secret, patent and trademark laws and confidentiality procedures and contractual rights and restrictions to establish, protect and grow our intellectual property (“IP”) rights.
For additional information about competition, see “Risk Factors—A failure to innovate and adapt how we offer our products in response to rapidly evolving technological changes and in the midst of an intensely competitive market may harm our competitive position and business prospects.” Regulations We conduct business globally and are subject to a wide range of U.S. federal, state and foreign laws and regulations across a variety of subject matters.
These transactions are intended to, among other things, expand or improve our service offerings and functionality, go-to-market and sales efforts, our operations or our ability to source necessary expertise and provide services in international locations.
These may include acquisitions of, or investments in, businesses, technologies, services, products and other assets. These transactions are intended to expand or improve our service offerings, enhance go-to-market and sales efforts, strengthen operations, increase access to expertise and support delivery of products and services to international markets.
Professional Services Our Professional Services, offered by ServiceNow directly and through our network of partners, include process design, implementation, configuration, architecture and optimization services that help our customers maximize the value of their ServiceNow investment.
Professional Services Our professional services delivered directly and through our partners, include design, implementation, architecture and optimization services. These services are intended to help our customers implement and configure our products effectively and maximize the value from their use.
See “Risk Factors—Doing business with the public sector and heavily-regulated entities subjects us to risks related to the government procurement process, regulations, and contracting requirements” for additional information about our sales to government customers. Research and Development Our research and development organization is responsible for the design, development, testing and validation of our solutions.
For additional information, see “Risk Factors—Doing business with the public sector and heavily-regulated entities subjects us to risks related to government procurement processes, regulations and contracting requirements.” Sales and Marketing We sell our products and services to enterprises across a wide variety of industries through subscription agreements facilitated by our global direct sales organization.
Now Assist for ITOM, our AI solution, simplifies complex technical language into easy-to-understand descriptions and provides quick resolution recommendations to IT operations issues. By doing so, this solution lowers the risk of outages, enhances customer productivity and increases overall service reliability.
Now Assist and AI agents for ITOM simplify complex technical language into easy-to-understand descriptions and provide quick resolution recommendations to IT operations issues.
Customers have the flexibility to tailor their AI transformation to their unique needs and expand the value of their workflows by using ServiceNow’s large language models (“LLMs”), which include models that can process different types of data, such as text, images, audio and video, and they can incorporate third-party LLMs and their own LLMs.
Organizations can select the tools that best align with their unique AI transformation needs. To illustrate, organizations can choose to leverage ServiceNow’s language models or integrate third-party or proprietary models. Depending on the selected model, they can process different types of data, such as text, images, audio and video.
Technology Workflows Technology Workflows enable IT departments to serve their customers, manage their IT infrastructure, identify and remediate security vulnerabilities and threats, gain visibility across their IT resources and asset lifecycles, optimize IT costs and reduce time spent on administrative tasks.
Our Creator and Other products help organizations rapidly develop and manage cross-enterprise workflows using AI-powered, low- code development tools, as well as manage data privacy and security. 4 Table of Contents Part I Our Technology products help IT departments serve customers, manage IT infrastructure, identify and remediate security vulnerabilities and threats, increase visibility across IT resources and asset lifecycles, optimize IT costs and reduce time spent on administrative tasks.
Customer and Industry Workflows Customer and Industry Workflows help organizations integrate front-end customer service capabilities with operations, order fulfillment and field service resources and can deliver industry-specific use cases.
CRM and Industry Creator and Other Our CRM and Industry products help organizations integrate front- end customer service functions with operations, field service resources, sales processes and order management, and provide workflows tailored for specific industries.
Our marketing efforts and lead generation activities consist primarily of customer referrals, digital advertising (including via our website), trade shows, industry events, brand campaigns and press releases.
Our marketing activities consist primarily of customer referrals, digital advertising (including via our website), trade shows, industry events, brand campaigns and press releases. We also host our annual Knowledge user conference, webinars and other user forums, including regional forums, which we call World Forums, where customers and partners participate in sessions on product usage and industry practices.
Automation Engine can also be used in conjunction with Now Assist for Creator, our AI solution, to automate essential functions, including flow generation, code generation and app generation, allowing developers to create complex workflows and applications using natural language prompts.
App Engine can also be used with Now Assist and AI agents for Creator to quickly create and scale apps on our Platform. Now Assist for Creator includes various natural language AI capabilities, including text-to-code, text-to-flow, text-to-service catalog and text-to-app.
It streamlines field service processes with automation to increase technician productivity, improve first time fix rates and optimize scheduling and dispatching. Organizations can use data-driven insights to enhance operations, identify trends and remove service bottlenecks to maximize efficiency and effectiveness, while also creating great customer and employee experiences.
It provides automated workflows to help optimize resource allocation, increase technician productivity and improve first-time resolution rates. It also provides data-driven insights to help organizations monitor field operations, identify service bottlenecks and improve efficiency of field operations.
We currently operate data centers in North America, South America, Europe, Asia and Australia, and we continuously evaluate our data center operations and capacity in existing and new geographies. We offer customers the option to deploy our services on dedicated hardware in our data centers.
Our data centers, along with our environments hosted by public cloud service providers, have been configured in pairs to provide replication, redundancy and high availability. We currently operate data centers in North America, South America, Europe, Asia and Australia, and we regularly evaluate our data center operations and capacity needs in existing and new geographies.
See “Risk Factors—We may not be able to protect or enforce our intellectual property rights.” Our Ambition, Values and Corporate Purpose Our ambition to become the defining enterprise software company of the 21 st century is the driving force behind our overall business strategy and is guided by our values: • Wow our customers: Customers are the center of our world.
The Risk Factors section of this Annual Report on Form 10-K includes additional information regarding government regulations relevant to our business. 18 Table of Contents Part I Our Ambition, Values and Corporate Purpose Our ambition to become the defining AI enterprise software company of the 21st century is the driving force behind our overall business strategy and is guided by our values: Customers are the center of our world.
It accelerates productivity by simplifying work order task summarization and knowledge generation. 5 Table of Contents Industry We offer industry solutions to better address the unique needs for specific industries, including, for example, financial services, healthcare and life sciences, manufacturing, public sector, retail, technology and telecommunications.
These tools streamline routine tasks, increase sales and order fulfillment productivity and reduce time required to complete sales processes. 2025 Annual Report 9 Table of Contents Part I Industry We provide solutions designed to address the requirements of specific industries, including financial services, healthcare and life sciences, manufacturing, public sector, retail, technology and telecommunications.
Our Technology products help companies unite IT, technology, risk management and security operations on a single platform to deliver modern and resilient digital services aligned to our customers’ priorities. These products also drive enterprise-wide outcomes, as well as power our Customer and Industry and Employee Workflows.
We release two major Platform upgrades each year, adding new products and functionality that simplify work and enhance productivity. Technology Core Business Our Technology products help companies unite technology, risk management and security operations on a single platform to deliver modern and resilient digital services aligned to an organization’s priorities.
We regularly test these models on platform-representative data to give customers confidence that the models deliver optimal performance for their intended use cases on the Now Platform. We also provide AI governance tools, including built-in monitoring and guardrails, dataset creation management and benchmarking capabilities, and visibility into adoption, usage and performance analytics.
Our AI governance tools include integrated monitoring and guardrails, as well as dataset creation management, benchmarking and performance analytics capabilities. They offer organizations greater visibility into their AI adoption, usage and performance. These tools provide organizations confidence that they are building, testing and deploying AI use cases and applications responsibly as they operationalize their AI strategy. Data.
Through these relationships, users can leverage their existing spending commitments with cloud providers to procure ServiceNow products. Further, our relationships with global system integrators such Accenture, Cognizant, Deloitte, EY and KPMG continue to help us expand our business by offering ServiceNow solutions to their customers.
Additionally, our relationships with global system integrators such as Accenture, Cognizant, Deloitte, EY, Infosys and KPMG, among others, continue to help us expand our business by offering ServiceNow solutions to their customers. 16 Table of Contents Part I Our Technology and Operations We operate a multi-instance architecture that provides each customer with a dedicated application layer and database.
A substantial portion of our employees work partially or fully remote. We believe such an environment will only serve to strengthen our company. Workforce Metrics As of December 31, 2024, we employed 26,293 people on a full-time basis, 13,193 in the United States and 13,100 internationally. None of our U.S. employees are represented by a labor union.
We also provide additional time away through “Wellbeing Days” to support employee health and wellbeing. 20 Table of Contents Part I Workforce Metrics As of December 31, 2025, we employed: 29,187 EMPLOYEES on a full-time basis 14,601 of whom are in the United States 14,586 of whom are international None of our U.S. employees are represented by a labor union.
While there are some limitations on agility and flexibility as compared to our cloud offering, a minority of our customers have elected the third-party alternative. The standard and enhanced customer support we provide to customers that deploy our services outside of our data centers is similar to the support we provide to customers deployed in our managed data centers.
While these alternatives may have some limitations relative to our managed cloud and public cloud offerings, a minority of customers use them. We provide standard and enhanced support for these deployments consistent with the support provided to customers using our managed data centers.
We continue to expand our sales capabilities in new geographies, including through investments in direct and indirect sales channels, professional services capabilities, customer support resources, post-sales customer support resources, strategic alliances and partnerships, implementation partners and advisory councils.
We continue to invest in sales and marketing to increase market penetration and expand into new geographies. These efforts include growth in both direct and indirect sales channels, investments in professional services and customer support, and development of strategic partnerships. Partner Ecosystem We maintain a global network of partners that provide implementation services, industry expertise and complementary technology offerings.
It boosts security analysts’ productivity, accelerates issue resolution and equips chief information security officers and other security leaders with valuable insights for transforming their security operations. Strategic Portfolio Management Our Strategic Portfolio Management (“SPM”) product helps customers plan, visualize and track value realization across their portfolio of projects, initiatives and digital products, all on one platform.
Strategic Portfolio Management Strategic Portfolio Management (“SPM”) helps organizations plan, visualize and track value realization across their portfolio of projects, initiatives and digital assets. It helps organizations align their strategy with their investments and operations to drive desired outcomes.
EVS insights are used to create action plans at all levels of the organization and inform the assessment of our human capital management approach and its alignment with our purpose and business strategy. “Create Belonging” is one of our four company values that guides our ambition.
Our Employee Voice Survey (“EVS”) measures engagement across areas including belonging, learning and development, recognition, compensation and wellbeing. Insights from our EVS are used to create action plans throughout the organization and to assess the alignment of our human capital management practices with our purpose and business strategy.
Source-to-Pay Operations Our Source-to-Pay Operations suite connects to customers’ existing enterprise resource planning and procurement systems, delivering a guided experience and highly automated processes that reduce cycle time and cuts costs across procurement, supplier management and accounts payable processes.
Source-to-Pay Operations Source-to-Pay Operations (“SPO”) connects organizations’ existing enterprise resource planning and procurement systems to support purchasing, supplier management, performance monitoring and accounts payable processes. These capabilities allow organizations to manage costs, negotiate terms, and onboard suppliers quickly.
Customers We primarily sell our services to large enterprise customers, and we host and support large, enterprise-wide deployments for our customers. As of December 31, 2024, we had approximately 8,400 customers. Our customers operate in a wide variety of industries. The portion of our revenues generated by sales to government customers has also increased over time.
The offering includes monitoring of Platform health, reporting on Platform metrics and access to designated experts and technical support. 2025 Annual Report 15 Table of Contents Part I Customers We primarily sell our services to enterprise customers and support enterprise-wide deployments. As of December 31, 2025, we had approximately 8,700 customers across a wide variety of industries.
It also maintains a single data record for all IT configurable items, allowing our customers to exercise control over their on-premises or cloud-based infrastructures, while orchestrating key processes and tasks. ITOM also includes Cloud Observability, which provides real-time visibility into cloud-native and monolithic environments that power our customers’ internal- and external-facing products and services.
It can simultaneously identify issues from a customer’s IT infrastructure (e.g., physical servers) and digital components (e.g., email), which helps organizations better manage potential disruptions to business services. ITOM also maintains a single record of all IT configurable items, providing organizations better control over on-premises or cloud-based infrastructures while orchestrating key processes and tasks.
By prioritizing these values, we are able to gain the trust of our employees and customers and work towards fulfilling our corporate purpose to “make the world work better for everyone.” Environmental, Social and Governance Our ESG strategy is aligned to our corporate purpose.
By prioritizing these values, we seek to build trust with employees and customers and align with our corporate purpose to “make the world work better for everyone.” 2025 Annual Report 19 Table of Contents Part I Human Capital Management Our People Pact Our People Pact is central to our ability to fulfill our corporate purpose and reflects our commitment to supporting one another in doing our best work and achieving our shared objectives.
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ITEM 1. BUSINESS ServiceNow was founded on a simple premise: to make work flow better. Our intelligent platform—the Now Platform—is a cloud-based solution that helps enterprises and organizations across public and private sectors digitize workflows, in line with our purpose of making the world work better for everyone.
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Item 1. Business Overview ServiceNow delivers solutions that help public and private organizations govern, secure and manage artificial intelligence and digitalize and streamline workflows to drive collaboration, productivity and better experiences across the enterprise.
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Organizations are increasingly turning to digital investments to streamline business-critical processes, drive deeper collaboration, increase employee productivity and power better customer experiences. The Now Platform helps business leaders realize value from these investments by incorporating advanced technology into the flow of work, end-to-end across the enterprise, for every department and persona.
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We offer an innovative suite of products, including AI-powered applications, and services designed to automate workflows, integrate systems and empower employees, regardless of existing systems, cloud environments or collaboration tools.
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The workflow applications built on the Now Platform are organized in four primary areas: Technology, Customer and Industry, Employee and Creator. Our Technology Workflows empower Information Technology (“IT”) departments to plan, build, operate and service the IT needs of the business enterprise.
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At the core of these solutions is the ServiceNow AI Platform, a robust, cloud-based platform that facilitates comprehensive delivery of seamless workflows and drives digital transformation across all departments and personas within an organization. With the emergence of artificial intelligence, organizations are under pressure from their stakeholders to accelerate growth and achieve unprecedented productivity improvements.
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Our Customer and Industry Workflows help organizations reimagine their customer experience by empowering their customers with personalized self-service and providing organizations with greater ability to anticipate their customer needs by providing real-time insights. Our Employee Workflows help customers simplify how their employees access services they need, creating a consumer-like experience.
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To meet these demands, they are prioritizing the digitalization and modernization of their workflows through AI-powered automation. At the same time, they are seeking secure and reliable tools to manage the heightened risks associated with AI innovation and ensure measurable returns on investment.
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Our Creator Workflows enable customers to automate processes by quickly creating their own custom workflows on the Now Platform. Artificial Intelligence (“AI”), particularly Generative AI (“GenAI”) and agentic AI, is driving a new wave of technology transformation.
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ServiceNow addresses these evolving organizational needs by providing solutions that help organizations govern, secure, and manage artificial intelligence, while optimizing their workflows. We operate in a dynamic and rapidly evolving technology landscape characterized by the accelerating adoption of artificial intelligence and machine learning capabilities across enterprise software.
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We are an early leader in applying AI to enterprise workflows and are working to remain at the forefront of AI as we continue to execute our product roadmap.
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While this period of technological transformation presents both opportunities and uncertainties reminiscent of prior inflection points—such as the shift from on-premises to cloud computing in the early 2010s and the advent of mobile computing before that—we believe our established market position, deep customer relationships, and platform capabilities position us favorably to capitalize on these emerging needs.
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As an AI platform for business transformation, the Now Platform has embedded Now Assist, our AI solution available for certain products at an additional cost, to help enhance user productivity and efficiency, thereby accelerating our customers’ return on investment in the Now Platform.
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We have invested in understanding evolving customer requirements through ongoing dialogue with our customer base, which spans diverse industries and use cases, and we have developed our platform to address the practical challenges enterprises encounter when 2025 Annual Report 1 Table of Contents Part I implementing AI-enabled automation within mission-critical business processes while maintaining security, governance and operational continuity.
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For example, with Now Assist, customer service agents can solve customers’ problems quickly with AI-produced case summaries and next step suggestions; employees can obtain faster and more accurate answers using AI-powered self-service, increasing their productivity and engagement; customers can receive enhanced self-service options and improved experiences from live support agents; and developers can generate code and create apps, saving time to focus on more complex matters.
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A critical insight emerging from this technological shift is that AI excels at analyzing data and generating information, but transforming that information into business outcomes requires infrastructure that can orchestrate action across systems, enforce governance policies, and manage complex workflows.
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We believe that with Now Assist, even customers with limited technical background can leverage AI to meaningfully contribute to their businesses’ digital transformation. Our customers have given us feedback that these enhanced products significantly improve the efficiency and fidelity of their workflows.
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AI models can identify patterns, make recommendations, and surface insights, but they cannot independently execute transactions, route approvals, update systems of record, or support compliance with business rules and regulatory requirements. Our platform addresses this fundamental gap by providing the underlying infrastructure that connects AI-generated insights to the operational systems and processes where work actually gets done.
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Agentic AI, the next evolution of GenAI, involves AI agents that act and interact in smart and autonomous ways with humans providing oversight and guardrails. With agentic AI, humans can be supported by multiple AI agents trained to perform specific tasks, rather than, for example, a single AI assistant or chatbot relying on a human’s specific prompts or queries.
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This capability—to direct, control, and manage what happens after information is generated—represents a substantial portion of the value enterprises seek when adopting AI technologies. Several factors contribute to our competitive positioning in this environment. Our two decades partnering with enterprise customers provide us with a deep understanding of how work actually flows across organizations—across departments, systems and organizational silos.
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Agentic AI is available to our customers as a Now Assist feature, where they can easily create agentic skills tailored to their unique needs.
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We have developed expertise in the operational processes specific to different industries, functional areas and user roles, knowledge that cannot be readily replicated and that proves essential when designing solutions that must integrate with existing workflows rather than replace them.
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AI agents can use these skills to work together with humans to help augment and accelerate workflow outcomes by performing and completing actions on the human’s behalf. 1 Table of Contents The Now Platform, utilized by over 85% of the Fortune 500 and nearly 60% of the Global 2000, is a platform of consequence that puts AI to work for people, delivering tangible results while upholding a trustworthy, human‑centered approach to deploying products and services at scale.
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This institutional knowledge enables us to build cross-functional workflows that reflect the practical realities of how enterprises operate, rather than idealized process models. Building on this foundation, our platform’s architecture, developed over years of iteration with customer feedback, allows organizations to deploy AI-enhanced workflows without replacing their existing technology infrastructure or disrupting established processes.
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Many of our customers recognize the advantages of the Now Platform and have developed multi-year digital transformation plans that expand over time the use of ServiceNow products and services for their business.
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We bridge the gap between AI's analytical capabilities and the execution layer where business processes operate, providing the connective tissue that turns insights into outcomes. Equally important, our experience operating a software-as-a-service platform at scale gives us operational expertise in maintaining reliability, security, and performance standards that enterprise customers require, particularly as they entrust increasingly critical functions to AI-enabled systems.
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As we gain our customers’ trust by delivering products that provide great experiences and value across our customers’ entire enterprise, we feel immensely proud that “The World Works with ServiceNow.” Our Products ServiceNow’s product portfolio—which spans our Technology, Customer and Industry, Employee, Creator and other Workflows—is delivered on the Now Platform.
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While competitors are actively developing AI capabilities and several entrants have emerged with point solutions focused on data analysis and information generation, we believe many face challenges in delivering the comprehensive integration, workflow orchestration, governance frameworks, and enterprise-grade reliability that our customers require to operationalize AI insights.
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Each year, two major platform upgrades are released, delivering new standard functionality and standalone products to further simplify the way our customers work and enhance productivity. Since launching AI-powered versions of our products, we have continued to expand the Now Assist product portfolio and plan to continue to embed AI capabilities in our portfolio in the future.
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The AI era has not eliminated—and has arguably intensified—the fundamental need for platforms that can unify disparate systems, maintain data integrity, ensure regulatory compliance, enforce business logic, and provide consistent execution across complex organizational processes. We recognize that technological transitions create both opportunity and risk. Competitive dynamics may shift as new approaches emerge and customer preferences evolve.
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The Now Platform The Now Platform is the AI platform for digital transformation. We help customers leverage emerging AI-based technologies to improve enterprise workflows. We believe AI-enabled workflows allow our customers to enhance their digital transformation and business impact.
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However, we believe our established customer relationships, platform investments, and operational experience in workflow orchestration and systems integration provide meaningful advantages as enterprises navigate this transformation.
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Transformations enabled by the Now Platform rapidly automate business processes across an entire enterprise by seamlessly connecting disparate departments, systems and silos to unlock productivity and improve experiences for both employees and customers.
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Our strategy focuses on continuing to understand and meet customer needs as they adopt AI technologies, applying our ability to deliver integrated solutions that address the practical complexities of converting AI-generated insights into controlled, governed business outcomes. 2 Table of Contents Part I Our Platform The ServiceNow AI Platform (our “Platform”) connects people, processes and data to break down silos and simplify complex business processes, increasing flexibility, scalability and extensibility.
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As the foundation for how we deliver our cross-enterprise digital workflows, the Now Platform orchestrates work across our customers’ cloud platforms and systems of choice, allowing them to get work done regardless of their current and future systems of record and collaboration platforms, across any data and system. 2 Table of Contents Our one platform, one architecture and one data model approach can provide a “single pane of glass” that connects people, processes, data and devices.
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Our one platform architecture provides the foundation for organizations to seamlessly integrate AI, data, and workflows and create intelligent processes across their enterprise. AI. Our Platform’s integrated AI offering, Now Assist, empowers organizations to boost productivity by providing a range of AI tools. These tools operate autonomously with human oversight and adhere to predefined guardrails.
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It offers a one-stop shop for automation and simplification of manual processes and is highly flexible, scalable and extensible. Enterprises can leverage our platform’s consumer-like user interface to help them deliver seamless experiences. For example, the Now Platform empowers users to independently resolve issues and seek answers through intelligent self-service portals.
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They can also trust that the selected models are tested to confirm they will perform as intended on our Platform, as all integrated models are regularly evaluated on Platform-representative data.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeRisk Factors Summary This summary provides an overview of the risks we face and should not be considered a substitute for the more fulsome risk factors discussed immediately following this summary. • Risks Related to Our Ability to Grow Our Business • Laws, regulations and customer expectations regarding the use, storage and movement of data may restrict our ability to continue to optimize our platform. • A failure to innovate in response to rapidly evolving technological changes and in the midst of an intensely competitive market may harm our competitive position and business prospects. • We may not successfully increase our penetration of international markets or manage risks associated with foreign markets. • Incorporating AI technology into our offerings may result in operational, legal, regulatory, ethical and other challenges. • We rely on our network of partners for an increasing portion of our revenues, and if these partners fail to perform, our business may be harmed. • Doing business with the public sector and heavily-regulated entities subjects us to risks related to government procurement processes, regulations and contracting requirements. • If we fail to comply with applicable anti-corruption and anti-bribery laws, export control laws, economic and trade sanctions laws, or other global trade laws, we could be subject to penalties and civil and/or criminal sanctions and our business could be materially adversely affected. • Our customer deals are becoming more complex, which tend to involve longer and more expensive sales cycles, increased pricing pressure and implementation and configuration challenges. • As we acquire or invest in companies and technologies, we may not realize the expected business or financial benefits and the acquisitions and investments may divert our management’s attention and result in additional shareholder dilution or costs. • Risks Related to the Operation of Our Business • Actual or perceived cybersecurity events experienced by us or our third-party service providers may create the perception that our platform is not secure, and we may lose customers or incur significant liabilities. • We may lose key members of our management team or qualified employees or may not be able to attract and retain employees we need. • Delays in the release of, or actual or perceived defects in, our products may slow the adoption of our latest technologies, reduce our ability to efficiently provide services, decrease customer satisfaction, and adversely impact future product sales. • Disruptions or defects in our services could damage our customers’ businesses, subject us to substantial liability and harm our business. • Delays in improving our information systems and processes could interfere with our ability to support our existing and growing customer and employee base as we scale. • We may not be able to protect or enforce our intellectual property rights. • Our use of open-source software could harm our ability to sell our products and services and subject us to possible litigation. • Various factors, including our customers’ business, integration, migration, compliance and security requirements, or errors by us, our partners, or our customers, may cause implementations of our products to be delayed, inefficient or otherwise unsuccessful. • Our failure or perceived failure to achieve our ESG goals or maintain ESG practices that meet evolving stakeholder expectations could adversely affect us. • We may face natural disasters, including climate change, and other events beyond our control. 14 Table of Contents • Risks Related to the Financial Performance or Financial Position of Our Business • Because we generally recognize revenues from our subscription service over the subscription term, a decrease in new subscriptions or renewals may not be immediately reflected in our operating results. • As our business grows, we expect our revenue growth rate to decline over the long term. • Changes in our effective tax rate or disallowance of our tax positions may adversely affect our business. • We may be adversely affected by our debt service obligations. • Risks Related to General Economic Conditions • Our industry and business may be harmed by global economic conditions. • We may be harmed by foreign currency exchange rate fluctuations. • Risks Related to Ownership of Our Common Stock • Our stock price is likely to continue to be volatile. • Provisions in our governing documents or Delaware law might discourage, delay or prevent a change of control or changes in our management and, therefore, depress our stock price.
Biggest changeRisks Related to Our Ability to Grow Our Business • Laws, regulations and customer expectations regarding the use, storage and movement of data may restrict our ability to continue to optimize our platform. • A failure to innovate and adapt how we offer our products in response to rapidly evolving technological changes and in the midst of an intensely competitive market may harm our competitive position and business prospects. • We may not successfully increase our penetration of international markets or manage risks associated with foreign markets. • Incorporating AI technology into our offerings may result in operational, legal, regulatory, ethical and other challenges. • We rely on our network of partners for an increasing portion of our revenues, and if these partners fail to perform, our business may be harmed. • Doing business with the public sector and heavily-regulated entities subjects us to risks related to government procurement processes, regulations and contracting requirements. • If we fail to comply with applicable anti-corruption and anti-bribery laws, export control laws, economic and trade sanctions laws, or other global trade laws, we could be subject to penalties and civil and/or criminal sanctions and our business could be materially adversely affected. • Our customer deals are becoming more complex, which tend to involve longer, more expensive sales cycles, increased pricing pressure, and implementation and configuration challenges. • As we acquire or invest in companies and technologies, we may not realize the expected business or financial benefits and the acquisitions and investments may divert our management’s attention and result in additional shareholder dilution or costs.
Our customer deals are becoming more complex, which tend to involve longer and more expensive sales cycles, increased pricing pressure and implementation and configuration challenges. The customer deals we pursue are becoming more complex as we engage with increasingly larger enterprise customers with multiple workflow products that span the enterprise.
Our customer deals are becoming more complex, which tend to involve longer, more expensive sales cycles, increased pricing pressure, and implementation and configuration challenges. The customer deals we pursue are becoming more complex as we engage with increasingly larger enterprise customers with multiple workflow products that span the enterprise.
Geopolitical destabilization and warfare have impacted and may continue to impact global currency exchange rates, commodity prices, energy markets, trade and movement of resources, which may adversely affect the buying power of our customers, our access to and cost of resources from our suppliers, and ability to operate or grow our business.
Geopolitical destabilization and warfare have impacted and may continue to impact global currency exchange rates, commodity prices, energy markets, trade and movement of resources, which may adversely affect the buying power of our customers and our access to and cost of resources from our suppliers and ability to operate or grow our business.
Factors affecting our stock price, some of which are beyond our control, include, among other factors: • changes in the estimates of our operating results, revenue growth, or changes in recommendations by securities analysts; • changes in the average contract term of our customer agreements, timing of renewals and renewal rates; • our ability to meet our financial guidance or financial performance expectations of the securities analysts or investors; • announcements of new products, services or technologies, new applications or enhancements to services, strategic alliances, acquisitions, or other significant events by us or by our competitors; • fluctuations in company valuations, such as high-growth or cloud companies, perceived to be comparable to us; • changes to our management team; • trading activity by directors, executive officers and significant shareholders, or the market’s perception that large shareholders intend to sell their shares; • the inclusion, exclusion, or removal of our stock from any major trading indices; • the size of our market float; • the trading volume of our common stock, including sales following the exercise of outstanding options or vesting of equity awards; • our issuance or repurchase of shares of our common stock; • changes in laws or regulations impacting the delivery of our services; • significant litigation or regulatory actions; • the amount and timing of customer payments, payment defaults, operating costs and capital expenditures • the amount and timing of equity awards and the related financial statement expenses; • the impact of new accounting pronouncements; • the inability to conclude that our internal controls over financial reporting are effective; • our ability to accurately estimate the total addressable market for our products and services; and • overall performance of the equity markets.
Factors affecting our stock price, some of which are beyond our control, include, among others: • changes in the estimates of our operating results, revenue growth or changes in recommendations by securities analysts; • changes in the average contract term of our customer agreements, timing of renewals and renewal rates; • our ability to meet our financial guidance or financial performance expectations of the securities analysts or investors; • announcements of new products, services or technologies, new applications or enhancements to services, strategic alliances, acquisitions or other significant events by us or by our competitors; • fluctuations in company valuations, such as high-growth or cloud companies, perceived to be comparable to us; • changes to our management team; • trading activity by directors, executive officers and significant shareholders or the market’s perception that large shareholders intend to sell their shares; • the inclusion, exclusion or removal of our stock from any major trading indices; • the size of our market float; • the trading volume of our common stock, including sales following the exercise of outstanding options or vesting of equity awards; • our issuance or repurchase of shares of our common stock; • changes in laws or regulations impacting the delivery of our services; • significant litigation or regulatory actions; • the amount and timing of customer payments, payment defaults, operating costs and capital expenditures; • the amount and timing of equity awards and the related financial statement expenses; • the impact of new accounting pronouncements; • the inability to conclude that our internal controls over financial reporting are effective; • our ability to accurately estimate the total addressable market for our products and services; and • overall performance of the equity markets.
Accordingly, to compete effectively, we must: • identify and innovate in the right technologies; • keep pace with rapidly changing technological developments, such as AI, which may disrupt resource and talent needs and the enterprise software marketplace; • accurately predict and meet our customers’ changing digital transformation needs, priorities and adoption practices, including their technology infrastructures and buying and budgetary practices; • invest in and continually optimize our own technology platform so that we continue to meet the very high-performance expectations of our customers; • successfully deliver and promote new, scalable technologies and products to meet customer needs and priorities; • efficiently integrate with technologies within our customers’ digital environments; • expand our offerings into new and adjacent industries and comply with regulations in such industries; • successfully sell to buyers who are not familiar with our offerings; • profitably and efficiently market and sell our new and existing products; • effectively scale our business processes and operations as we grow; • successfully adapt new pricing models; • promote ongoing customer relationships and customer value realization; • effectively secure our platform, data and customers’ data; and • effectively deliver, directly or through our partner ecosystem, the digital transformation process planning, IT systems architecture planning, and product implementation services that our customers require to be successful.
Accordingly, to compete effectively, we must: • identify and innovate in the right technologies; • keep pace with rapidly changing technological developments, such as AI, which may disrupt resource and talent needs and the enterprise software marketplace; • accurately predict and meet our customers’ changing digital transformation needs, priorities and adoption practices, including their technology infrastructures and buying and budgetary practices; • invest in and continually optimize our own technology platform so that we continue to meet the high-performance expectations of our customers; • successfully deliver and promote new, scalable technologies and products, such as AI, to meet customer needs and priorities; • efficiently integrate with technologies within our customers’ digital environments; • expand our offerings into new and adjacent industries and comply with regulations in such industries; • successfully sell to buyers who are not familiar with our offerings; • profitably and efficiently market and sell our new and existing products; • effectively scale our business processes and operations as we grow; • successfully adapt new pricing models; • promote ongoing customer relationships and customer value realization; • effectively secure our platform, data and customers’ data; and • effectively deliver, directly or through our partner ecosystem, the digital transformation process planning, IT systems architecture planning, and product implementation services that our customers require to be successful.
Our competitors could also independently develop services equivalent to ours, and our IP rights may not be broad enough for us to prevent competitors from utilizing their developments to compete with us. Reverse engineering, unauthorized copying or other misappropriation of our proprietary technology could enable third parties to benefit from our technology without paying us for it.
Our competitors could also independently develop services equivalent to ours, and our IP rights may not be broad enough for us to prevent them from utilizing their developments to compete with us. Reverse engineering, unauthorized copying or other misappropriation of our proprietary technology could enable third parties to benefit from our technology without paying us for it.
Delays in the release of, or actual or perceived defects in, our products may slow the adoption of our latest technologies, reduce our ability to efficiently provide services, decrease customer satisfaction, and adversely impact future product sales. We must successfully continue to release new products and updates to existing products.
Delays in the release of, or actual or perceived defects in, our products may slow the adoption of our latest technologies, reduce our ability to efficiently provide services, decrease customer satisfaction and adversely impact future product sales. We must successfully continue to release new products and updates and features to existing products.
These and other laws or regulations may cause us to modify our data handling and compliance practices, which could be costly or disruptive to our operations, and may also impact our ability to use certain data to support our products or our product development efforts or hinder our customers’ ability to adopt or continue to use our products.
These and other laws or regulations or enforcement practices may cause us to modify our data handling and compliance practices, which could be costly or disruptive to our operations, and may also impact our ability to use certain data to support our products or our product development efforts or hinder our customers’ ability to adopt or continue to use our products.
Additionally, the IP ownership and license rights of new technologies and the use of outputs therefrom, such as AI, which we are increasingly building into our product offerings, have not been fully addressed by U.S. courts interpreting current and new laws or regulations, and the use or adoption of such technologies in our products and services may expose us to potential intellectual property claims; breach of a data license, software license, or website terms of service allegations; claimed violations of privacy rights; and other tort claims.
Additionally, the IP ownership and license rights of new technologies and the use of outputs therefrom, such as AI, which we are increasingly building into our product offerings, have not been fully addressed by U.S. and foreign courts interpreting current and new laws or regulations, and the use or adoption of such technologies in our products and services may expose us to potential IP claims; breach of a data license, software license, or website terms of service allegations; claimed violations of privacy rights; and other tort claims.
In addition, the relatively new Trans-Atlantic Data Privacy Framework, which facilitates the transfer of data between the United States (“U.S.”) and European Union (“EU”), may be subject to legal challenges and regulatory interpretations that could create uncertainties and impact our operations and compliance obligations.
In addition, the Trans-Atlantic Data Privacy Framework, which facilitates the transfer of data between the United States (“U.S.”) and European Union (“EU”), may be subject to legal challenges and regulatory interpretations that could create uncertainties and impact our operations and compliance obligations.
Disruptions or defects in our services could damage our customers’ businesses, subject us to substantial liability and harm our business. Our business depends on our platform to be available without disruption. From time to time, we have experienced and expect to continue to experience defects, disruptions, outages and other performance and quality problems with our platform.
Disruptions or defects in our services could damage our customers’ businesses, subject us to substantial liability and harm our business. Our business depends on our platform to be available without disruption. From time to time, we have experienced and expect to continue to experience defects, disruptions, data loss, outages and other performance and quality problems with our platform.
While we maintain crisis management and disaster response plans, such planning may not account for all possible events and the occurrence of such events could make it difficult or impossible for us to deliver our services to our customers, could decrease demand for our services, and could cause us to incur substantial expense.
While we maintain crisis management, business continuity and disaster response plans, such planning may not account for all possible events and the occurrence of such events could make it difficult or impossible for us to deliver our services to our customers, could decrease demand for our services, and could cause us to incur substantial expense.
New defects may be detected in the future and may arise from our increasing use of the public cloud. For example, we provide regular updates to our services, which can contain undetected defects. Defects may also be introduced by our use of third-party software, including open-source software.
New defects may be detected in the future and may arise from our increasing use of public cloud service providers. For example, we provide regular updates to our services, which can contain undetected defects. Defects may also be introduced by our use of third-party software, including open-source software.
Risks Related to the Financial Performance or Financial Position of Our Business Because we generally recognize revenues from our subscription service over the subscription term, a decrease in new subscriptions or renewals may not be immediately reflected in our operating results. We generally recognize revenues from customers ratably over the terms of their subscriptions.
Risks Related to the Financial Performance or Financial Position of Our Business Because we generally recognize revenues from our subscription services over the subscription term, a decrease in new subscriptions or renewals may not be immediately reflected in our operating results. We generally recognize revenues from customers ratably over the terms of their subscriptions.
Moreover, even if a breach is unrelated to our security programs or practices, it could still cause us reputational harm and require us to undertake significant efforts to assess and respond to the breach, including further protecting our customers from their own vulnerabilities.
Moreover, even if a breach is unrelated to our security programs or practices, it could still cause us reputational harm and require us to undertake significant efforts to assess and respond to the breach, including further protecting our customers from their own security risks.
For example, our partners could misrepresent to our customers the functionality of our platform or products, fail to perform services to our customers’ expectations, or violate laws or our corporate policies. Further, changes to our direct go-to-market models may cause friction with our partners.
For example, our partners could misrepresent to our customers the functionality of our platform or products, fail to perform services that meet our customers’ expectations, or violate laws or our corporate policies. Further, changes to our direct go-to-market models may cause friction with our partners.
Disruptions or defects in our services may reduce our revenues, cause us to issue credits or pay penalties, subject us to claims and litigation, cause our customers to delay payment or terminate or fail to renew their subscriptions, and adversely affect our ability to attract new customers.
Disruptions or defects in our services may reduce our revenues, cause us to issue credits or pay penalties, subject us to claims and litigation, cause our customers to delay payment or terminate or decline to renew their subscriptions, and adversely affect our ability to attract new customers.
They may utilize acquisitions, integrations or consolidations to offer integrated or bundled products, enhanced 15 Table of Contents functionality or other advantages. Some of our existing competitors and potential competitors are larger and have greater name recognition, the ability to more efficiently scale their business, more established operations and customer relationships, and greater financial and technical resources than we do.
They may utilize acquisitions, integrations or consolidations to offer integrated or bundled products, enhanced functionality or other advantages. Some of our existing competitors and potential competitors are larger and have greater name recognition, the ability to more efficiently scale their business, more established operations and customer relationships and greater financial and technical resources than we do.
In addition, we grant equity awards to our employees and sustained declines in our stock price or lower stock price performance relative to our competitors reduces the retention value of such awards, which can impact the competitiveness of our compensation.
In addition, we grant equity awards to our employees and sustained declines in our stock price or lower stock price performance relative to our competitors reduces the retention value of such awards, which can impact the attractiveness of our compensation.
Further, security researchers and other individuals have in the past actively searched for, published and/or exploited actual and potential vulnerabilities in our products or services and will likely continue to do so in the future.
Further, security researchers and other entities and individuals have actively searched for, published and/or exploited actual and potential vulnerabilities in our products or services and will likely continue to do so in the future.
We are continually evaluating and, as appropriate, enhancing the attractiveness of our compensation packages and benefit programs. As a result, we have experienced and may continue to 21 Table of Contents experience increased costs that may not be offset by either improved productivity or higher sales, potentially resulting in a reduction in our profitability.
We are continually evaluating and, as appropriate, enhancing the attractiveness of our compensation packages and benefit programs. As a result, we have experienced and may continue to experience increased costs that may not be offset by either improved productivity or higher sales, potentially resulting in a reduction in our profitability.
If we fail to effectively manage and grow our network of partners, our ability to sell our products and efficiently provide our services may be impacted and our business may be harmed. 17 Table of Contents Doing business with the public sector and heavily-regulated entities subjects us to risks related to government procurement processes, regulations and contracting requirements.
If we fail to effectively manage and grow our network of partners, our ability to sell our products and efficiently provide our services may be impacted and our business may be harmed. Doing business with the public sector and heavily-regulated entities subjects us to risks related to government procurement processes, regulations and contracting requirements.
Techniques used to sabotage or to obtain unauthorized access to systems are constantly evolving and may go undetected until a successful attack occurs. Moreover, we have experienced security incidents, which may reoccur in the future, that resulted in unauthorized access to, loss, or inadvertent disclosure of confidential, proprietary and sensitive information.
Techniques used to sabotage or to obtain unauthorized access to systems are constantly evolving and may go undetected until we become aware of a successful attack. Moreover, we have experienced security incidents, which may reoccur in the future, that resulted in unauthorized access to, loss or inadvertent disclosure of confidential, proprietary and sensitive information.
In addition, our subscription agreements generally require us to defend our customers against claims that our technology infringes the intellectual property rights of third parties. Any claim or litigation, whether or not resolved in our favor, could result in significant expense to us, divert the efforts of our personnel and may result in counterclaims against us.
In addition, our subscription agreements generally require us to defend our customers against claims that our technology infringes the IP rights of third parties. Any claim or litigation, whether or not resolved in our favor, could result in significant expense to us, divert the efforts of our personnel and may result in counterclaims against us.
Our insurance may not be sufficient to cover losses or additional expenses we may sustain. In the event of major natural disasters or catastrophic events, our backup systems could fail, customer data could be lost, and resumption of operations could require significant time.
Our insurance may not be sufficient to cover losses or additional expenses we may sustain. In the event of major natural disasters or catastrophic events, our backup systems could fail, critical teams could be impacted, customer data could be lost and resumption of operations could require significant time.
If this conflict continues or if serious conflict arises elsewhere, the U.S. and other jurisdictions could impose wider economic and trade sanctions as well as export restrictions, which could impact our business opportunities and operations. Any violation of the U.S.
For so long as this conflict continues or if serious conflict arises elsewhere, the U.S. and other jurisdictions could impose wider economic and trade sanctions as well as export restrictions, which could impact our business opportunities and operations. Any violation of the U.S.
Our data security system and data governance framework, designed to protect our and our customers’ information and prevent data loss, may not be effective at preventing material breaches caused by intentional or unintentional actions or inactions by employees, contractors or third parties.
Our data security system and data governance framework, designed to protect our and our customers’ information and prevent data loss, may not be effective at preventing, detecting, responding to or remediating material breaches caused by intentional or unintentional actions or inactions by employees, contractors or third parties.
This might lead to disruptions to our operations, loss of customers, loss of revenue, or damage to our reputation, all of which could harm our business plan to successfully scale our operations and enhance productivity. We may not be able to protect or enforce our intellectual property rights.
This might lead to disruptions to our operations, loss of customers, loss of revenue, or damage to our reputation, all of which could harm our business plan to successfully scale our operations and enhance productivity. We may not be able to protect or enforce our IP rights.
Further, Section 203 of the Delaware General Corporation Law may discourage, delay or prevent a change in control of our company. Section 203 imposes certain restrictions on merger, business combinations and other transactions between us and certain shareholders. 28 Table of Contents
Further, Section 203 of the Delaware General Corporation Law may discourage, delay or prevent a change in control of our Company. Section 203 imposes certain restrictions on merger, business combinations and other transactions between us and certain shareholders.
Risks associated with making our products and services available in international markets include, for example: • compliance with multiple, conflicting and changing governmental laws and regulations; • requirements to have local partner(s), local entity ownership limitations or technology transfer or sharing requirements, or to comply with data residency and transfer laws and regulations, privacy and data protection laws and regulations, which may increase operational costs and restrictions; • the possibility that illegal or unethical activities of our local employees or business partners will be attributed to us or cause us harm; • longer and potentially more complex sales and payment receipt cycles and other collection difficulties; • different pricing and distribution environments; • potential changes in international trade policies, tariffs, agreements and practices, including the adoption and expansion of formal or informal trade restrictions or regulatory frameworks that may favor local competitors; 16 Table of Contents • governmental direction, business practices and/or cultural norms that may favor local competitors; • more prevalent cybersecurity, intellectual property and AI risks; and • localization of our services, including translation into foreign languages and associated expenses.
Risks associated with making our products and services available in international markets include, for example: • compliance with multiple, conflicting and changing governmental laws and regulations, including antitrust and competition regulations; • requirements to have local partner(s), local entity ownership limitations or technology transfer or sharing requirements, or to comply with data residency and transfer laws and regulations, privacy and data protection laws and regulations, which may increase operational costs and restrictions; • the possibility that illegal or unethical activities of our local employees or business partners will be attributed to us or cause us harm; • longer and potentially more complex sales and payment receipt cycles and other collection difficulties; • different pricing and distribution environments; • potential changes in international trade policies, tariffs, agreements and practices, including the adoption and expansion of formal or informal trade restrictions or regulatory frameworks that may favor local companies; • governmental direction, business practices and/or cultural norms that may favor local companies; • more prevalent cybersecurity, IP and AI risks; and • localization of our services, including translation into foreign languages and associated expenses.
For example, as disclosed in Note 17 in the notes to our consolidated financial statements, the Company informed certain U.S. government agencies of an internal investigation and preliminary findings and is cooperating with, among others, the Department of Justice, which commenced its own investigation into the matters.
For example, as disclosed in Note 18 “Commitments and Contingencies” in the notes to our consolidated financial statements, the Company informed certain U.S. government agencies of an internal investigation and preliminary findings and is cooperating with, among others, the Department of Justice, which commenced its own investigation into the matters.
Our failure or perceived failure to achieve our ESG goals or maintain ESG practices that meet evolving stakeholder expectations or regulatory requirements could harm our reputation, adversely impact our ability to attract and retain employees or customers and expose us to increased scrutiny from the investment community, regulatory authorities and others or subject us to liability.
Our failure or perceived failure to achieve our corporate sustainability goals or maintain corporate sustainability practices that meet stakeholder expectations or regulatory requirements could harm our reputation, adversely impact our ability to attract and retain employees or customers and expose us to increased scrutiny from the investment community, regulatory authorities and others or subject us to liability.
As we continue to expand our business internationally, we will inevitably do more business with large private enterprises and the public sector in countries outside of the U.S. Increased business in countries with heightened levels of corruption subjects us and our officers and directors to increased scrutiny and potential liability from our business operations.
As we continue to expand our business internationally, we will inevitably do more business with large private enterprises and the public sector in countries outside of the U.S. Increased business in countries with heightened trade controls and levels of corruption subjects us and our officers and directors to increased scrutiny and potential liability.
Further, unanticipated changes in foreign currency exchange rates may result in poorer overall financial performance than if we had not engaged in any hedging transactions, as the hedging instrument we use may not be aligned with the exposures being hedged. Risks Related to Ownership of Our Common Stock Our stock price is likely to continue to be volatile.
Further, unanticipated changes in foreign currency exchange rates may result in poorer overall financial performance than if we had not engaged in any hedging transactions, as the hedging instrument we use may not be aligned with the exposures being hedged. 38 Table of Contents Part I Risks Related to Ownership of Our Common Stock Our stock price is likely to continue to be volatile.
Further, due to heightened concerns relating to privacy and security regulatory matters, our customers may request certain certifications and failure to obtain, or consistently maintain, those certifications may adversely impact our reputation and business.
Further, due to heightened concerns relating to privacy and security regulatory matters, our customers from time to time request certain certifications, and a failure to obtain or consistently maintain those certifications may adversely impact our reputation and business.
If such laws or regulations require increased transparency, it may impair protection of our trade secrets or other IP. 23 Table of Contents Our use of open-source software could harm our ability to sell our products and services and subject us to possible litigation.
If such laws or regulations require increased transparency, it may impair protection of our trade secrets or other IP. 34 Table of Contents Part I Our use of open-source software could harm our ability to sell our products and services and subject us to possible litigation.
Any of our primary locations may be vulnerable to the adverse effects of climate change. For example, our California headquarters have experienced, and may continue to experience, climate-related events at an 24 Table of Contents increasing frequency and severity, including drought, water scarcity, heat waves, wildfires and air quality impacts and power shutoffs associated with wildfires.
Any of our primary locations may be vulnerable to the adverse effects of climate-related risks. For example, our California headquarters have experienced and may continue to experience climate-related events at an increasing frequency and severity, including drought, water scarcity, heat waves, wildfires and air quality impacts and power shutoffs associated with wildfires.
We offer region-specific services, by which customer data is hosted locally and customers may elect to receive support from locally-based ServiceNow teams. Setting up and maintaining these region-specific services require significant investment, including to comply with applicable laws and regulations.
We offer some region-specific services where customer data is hosted locally and customers may elect to receive support from locally-based ServiceNow teams. Setting up and maintaining these region-specific services require significant investment, including to comply with applicable laws and regulations.
In addition, compliance with complex regulations and contracting provisions in a variety of jurisdictions can be expensive and consume significant management resources. In certain jurisdictions, our ability to win business may be constrained by political and other factors unrelated to our competitive position in the market.
In addition, compliance with complex regulations and contracting provisions in a variety of jurisdictions can be expensive and consume significant management resources. In certain jurisdictions, our ability to win business may be constrained by political and other factors unrelated to our market offerings.
While we believe that our position is appropriate 25 Table of Contents and well founded, if our position were successfully challenged by taxing authorities in other jurisdictions, we may become subject to significant tax liabilities. We may be adversely affected by our debt service obligations.
While we believe that our position is appropriate and well founded, if our position were successfully challenged by taxing authorities in other jurisdictions, we may become subject to significant tax liabilities. We may be adversely affected by our debt service obligations.
If we breach any of the covenants and do not obtain a waiver from the note holders or lenders, then, subject to applicable cure periods, any outstanding indebtedness may be declared immediately due and payable. In addition, changes by any rating agency to our credit rating may negatively impact the value and liquidity of our securities.
If we breach any of the covenants and do not obtain a waiver from the note holders or lenders, then, subject to applicable cure periods, any outstanding indebtedness may be declared immediately due and payable. In addition, a rating agency’s change to our credit rating may negatively impact the value and liquidity of our securities.
We use derivative instruments, such as foreign currency forward contracts, to hedge exposures that certain of our balance sheet and income statement items have to changes in foreign currency exchange rates. These hedging contracts have reduced and may continue to reduce, but they have not and cannot entirely eliminate, the impact of adverse foreign currency exchange rate movements.
We use derivative instruments, such as foreign currency forward contracts, to hedge certain balance sheet and income statement exposures to foreign currency exchange rates. These hedging contracts have reduced and may continue to reduce, but they have not and cannot entirely eliminate, the impact of adverse foreign currency exchange rate movements.
Strategic transactions involve numerous risks, including: • difficulties assimilating or integrating the businesses, technologies, products, personnel or operations of the acquired companies; • failing to achieve the expected benefits of the acquisition or investment; • potential loss of employees of the acquired company; • inability to maintain relationships with customers, suppliers and partners of the acquired business; 19 Table of Contents • introducing vulnerabilities or threats by integrating acquired technologies or businesses; • introducing increased complexity and burden to maintain the technology platform; • potential adverse tax consequences; • disruption to our business and diversion of management attention and other resources; • potential financial, credit or regulatory risks associated with acquired customers, suppliers and partners of the acquired business; • dependence on acquired technologies or licenses for which alternatives may not be available to us or which may involve significant cost or complexity; • in the case of foreign acquisitions, the challenges associated with integrating operations across different cultures, languages, and legal regimes and any currency and regulatory risks associated with specific countries; • data security or privacy risks, compliance requirements, or integration costs from the acquired technology or company; • impairment of our investments or the possibility our investees will be unable to obtain future funding on favorable terms or at all; and • potential unknown liabilities or disputes associated with the acquired businesses.
Strategic transactions involve numerous risks, including: • difficulties assimilating or integrating the businesses, technologies, products, personnel or operations of the acquired companies; • failing to achieve the expected benefits of the acquisition or investment; • potential loss of employees of the acquired company; • inability to maintain relationships with customers, suppliers and partners of the acquired business; • introducing vulnerabilities or threats by integrating acquired technologies or businesses; • introducing increased complexity and burden to maintain the technology platform; • potential adverse tax consequences; • disruption to our business and diversion of management attention and other resources; • potential financial, credit or regulatory risks associated with acquiring a business or a part thereof, including risks of delayed, conditioned or denied regulatory clearances and risks relating to customers, suppliers and partners of the acquired business; • dependence on acquired technologies or licenses for which alternatives may not be available to us or which may involve significant cost or complexity; • in the case of foreign acquisitions, the challenges associated with integrating operations across different cultures, languages, legal regimes and any currency, tax and regulatory risks associated with specific countries; • data security or privacy risks, compliance requirements or integration costs from the acquired technology or company; 2025 Annual Report 29 Table of Contents Part I • impairment of our investments or the possibility our investees will be unable to obtain future funding on favorable terms or at all; and • potential unknown liabilities or disputes associated with the acquired businesses.
We may not have insurance sufficient to compensate us for potentially significant losses that may result from claims arising from disruptions to our services. Delays in improving our information systems and processes could interfere with our ability to support our existing and growing customer and employee base as we scale.
We may not have insurance sufficient to compensate us for potentially significant losses that may result from claims arising from disruptions to our services. Delays in improving our information systems and processes could interfere with our ability to support our existing and growing base of customers and employees as we scale.
Unanticipated currency 26 Table of Contents fluctuations have adversely affected and could continue to adversely affect our financial results or cause our results to differ from investor expectations or our own guidance in any future periods. Volatility in foreign currency exchange rates and global financial markets is expected to continue due to political and economic uncertainty globally.
Unanticipated currency fluctuations have adversely affected and could continue to adversely affect our financial results or cause our results to differ from investor expectations or our own guidance in any future periods. Volatility in foreign currency exchange rates and global financial markets is expected to continue due to global political and economic uncertainty.
If we are unable to manage these risks, our business will be adversely affected. Incorporating AI technology into our offerings may result in operational, legal, regulatory, ethical and other challenges. We are increasingly innovating and expanding offerings on our platform by integrating AI technology.
If we are unable to manage these risks, our business will be adversely affected. Incorporating AI technology into our offerings may result in operational, legal, regulatory, ethical and other challenges. We are increasingly innovating and expanding offerings on our platform by integrating AI technology into our customer-facing products and internal operations.
Governments have adopted, and likely will continue to adopt, laws and regulations affecting the use, storage and movement of data, including laws related to data privacy and security, the use of machine learning and artificial intelligence (“AI”), and data sovereignty or residency requirements.
Governments have adopted, and likely will continue to adopt, laws and regulations affecting the use, storage and movement of data, including laws related to data privacy and security, the use of machine learning and AI, and data sovereignty or residency requirements.
As a result of the Russia-Ukraine conflict, for example, the U.S. and other jurisdictions have imposed economic and trade sanctions and export control restrictions against Russia and Belarus, as well as certain persons, assets and interests associated with those countries.
As a result of the Russia-Ukraine conflict, for example, the U.S. and other jurisdictions have imposed economic and trade sanctions and export control restrictions against Russia and Belarus, as well as certain persons, assets and interests associated with 28 Table of Contents Part I those countries.
These provisions, among other things: • permit our board to establish the number of directors; • require super-majority voting to amend certain provisions in our certificate of incorporation and bylaws; • authorize issuance of “blank check” preferred stock that our board could use to implement a shareholder rights plan; • prohibit shareholder action by written consent, which requires all shareholder actions to be taken at a meeting; • permit our board to make, alter or repeal our bylaws; and 27 Table of Contents • require advance notice for shareholders to submit director nominations or other business at annual shareholders meetings (although our bylaws permit shareholders proxy access).
These provisions, among other things: • permit our board to establish the number of directors; • authorize issuance of “blank check” preferred stock that our board could use to implement a shareholder rights plan; • prohibit shareholder action by written consent, which requires all shareholder actions to be taken at a meeting; • permit our board to make, alter or repeal our bylaws; and • require advance notice for shareholders to submit director nominations or other business at annual shareholders meetings (although our bylaws permit shareholders proxy access).
Moreover, the incorporation of third-party or open-source software code into our or our customers’ systems increases the risk of exploitation of vulnerabilities. We also have inherited and may in the future inherit additional security risks from acquiring or partnering with other companies.
Moreover, the incorporation of third-party, AI-generated or open-source software code into our or our customers’ systems increases the risk of exploitation of 30 Table of Contents Part I vulnerabilities. We also have inherited and may in the future inherit additional security risks from acquiring or partnering with other companies.
Our business operations are subject to interruption by natural disasters, flooding, fire, extreme heat, power shortages, pandemics, terrorism, political unrest, telecommunications failure, vandalism, cyberattacks, geopolitical instability, war, the effects of climate change and other events beyond our control.
Our business operations are subject to interruption by natural disasters, flooding, fire, extreme heat, power shortages, pandemics, terrorism, political 2025 Annual Report 35 Table of Contents Part I unrest, telecommunications failure, vandalism, cyberattacks, geopolitical instability, war, the effects of climate change and other events beyond our control.
Further, we are required to comply with a variety of complex laws, regulations, and contractual provisions relating to the formation, administration, or performance of government contracts that give public sector customers substantial rights and remedies, many of which are not typically found in commercial contracts.
In addition, we could be precluded from doing further business with governmental entities. Further, we are required to comply with a variety of complex laws, regulations and contractual provisions relating to the formation, administration or performance of government contracts that give public sector customers substantial rights and remedies, many of which are not typically found in commercial contracts.
Downgrades in our credit ratings could restrict our ability to obtain additional financing in the future and could affect the terms of any such financing. Risks Related to General Economic and Political Conditions Our industry and business may be harmed by global economic and political conditions.
Downgrades in our credit ratings could restrict our ability to obtain additional financing in the future and could affect the terms of any such financing. 2025 Annual Report 37 Table of Contents Part I Risks Related to General Economic and Political Conditions Our industry and business may be harmed by global economic and political conditions.
Some customers may lack the internal resources to manage a digital transformation such as our offering and, as a consequence, may be unable to see the benefits of our products. Unsuccessful, lengthy, or costly implementations and integrations could result in claims from customers, reputational harm, and opportunities for competitors to displace our products.
Some customers may lack the resources to effectively manage a digital transformation using our products and, as a consequence, may be unable to see the benefits of our products. Unsuccessful, lengthy or costly implementations and integrations could result in claims from customers, reputational harm and opportunities for other market participants to displace our products.
Such changes may restrict our ability to use, store or otherwise process customer data in connection with providing services and could alter or increase our compliance requirements. In some cases, this could impact our ability to offer our services in certain locations or our customers’ ability to deploy our services globally.
Such changes may restrict our ability 2025 Annual Report 23 Table of Contents Part I to use, store or otherwise process customer data in connection with providing services and could alter or increase our compliance requirements. In some cases, this could impact our ability to offer our services in certain locations or our customers’ ability to deploy our services globally.
Increases in our effective tax rate would reduce our profitability or in some cases increase our losses. Additionally, our future effective tax rate could be impacted by changes in accounting principles or changes in federal, state or international tax laws or tax rulings and these changes may have a retroactive effect. The U.S.
Increases in our effective tax rate would reduce our profitability or in some cases increase our losses. 36 Table of Contents Part I Additionally, our future effective tax rate could be impacted by changes in accounting principles or changes in federal, state or international tax laws or tax rulings and these changes may have a retroactive effect.
Our failure or perceived failure to achieve our ESG goals or maintain ESG practices that meet evolving stakeholder expectations could adversely affect us. Our ability to achieve published environmental, social, and governance (“ESG”) initiatives, goals and commitments is subject to numerous factors both within and outside of our control.
Our failure or perceived failure to achieve our corporate sustainability goals or maintain corporate sustainability practices that meet evolving stakeholder expectations could adversely affect us. Our ability to achieve published corporate sustainability goals and commitments is subject to numerous factors both within and outside of our control.
Our public sector customers may have contractual, statutory or regulatory rights to terminate current contracts with us or our third-party distributors or resellers for convenience or due to a default, though such risk may be assumed by such third-party distributor or reseller.
Our public sector customers may have contractual, statutory or regulatory rights to terminate current contracts with us or our third-party distributors or resellers for convenience or due to a default, though such risk may be 2025 Annual Report 27 Table of Contents Part I assumed by such third-party distributor or reseller.
Our success depends substantially upon the continued services of our management team, particularly our chief executive officer, chief operating officer and the other members of our executive staff. From time to time in the ordinary course of business, there have been and may continue to be changes in our management team.
Our success depends substantially upon the continued services of our management team, particularly our chief executive officer and the other members of our executive staff. From time to time in the ordinary course of business, there have been and may 2025 Annual Report 31 Table of Contents Part I continue to be changes in our management team.
We are also subject to global trade laws that apply to our worldwide operations, including prohibitions or restrictions on conducting business in certain geographies or involving certain counterparties, end-users or end-use cases.
Higher tariffs on imports related to our operations could increase our operating costs. We are also subject to global trade laws that apply to our worldwide operations, including prohibitions or restrictions on conducting business in certain geographies or involving certain counterparties, end-users or end-use cases.
The occurrence of payment delays, service credit, warranty or termination for material breach or other claims against us could result in an increase in our bad debt expense, an increase in collection cycles, an increase to our service level credit accruals, other increased expenses or risks of litigation.
The occurrence of payment delays, service credit, warranty or termination for material breach or other claims against us could result in an increase in our bad debt expense, longer aggregate collection cycles, service level credit accruals and other expenses and a heightened risk of litigation.
In most instances, our customers are responsible for administering access to the data held in their particular instance for their employees and service providers. While our software is delivered with certain preset configurations, we 20 Table of Contents understand that our customers require flexibility to configure the Now Platform to their specific business needs.
In most instances, our customers are responsible for configuring and determining access levels to the data held in their particular instance for their employees and service providers. While our software is delivered with certain preset configurations, we understand that our customers require flexibility to configure the ServiceNow AI Platform to their specific business needs.
These may also include rights with respect to price protection, refund and setoff, performance of services in languages other than English, the accuracy of information provided to the government, contractor compliance with supplier diversity policies, constraints on sales practices and other obligations that are particular to government contracts.
These laws, regulations and contractual provisions may encompass rights with respect to price protection, refund and setoff, the provision of services in languages other than English, the accuracy of information provided to the government, contractor compliance with supplier diversity policies, constraints on certain business and sales practices, and other obligations that are particular to government contracts.
However, there can be no assurance that our efforts have been or will be successful. There is little or no legal precedent governing the interpretation of the terms of open-source licenses, and therefore the potential impact of these terms on our business is uncertain and enforcement of these terms may result in unanticipated obligations regarding our products and services.
There is little or no legal precedent governing the interpretation of the terms of open-source licenses, and therefore the potential impact of these terms on our business is uncertain and enforcement of these terms may result in unanticipated obligations regarding our products and services.
Our certificate of incorporation and bylaws contain provisions that could depress our stock price by acting to discourage, delay or prevent a change in control or changes in our management that our shareholders may deem advantageous.
Our certificate of incorporation and bylaws contain provisions that could depress our stock price by discouraging, delaying or preventing a change in control or changes in our management that our shareholders may deem advantageous.
We may be subject to increased costs, regulations, reporting requirements, standards or expectations regarding climate change-driven impacts on our business. While we seek to mitigate our business risks associated with climate change by establishing robust environmental programs as part of our ESG strategy, certain of those risks are inherent wherever business is conducted.
We may be subject to increased costs, regulations, reporting requirements, standards or expectations regarding climate-related impacts on our business. While we seek to mitigate our business risks associated with climate-related risks by establishing environmental sustainability and enterprise risk programs, certain of those risks are inherent wherever business is conducted.
In addition, new partners may require extensive training and/or significant time and resources to become productive. Additionally, our relationships with partners may require us, along with our partners, to comply with complex regulations, contractual requirements and government procurement rules. Failure to adhere to these requirements could result in the loss of business opportunities, potential liabilities or penalties.
Separately, our relationships with partners may require us, along with our partners, to comply with complex regulations, contractual requirements and government procurement rules. Failure to adhere to these requirements could result in the loss of business opportunities, potential liabilities or penalties.
We have experienced, and may continue to experience, difficulties in new geographic markets, including hiring qualified sales management personnel, penetrating the target market, and managing local operations.
We have experienced and may continue to experience difficulties in new geographic markets, including hiring qualified sales management personnel, penetrating the target market and 2025 Annual Report 25 Table of Contents Part I managing local operations.
We currently serve our customers primarily using equipment managed by us and co-located in third-party data centers operated by several different providers located around the world, and we serve certain of our customers using data center facilities operated by public cloud service providers.
Although we currently serve our customers primarily using equipment managed by us and co-located in third-party data centers operated by several different providers worldwide, we expect to increasingly serve our customers using data center facilities operated by public cloud service providers.
In addition to data center providers, we also have a large ecosystem of vendors and service providers that we use for our products. If there is a compromise to data, supply chain issue or other incident with our critical service providers, it may impact our ability to provide our services and reduce our productivity.
We also have a large ecosystem of vendors and service providers that we use for our products, and a data compromise, supply chain issue or other incident involving a critical service provider could impact our ability to provide our services and reduce our productivity.
For example, as customers increasingly adopt a hybrid (on-premises and off-premises/hyperscale cloud) approach for their IT workloads, our cloud services may fail to address evolving customer requirements, including data localization.
We will also need to continually adapt to customer privacy and security requirements as they change over time. For example, as customers increasingly adopt a hybrid (on-premises and off-premises/hyperscale cloud) approach for their IT workloads, our cloud services may fail to address evolving customer requirements, including data localization.
We cannot be certain that we will be able to identify all vulnerabilities or address the vulnerabilities of which we become aware. There have been delays and may continue to be delays in developing patches that can be effectively deployed to address vulnerabilities.
In addition, we cannot be certain that we will be able to prevent, detect or remediate all vulnerabilities, and there have been delays and may continue to be delays in developing patches that can be effectively deployed to address vulnerabilities.
For example, the EU Data Act has significant requirements regarding data portability, interoperability and accessibility and unclear data transfer restrictions, any of which could impact our operations.
For example, the EU Data Act has data portability, interoperability and accessibility requirements, as well as unclear data transfer restrictions that could impact our operations.
These data centers are vulnerable to damage or interruption from earthquakes, hurricanes, floods, fires, power failures and similar events. They may also be subject to break-ins, sabotage, intentional acts of vandalism and similar misconduct, equipment failure and adverse events caused by operator error or negligence. In addition, an increased use of the public cloud increases our vulnerability to cyberattacks.
These data centers, whether managed by us or third parties, are vulnerable to damage or interruption from earthquakes, hurricanes, floods, fires, power failures and similar events. They may also be subject to break-ins, sabotage, intentional acts of vandalism and similar misconduct, equipment failure and adverse events caused by operator error or negligence.
Provisions in our governing documents or Delaware law might discourage, delay or prevent a change of control or changes in our management and, therefore, depress our stock price.
Risks Related to Ownership of Our Common Stock • Our stock price is likely to continue to be volatile. • Provisions in our governing documents or Delaware law might discourage, delay or prevent a change of control or changes in our management and, therefore, depress our stock price.
If one of those third parties is limited in its ability to do business with the government due to a regulatory or legal issue arising from their own conduct and we are not able to move our business to another third party, our business could be negatively impacted. 18 Table of Contents Further, we are increasingly doing business in heavily regulated industries, such as financial services, telecommunication, media and television, and health care.
If one of those third parties is limited in its ability to do business with the government due to a regulatory or legal issue arising from their own conduct and we are not able to move our business to another third party, our business could be negatively impacted.
Current and prospective customers in those industries may be required to comply with more stringent regulations to subscribe to and/or implement our services. In addition, regulatory agencies may impose requirements on third-party vendors that we may not meet.
Further, we are increasingly doing business in heavily regulated industries, such as financial services, telecommunication, media and television and health care. Current and prospective customers in those industries may be required to comply with more stringent regulations to subscribe to and/or implement our services. In addition, regulatory agencies may impose requirements on third-party vendors that we may not meet.
If a contract is terminated for convenience, we may only be able to collect fees for products or services delivered prior to termination and settlement expenses.
If a contract is terminated for convenience, we may only be able to collect fees for products or services delivered prior to termination and settlement expenses. If a contract is terminated due to a default, we may be liable for excess costs incurred by the customer for procuring alternative products or services.
We have made and continue to make investments to improve our information systems to support the needs of our growing customer and employee base, increase productivity, develop and enhance our services, expand into new geographic areas, and scale with 22 Table of Contents our overall growth. Such improvements are often complex, costly, and time consuming.
We have made and continue to make investments to improve our information systems to support the needs of our growing base of customers and employees, increase productivity, develop and enhance our services, expand into new geographic areas, and scale with our overall growth.
Disruptions may result from errors we make in developing, delivering, configuring or hosting our services, or designing, installing, expanding or maintaining our cloud infrastructure. Disruptions in service can also result from incidents outside of our control, including third-party incidents or denial of service or ransomware attacks, among others.
Disruptions, data loss and service degradation may result from errors we make in developing, delivering, configuring or hosting our services, or designing, installing, expanding or maintaining our cloud infrastructure. They may also arise from incidents outside of our control, including third-party incidents, denial of service or ransomware attacks, as well as from our efforts to address vulnerabilities and security incidents.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

14 edited+2 added−1 removed12 unchanged
Biggest changeThese assessments include a variety of activities including information security maturity assessments, audits and independent reviews of our information security control environment and operating effectiveness. For example, in 2022, 2023 and 2024 we conducted independent cyber maturity assessments to review our controls against the NIST Cybersecurity Framework.
Biggest changeFor example, in 2023, 2024 and 2025 we conducted independent cyber maturity assessments to review our controls against the NIST Cybersecurity Framework. The results of significant assessments are reported to management, the Board and Audit Committee. Cybersecurity processes are adjusted, as appropriate, based on the information provided from these assessments.
The Security Committee meets quarterly to review security performance metrics, identify security risks, and assess the status of approved security enhancements. The Security Committee also considers and makes recommendations on security policies and procedures, security service requirements, and risk mitigation strategies.
The Security Committee meets periodically to review security performance metrics, identify security risks, and assess the status of approved security enhancements. The Security Committee also considers and makes recommendations on security policies and procedures, security service requirements, and risk mitigation strategies.
We have devoted significant financial and personnel resources to implement and maintain security measures to meet regulatory requirements and customer expectations, and we intend to continue to make significant investments in our data and cybersecurity infrastructure.
We have devoted significant financial and personnel resources to implement and maintain security measures to meet regulatory requirements and customer expectations as detailed in our Risk Factors, and we intend to continue to make significant investments in our data and cybersecurity infrastructure.
Management’s Role The following individuals have primary responsibility for assessing and managing cybersecurity risks: • Chief customer officer (“CCO”), who oversees the digital transformation, digital technology and security functions • Chief digital information officer (“CDIO”), who oversees enterprise-wide digital transformation • Chief information security officer (“CISO”), who oversees the security function and reports to the CCO • Chief technology officer (“CTO”), who oversees product engineering and advanced technologies • General Counsel, who oversees the legal and compliance functions These individuals, among others, also serve as members of management’s Security Steering Committee (the “Security Committee”), which is a governing body that drives alignment on security decisions across the Company.
Management’s Role The following individuals have primary responsibility for assessing and managing cybersecurity risks: • Chief product officer (“CPO”) and chief operating officer (“COO”), who oversees the digital transformation, digital technology and security functions • Chief digital information officer (“CDIO”), who oversees enterprise-wide digital technology • Chief information security officer (“CISO”), who oversees the security function and reports to the COO • Chief technology officer (“CTO”), who oversees product engineering and advanced technologies • Chief legal officer (“CLO”), who oversees the legal and compliance functions These individuals, among others, also serve as members of management’s Security Steering Committee (the “Security Committee”), which is a governing body that drives alignment on security decisions across the Company.
Governance Board Oversight Our Board, in coordination with the Audit Committee, oversees our management of cybersecurity risk. They receive regular reports from management about the prevention, detection, mitigation, and remediation of material information security risks, including cybersecurity incidents and vulnerabilities. Our Audit Committee is responsible for overseeing our cybersecurity program.
They receive regular reports from management about the prevention, detection, mitigation, and remediation of material information security risks, including cybersecurity incidents and vulnerabilities. Our Audit Committee is responsible for overseeing our cybersecurity program.
Our CISO has served in various roles in information technology 31 Table of Contents and information security for almost 20 years, including serving as the Chief Information Security Officer or Chief Security Officer at two other large public companies. He holds an undergraduate and master’s degree in computer science.
Our CISO has served in various roles in information technology and information security for almost 20 years, including serving as the Chief Information Security Officer or Chief Security Officer at three other large public companies. He holds undergraduate and master’s degrees in computer science.
Technical Safeguards We regularly assess and deploy technical safeguards designed to protect our information systems from cybersecurity threats. Such safeguards are regularly evaluated and improved based on vulnerability assessments, cybersecurity threat intelligence and incident response experience.
Technical Safeguards 2025 Annual Report 41 Table of Contents Part I We regularly assess and deploy technical safeguards designed to protect our information systems from cybersecurity threats. Such safeguards are regularly evaluated and improved based on vulnerability assessments, cybersecurity threat intelligence and incident response experience.
Our CTO has served in various roles in information technology for over 25 years and has been with us since 2011. Our General Counsel has over 20 years of experience managing risks, including risks arising from cybersecurity threats, at several large public technology companies. 32 Table of Contents
Our CTO has served in various roles in information technology for over 25 years and has been with us since 2011. Our CLO has over 25 years of experience managing risks, including risks arising from cybersecurity threats, at large public technology companies. 2025 Annual Report 43 Table of Contents Part I
Our CDIO has served in various roles in information technology for over 20 years, including serving as our Senior Vice President of Digital Technology Experience and in similar senior roles at two other public companies.
He holds an undergraduate degree in electrical and computer engineering and a master’s degree in information networking. Our CDIO has served in various roles in information technology for over 20 years, including serving as our Senior Vice President of Digital Technology Experience and in similar senior roles at two other public companies.
Incident Response and Recovery Planning We have established comprehensive incident response and recovery plans and continue to regularly test and evaluate the effectiveness of those plans.
Incident Response and Recovery Planning We have established comprehensive incident response and recovery plans and continue to regularly test and evaluate the effectiveness of those plans. Our incident response and recovery plans address — and guide our employees, management and the Board on — our response to a cybersecurity incident.
Such providers are subject to security risk assessments at the time of onboarding, contract renewal, and upon detection of an increase in risk profile. We use a variety of inputs in such risk assessments, including information supplied by providers and third parties.
Third-Party Risk Management We have implemented controls designed to identify and mitigate cybersecurity threats associated with our use of third-party service providers. Such providers are subject to security risk assessments at the time of onboarding, contract renewal, and upon detection of an increase in risk profile.
We regularly remind employees of the importance of handling and protecting customer and employee data, including through annual privacy and security training to enhance employee awareness of how to detect and respond to cybersecurity threats. External Assessments Our cybersecurity policies, standards, processes and practices are regularly assessed by consultants and external auditors.
We regularly remind employees of the importance of handling and protecting customer and employee data, including through annual privacy and security training, to enhance employee awareness of how to detect and respond to cybersecurity threats. The training we offer to employees covers critical cybersecurity topics such as phishing, insider threats and the secure use of company systems.
The results of significant assessments are reported to management, the Board and Audit Committee. Cybersecurity processes are adjusted, as appropriate, based on the information provided from these assessments. We have also obtained industry certifications and attestations that demonstrate our dedication to protecting the data our customers entrust to us.
We have also obtained industry certifications and attestations that demonstrate our dedication to protecting the data our customers entrust to us. 42 Table of Contents Part I Governance Board Oversight Our Board, in coordination with the Audit Committee, oversees our management of cybersecurity risk.
Our CCO has served in various roles in information technology and information security for over 20 years, including serving as our Chief Information Officer (“CIO”) and either the Chief Technology Officer or CIO of three other public companies. He holds an undergraduate degree in computer engineering.
Our CPO and COO has served in various roles in information technology and information security for over 25 years, including serving as the Head of Platform and in other senior leadership roles at two other large public companies overseeing areas such as cloud infrastructure, platform security and enterprise product development.
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Our incident response and recovery plans address — and guide our employees, management and the Board on — our response to a cybersecurity incident. 30 Table of Contents Third-Party Risk Management We have implemented controls designed to identify and mitigate cybersecurity threats associated with our use of third-party service providers.
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We use a variety of inputs in such risk assessments, including information supplied by providers and third parties. These inputs may include, as appropriate, our review of third-party audit reports, ongoing monitoring activities and validation of relevant security certifications.
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External Assessments Our cybersecurity policies, standards, processes and practices are regularly assessed by consultants and external auditors. These assessments include a variety of activities including information security maturity assessments, audits and independent reviews of our information security control environment and operating effectiveness.

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−0 removed0 unchanged
Biggest changeRefer to Note 17 in the notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for more information about our lease commitments.
Biggest changeRefer to Note 18 “Commitments and Contingencies” in the notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for more information about our lease commitments.
ITEM 2. PROPERTIES Our principal office is located in Santa Clara, California, where we lease approximately 972,000 square feet of space under lease agreements for our business operations and product development. We also maintain offices globally. All of our properties are currently leased. We believe our existing facilities are adequate to meet our current requirements.
Item 2. Properties Our principal office is located in Santa Clara, California, where we lease approximately 973,000 square feet of space under lease agreements for our business operations and product development. We also maintain offices globally. All of our properties are currently leased. We believe our existing facilities are adequate to meet our current requirements.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed2 unchanged
Biggest changeFor additional information regarding legal proceedings, refer to Note 17 in the notes to our consolidated financial statements in this Annual Report on Form 10-K.
Biggest changeFor additional information regarding legal proceedings, refer to Note 18 “Commitments and Contingencies” in the notes to our consolidated financial statements in this Annual Report on Form 10-K.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

7 edited+6 added−1 removed1 unchanged
Biggest changeStock Performance Graph This performance graph shall not be deemed “soliciting material” or to be “filed” with the SEC, for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities under that section, and shall not be deemed incorporated by reference into any of our other filings under the Securities Act of 1933, (the “Securities Act”) or the Exchange Act except to the extent we specifically incorporate it by reference into such filing.
Biggest changeStock Performance Graph This performance graph shall not be deemed “soliciting material” or to be “filed” with the SEC, for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities under that section, and shall not be deemed incorporated by reference into any of our other filings under the Securities Act of 1933, (the “Securities Act”) or the Exchange Act except to the extent we specifically incorporate it by reference into such filing. 2025 Annual Report 45 Table of Contents Part II The graph below compares the cumulative total stockholder return on our common stock with the cumulative total return on the S&P 500 Index, NYSE Composite Index and the Standard & Poor Systems Software Index for each of the last five fiscal years ended December 31, 2021 through December 31, 2025, assuming an initial investment of $100.
Stockholders As of December 31, 2024, there were 13 registered stockholders of record (not including an indeterminate number of beneficial holders of stock held in street name through brokers and other intermediaries) of our common stock.
Stockholders As of December 31, 2025, there were 783 registered stockholders of record (not including an indeterminate number of beneficial holders of stock held in street name through brokers and other intermediaries) of our common stock.
Refer to Note 13 “Stockholders’ Equity” in the notes to the consolidated financial statements included in Part II, Item 8 of this Annual Report for additional information. 36 Table of Contents
Refer to Note 14 “Stockholders' Equity” in the notes to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for additional information.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information for Common Stock Our common stock is listed on the New York Stock Exchange under the symbol “NOW.” Dividends Our board of directors currently intends to retain any future earnings to support operations and to finance the growth and development of our business, and therefore does not intend to pay cash dividends on our common stock for the foreseeable future.
Dividends Our board of directors currently intends to retain any future earnings to support operations and to finance the growth and development of our business, and therefore does not intend to pay cash dividends on our common stock for the foreseeable future.
As of December 31, 2024, approximately $266 million remained available for future repurchases under the share repurchase program. In January 2025, our board of directors authorized an additional $3.0 billion in repurchases under the share repurchase program.
In January 2025, our board of directors authorized an additional $3.0 billion in repurchases under the share repurchase program, and in January 2026, our board of directors authorized an additional $5.0 billion in repurchases under the Share Repurchase Program.
Data for the S&P 500 Index, NYSE Composite Index and the Standard & Poor Systems Software Index assume reinvestment of dividends.
Data for the S&P 500 Index, NYSE Composite Index and the Standard & Poor Systems Software Index assume reinvestment of dividends. The comparisons in the graph below are based upon historical data and are not indicative of, nor intended to forecast, future performance of our common stock.
The graph below compares the cumulative total stockholder return on our common stock with the cumulative total return on the S&P 500 Index, NYSE Composite Index and the Standard & Poor Systems Software Index for each of the last five fiscal years ended December 31, 2020 through December 31, 2024, assuming an initial investment of $100.
Comparison of 5 Year Cumulative Total Return* Among ServiceNow, Inc., the NYSE Composite index, the S&P 500 Index and the S&P 500 Systems Software Index ServiceNow, Inc. NYSE Composite S&P 500 S&P 500 Systems Software *$100 invested on 12/31/20 in stock or index, including reinvestment of dividends. Fiscal year ending December 31.
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The comparisons in the graph below are based upon historical data and are not indicative of, nor intended to forecast, future performance of our common stock. 34 Base Period Dec 31, 2019 Dec 31, 2020 Dec 31, 2021 Dec 31, 2022 Dec 31, 2023 Dec 31, 2024 ServiceNow, Inc. 100.00 194.97 229.92 137.53 250.24 375.50 NYSE Composite 100.00 106.99 129.11 117.04 133.16 154.19 S&P 500 100.00 118.40 152.39 124.79 157.59 197.02 S&P Systems Software 100.00 143.08 215.33 156.16 245.01 288.35 35 Table of Contents Unregistered Sales of Equity Securities None Issuer Purchases of Equity Securities Share repurchases of our common stock for the three months ended December 31, 2024 were as follows: Issuer Purchases of Equity Securities Total Number of Shares Purchased as Part of Publicly Announced Program (in thousands) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (1) (in millions) Period Total Number of Shares Purchased (in thousands) Average Price Paid Per Share October 1 - 31 86 $ 927.22 86 $ 482 November 1 - 30 162 1,022.16 162 316 December 1 - 31 45 1,106.67 45 266 Fourth Quarter 2024 293 $ 1,007.28 293 $ 266 (1) On May 16, 2023, our board of directors authorized a program to repurchase up to $1.5 billion of our common stock.
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Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information for Common Stock Our common stock is listed on the New York Stock Exchange under the symbol “NOW.” On December 5, 2025, our board of directors approved and declared a 5-for-1 split of our common stock (“Stock Split”), with a proportionate increase in the number of shares of authorized common stock.
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The Stock Split had a record date of December 16, 2025 and an effective date of December 17, 2025. The par value per share of our common stock remains unchanged at $0.001 per share after the Stock Split.
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Accordingly, an amount equal to the par value of the additional issued shares resulting from the Stock Split was reclassified from additional paid-in capital to common stock. All references made to common share, equity award and per share amounts throughout this Annual Report on Form 10-K have been retroactively adjusted to reflect the effects of the Stock Split.
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Base Period Dec 31, 2020 Dec 31, 2021 Dec 31, 2022 Dec 31, 2023 Dec 31, 2024 Dec 31, 2025 ServiceNow, Inc. 100.00 117.93 70.54 128.35 192.60 139.15 NYSE Composite 100.00 120.68 109.39 124.46 144.12 169.62 S&P 500 100.00 128.71 105.40 133.10 166.40 196.16 S&P Systems Software 100.00 150.49 109.14 171.24 201.53 227.15 Unregistered Sales of Equity Securities In connection with the acquisition of Moveworks consummated on December 15, 2025, we issued 7,805,995 shares of our common stock on such date to certain stockholders of Moveworks who had voted in favor of and adopted and approved the acquisition by written consent, dated as of March 9, 2025.
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The shares of our common stock were issued in reliance on the exemption from registration pursuant to Section 4(a)(2) of the Securities Act, as a transaction by an issuer not involving a public offering, and were in addition to shares of our common stock issued pursuant to an effective Form S-4 registration statement to certain other stockholders of Moveworks. 46 Table of Contents Part II Issuer Purchases of Equity Securities Share repurchases of our common stock for the three months ended December 31, 2025 were as follows: Issuer Purchases of Equity Securities Period Total Number of Shares Purchased (in thousands) (1) Average Price Paid Per Share (1) Total Number of Shares Purchased as Part of Publicly Announced Program (in thousands) (1) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (2) (in millions) October 1 - 31 786 $ 183.10 786 $ 1.88 November 1 - 30 1,170 167.25 1,170 1.68 December 1 - 31 1,611 160.01 1,611 1.43 Fourth Quarter 2025 3,567 $ 167.47 3,567 $ 1.43 (1) Share and per share information in this table has been adjusted to reflect the 5-for-1 common stock split effected on December 17, 2025.
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Refer to Note 2 “Summary of Significant Accounting Policies” in the notes to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for additional information. (2) On May 16, 2023, our board of directors authorized a program to repurchase up to $1.5 billion of our common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeInterest Income Year Ended December 31, % Change 2024 2023 (dollars in millions) Interest income $ 419 $ 302 39 % Percentage of revenues 4 % 3 % Interest income increased during the year ended December 31, 2024, compared to the prior year, primarily driven by an increase in investment income from our managed portfolio resulting from higher portfolio balances with higher interest rates. 48 Table of Contents Other Expense, net Year Ended December 31, % Change 2024 2023 (dollars in millions) Interest expense $ (23) $ (24) (4 %) Other (22) (32) (31 %) Other expense, net $ (45) $ (56) (20 %) Percentage of revenues — % (1%) Other expense, net decreased by $11 million during the year ended December 31, 2024, compared to the prior year, primarily due to a decrease in net losses on equity investments.
Biggest changeInterest Income Year Ended December 31, % Change 2025 2024 (dollars in millions) Interest income $ 451 $ 419 8 % Percentage of revenues 3% 4% Interest income increased during the year ended December 31, 2025, compared to the prior year, primarily driven by an increase in investment income from our managed portfolio resulting from higher average portfolio balances.
Our customer count is subject to adjustments for acquisitions, spin-offs and other market activity; accordingly, we restate previously disclosed number of customers with ACV greater than $1 million calculations to allow for comparability. ACV is calculated based on the foreign exchange rate in effect at the time the contract was signed.
Our customer count is subject to adjustments for acquisitions, spin-offs and other market activity; accordingly, we restate previously disclosed number of customers with ACV greater than $5 million calculations to allow for comparability. ACV is calculated based on the foreign exchange rate in effect at the time the contract was signed.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This section of our Annual Report on Form 10-K discusses our financial condition and results of operations for the fiscal years ended December 31, 2024 and 2023, and year-to-year comparisons between fiscal 2024 and fiscal 2023 in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”).
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations This section of our Annual Report on Form 10-K discusses our financial condition and results of operations for the fiscal years ended December 31, 2025 and 2024, and year-to-year comparisons between fiscal 2025 and fiscal 2024 in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”).
Provision for (Benefit from) Income Taxes Provision for (benefit from) income taxes consists of federal, state and foreign income taxes. Our income tax provision for the year ended December 31, 2024 is primarily attributable to the mix of earnings and losses in countries with differing statutory tax rates, offset by excess tax benefits of stock-based compensation.
Provision for (Benefit from) Income Taxes Provision for (benefit from) income taxes consists of federal, state and foreign income taxes. Our income tax provision for the year ended December 31, 2025 is primarily attributable to the mix of earnings and losses in countries with differing statutory tax rates, offset by excess tax benefits of stock-based compensation.
We sometimes also enter into contracts with durations that have a 12-month or shorter term to enable the contracts to co-terminate with the existing contract. The contract duration will cause variability in our RPO. Number of customers with ACV greater than $1 million.
We sometimes also enter into contracts with durations that have a 12-month or shorter term to enable the contracts to co-terminate with the existing contract. The contract duration will cause variability in our RPO. Number of customers with ACV greater than $5 million .
We expect subscription revenues for the year ending December 31, 2025 to increase in absolute dollars and remain relatively flat as a percentage of revenue as we continue to add new customers and existing customers increase their usage of our products compared to the year ended December 31, 2024.
We expect subscription revenues for the year ending December 31, 2026 to increase in absolute dollars and remain relatively flat as a percentage of revenue as we continue to add new customers and existing customers increase their usage of our products compared to the year ended December 31, 2025.
We expect our cost of subscription revenues for the year ending December 31, 2025 to increase in absolute dollars as we provide subscription services to more customers and increase usage within our customer instances and increase slightly as a percentage of revenue compared to the year ended December 31, 2024.
We expect our cost of subscription revenues for the year ending December 31, 2026 to increase in absolute dollars as we provide subscription services to more customers and increase usage within our customer instances and increase slightly as a percentage of revenue compared to the year ended December 31, 2025.
Based upon our stock price as of December 31, 2024, we expect stock-based compensation to continue to increase in absolute dollars for the year ending December 31, 2025 as we continue to issue stock-based awards to our employees but remain relatively flat as a percentage of revenue compared to the year ended December 31, 2024.
Based upon our stock price as of December 31, 2025, we expect stock-based compensation to continue to increase in absolute dollars for the year ending December 31, 2026 as we continue to issue stock-based awards to our employees but remain relatively flat as a percentage of revenue compared to the year ended December 31, 2025.
We adjust our renewal rate for acquisitions, consolidations and other customer events that cause the merging of two or more accounts occurring at the time of renewal. Our renewal rate was 98% for each of the years ended December 31, 2024, 2023 and 2022.
We adjust our renewal rate for acquisitions, consolidations and other customer events that cause the merging of two or more accounts occurring at the time of renewal. Our renewal rate was 98% for each of the years ended December 31, 2025, 2024 and 2023.
Contractual Obligations and Commitments Our estimated future obligations consist of leases, various non-cancellable agreements with cloud service providers and an information technology equipment provider, purchase obligations, debt and unrecognized tax benefits as of December 31, 2024.
Contractual Obligations and Commitments Our estimated future obligations consist of leases, various non-cancellable agreements with cloud service providers and an information technology equipment provider, purchase obligations, debt and unrecognized tax benefits as of December 31, 2025.
Cash outflows from operations are principally comprised of the salaries, bonuses, commissions, and benefits for our workforce, licenses and services arrangements that are integral to our business operations and data centers and operating lease arrangements that underlie our facilities.
Cash outflows from operations are principally comprised of the salaries, bonuses, commissions, and benefits for our workforce, licenses and services arrangements, including cloud services, that are integral to our business operations and data centers and operating lease arrangements that underlie our facilities.
We typically invoice our customers for subscription fees in annual increments upon execution of the initial contract or subsequent renewal. Our contracts are generally non-cancellable during the subscription term, though a customer can terminate for breach if we materially fail to perform. 42 Table of Contents Professional services and other revenues .
We typically invoice our customers for subscription fees in annual increments upon execution of the initial contract or subsequent renewal. Our contracts are generally non- cancellable during the subscription term, though a customer can terminate for breach if we materially fail to perform. Professional services and other revenues .
We have generated positive operating cash flows for more than ten years as we continue to grow our business in pursuit of our business strategy, and we expect to grow our business and generate positive cash flows from operations during 2025.
We have generated positive operating cash flows for more than ten years as we continue to grow our business in pursuit of our business strategy, and we expect to grow our business and generate positive cash flows from operations during 2026.
As of December 31, 2024 and 2023, we maintained a valuation allowance of $220 million and $196 million, respectively, against our California deferred tax assets due to the uncertainty regarding realizability of these deferred tax assets as they have not met the “more likely than not” realization criteria, particularly as we expect research and development tax credit generation to exceed our ability to use the credits in future years.
As of December 31, 2025 and 2024, we maintained a valuation allowance of $241 million and $220 million, respectively, against our California deferred tax assets due to the uncertainty regarding realizability of these deferred tax assets as they have not met the “more likely than not” realization criteria, particularly as we expect research and development tax credit generation to exceed our ability to use the credits in future years.
Subscription services arrangements typically have a three-year duration, and we have experienced a renewal rate of 98% for each of the years ended December 31, 2024, 2023 and 2022.
Subscription services arrangements typically have a three-year duration, and we have experienced a renewal rate of 98% for each of the years ended December 31, 2025, 2024 and 2023.
Amortization expenses associated with deferred commissions increased by $90 million, compared to the prior year, due to an increase in contracts with new customers, expansion and renewal contracts.
Amortization expenses associated with deferred commissions increased by $67 million, compared to the prior year, due to an increase in contracts with new customers, expansion and renewal contracts.
Our expectations for revenues, cost of revenues and operating expenses for the year ending December 31, 2025 are based on the 31-day average of foreign exchange rates for December 31, 2024.
Our expectations for revenues, cost of revenues and operating expenses for the year ending December 31, 2026 are based on the 31-day average of foreign exchange rates for December 31, 2025.
Other sales and marketing program expenses, which include branding, costs associated with purchasing advertising, marketing events and market data, increased by $95 million compared to the prior year, primarily due to increased program costs and travel for our annual Sales Kickoff and Knowledge user conference.
Other sales and marketing program expenses, which include branding, costs associated with purchasing advertising, marketing events and market data, increased by $68 million compared to the prior year, primarily due to increased program costs and travel costs for our annual Knowledge user conference.
A discussion of our financial condition and results of operations for the fiscal year ended December 31, 2022 and year-to-year comparisons between fiscal 2023 and fiscal 2022 that is not included in this Annual Report on Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed on January 25, 2024.
A discussion of our financial condition and results of operations for the fiscal year ended December 31, 2023 and year-to-year comparisons between fiscal 2024 and fiscal 2023 that is not included in this Annual Report on Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed on January 30, 2025.
Revenues from our direct sales organization represented 78% of our total revenues for the year ended December 31, 2024 and 79% of our total revenues for each of the years ended December 31, 2023 and 2022.
Revenues from our direct sales organization represented 78% of our total revenues for each of the years ended December 31, 2025 and 2024 and 79% of our total revenues for the year ended December 31, 2023.
A release of the valuation allowance, if any, would result in the recognition of certain deferred tax assets and a material income tax benefit for the period in which such release is recorded. 41 Table of Contents We regularly assess the need for a valuation allowance against our deferred tax assets.
A release of the valuation allowance, if any, would result in the recognition of certain deferred tax assets and a material income tax benefit for the period in which such release is recorded. We regularly assess the need for a valuation allowance against our deferred tax assets.
Our free cash flow and non-GAAP consolidated income from operations measures included in the section entitled “—Key Business Metrics—Free Cash Flow” and “—Key Business Metrics—Non-GAAP Consolidated Income from Operations” are not in accordance with GAAP.
Our free cash flow and non-GAAP consolidated income from operations measures included in the section entitled “Key Business Metrics—Free Cash Flow” and “Key Business Metrics—Non-GAAP Consolidated Income from Operations” are not in accordance with GAAP.
We will continue to monitor the need for a valuation allowance against our deferred tax assets on a quarterly basis. Refer to Note 16 “Provision for (Benefit from) Income Taxes,” in the notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information on our valuation allowance.
We will continue to monitor the need for a valuation allowance against our deferred tax assets on a quarterly basis. Refer to Note 17 “Provision for (Benefit from) Income Taxes” in the notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information on our valuation allowance.
Dollar had an immaterial impact on our expenses for the year ended December 31, 2024.
Dollar had an immaterial impact on our expenses for the year ended December 31, 2025.
We may repurchase our shares of common stock in the open market, in privately negotiated transactions or by other means, with the objective to return value to our stockholders and manage the dilution from future employee equity grants and employee stock purchase programs.
We may repurchase our shares of common stock through open market purchases, accelerated share repurchase transactions, privately negotiated transactions or by other means, with the objective to return value to our stockholders and manage the dilution from future employee equity grants and employee stock purchase programs.
Included in subscription revenues is $409 million and $322 million of revenues recognized upfront from the delivery of software associated with self-hosted offerings during the years ended December 31, 2024 and 2023, respectively.
Included in subscription revenues is $492 million and $409 million of revenues recognized upfront from the delivery of software associated with self-hosted offerings during the years ended December 31, 2025 and 2024, respectively.
Critical estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows, discount rates, revenue growth rates, the time and expense to recreate the assets and profit margin a market participant would receive. These estimates are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates.
Critical estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows, discount rates, revenue growth rates, royalty rates, technology migration rates and profit margin a market participant would receive. These estimates are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates.
Our capital expenditures are under cancellable and non-cancellable arrangements. Non-cancellable purchase commitments for business operations total $4.1 billion as of December 31, 2024, due primarily over the next five years. Operating lease obligations totaling $924 million are principally associated with leased facilities and have varying maturities with $558 million due over the next five years.
Our capital expenditures are under cancellable and non-cancellable arrangements. Non-cancellable purchase commitments for business operations total $7.9 billion as of December 31, 2025, which are due primarily over the next five years. Operating lease obligations totaling $1.1 billion are principally associated with leased facilities and have varying maturities with $687 million due over the next five years.
The net increase in cash used in financing activities is primarily due to a $241 million increase in taxes paid related to net share settlement of equity awards, a $184 million increase in business combination related to the second installment payment in the acquisition of G2K Group GmbH and a $158 million increase in repurchases of common stock, offset by a $43 million increase in proceeds from employee stock plans.
The net increase in cash used in financing activities is due to a $1,144 million increase in repurchases of common stock and a $70 million increase in taxes paid related to net share settlement of equity awards, offset by a $184 million decrease in business combination related to the second installment payment in the acquisition of G2K Group GmbH and a $33 million increase in proceeds from employee stock plans.
A calculation of free cash flow is provided below: Year Ended December 31, 2024 2023 2022 (in millions) Free cash flow: Net cash provided by operating activities $ 4,267 $ 3,398 $ 2,723 Purchases of property and equipment (852) (694) (550) Business combination and other related costs 23 24 7 Legal settlements 17 — — Free cash flow $ 3,455 $ 2,728 $ 2,180 We have historically seen higher collections in the quarter ended March 31 due to seasonality in timing of entering into customer contracts, which is significantly higher in the quarter ended December 31.
A calculation of free cash flow is provided below: Year Ended December 31, 2025 2024 2023 (dollars in millions) GAAP net cash provided by operating activities $ 5,444 $ 4,267 $ 3,398 Purchases of property and equipment (868) (852) (694) Business combination and other related costs 60 23 24 Legal settlements — 17 — Non-GAAP free cash flow $ 4,636 $ 3,455 $ 2,728 We have historically seen higher collections in the quarter ended March 31 due to seasonality in timing of entering into customer contracts, which is significantly higher in the quarter ended December 31.
The net increase in operating cash flows was primarily due to higher collections driven by revenue growth. Investing Activities Net cash used in investing activities for the year ended December 31, 2024 was $2.5 billion compared to $2.2 billion for the prior year.
The net increase in operating cash flows was primarily due to higher collections driven by revenue growth. Investing Activities Net cash used in investing activities for the year ended December 31, 2025 was $1,689 million compared to $2,501 million for the prior year.
The gains (losses) recognized for these foreign currency forward contracts in other expense, net, were immaterial for each of the years ended December 31, 2024 and 2023.
The gains (losses) recognized for these foreign currency forward contracts in other expense, net, were immaterial for the year ended December 31, 2024.
As of December 31, 2024, our RPO was $22.3 billion, of which 46% represented cRPO. RPO and cRPO increased by 23% and 19%, respectively, compared to December 31, 2023. Factors that may cause our RPO to vary from period to period include the following: • Foreign currency exchange rates .
As of December 31, 2025, our RPO was $28.2 billion, of which 46% represented cRPO. RPO and cRPO increased by 27% and 25%, respectively, compared to December 31, 2024. Factors that may cause our RPO to vary from period to period include the following: • Foreign currency exchange rates .
Purchases of property and equipment are otherwise included in cash used in investing activities under GAAP. We believe information regarding free cash flow provides useful information to investors because it is an indicator of the strength and performance of our business operations. However, our calculation of free cash flow may not be comparable to similar measures used by other companies.
We believe information regarding free cash flow provides useful information to investors because it is an indicator of the strength and performance of our business operations. However, our calculation of free cash flow may not be comparable to similar measures used by other companies.
Refer to Note 17 “Commitments and Contingencies,” and Note 16 “Provision for (Benefit from) Income Taxes” to our consolidated financial statements included in this Annual Report on Form 10-K for more information. 51 Table of Contents
Refer to Note 18 “Commitments and Contingencies” and Note 17 “Provision for (Benefit from) Income Taxes” to our consolidated financial statements included in this Annual Report on Form 10-K for more information. 2025 Annual Report 63 Table of Contents Part II
Further, we have policy restrictions on the types of securities that can be purchased as part of our available-for-sale debt securities portfolio. These restrictions take industry and company concentration limits into consideration among other things.
Further, we have policy restrictions on the types of securities that can be purchased as part of our available-for-sale debt securities portfolio. These restrictions take industry and company concentration limits into consideration among other things. We will continue to monitor the direct and indirect impact of macroeconomic events on our business and financial results.
For these contracts, the transaction price is allocated to the separate performance obligations on a relative SSP basis. Evaluating the terms and conditions included within our customer contracts for appropriate revenue recognition and determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment.
Evaluating the terms and conditions included within our customer contracts for appropriate revenue recognition and determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment.
The transaction price is allocated to separate performance obligations on a relative standalone selling price (“SSP”) basis. The transaction price allocated to the software element is recognized when transfer of control of the software to the customer is complete.
The transaction price is allocated to separate performance obligations on a relative standalone selling price (“SSP”) basis. The transaction price allocated to the software element is recognized when transfer of control of the software to the customer is complete. The transaction price allocated to the related support and updates are recognized ratably over the contract term.
We count the total number of customers with annual contract value (“ACV”) greater than $1 million as of the end of the period. We had 2,109, 1,885, and 1,626 customers with ACV greater than $1 million as of December 31, 2024, 2023 and 2022, respectively.
We count the total number of customers with annual contract value (“ACV”) greater than $5 million as of the end of the period. We had 603, 502, and 420 customers with ACV greater than $5 million as of December 31, 2025, 2024 and 2023, respectively.
We define free cash flow, a non-GAAP financial measure, as GAAP net cash provided by operating activities plus cash outflows for legal settlements, repayments of convertible senior notes attributable to debt discount and business combination and other related costs including compensation expense, reduced by purchases of property and equipment.
Free cash flow . We define free cash flow, a non-GAAP financial measure, as GAAP net cash provided by operating activities plus cash outflows for legal settlements and business combination and other related costs including compensation expense, reduced by purchases of property and equipment. Purchases of property and equipment are otherwise included in cash used in investing activities under GAAP.
We will continue to monitor the need for a valuation allowance against our deferred tax assets on a quarterly basis. 49 Table of Contents Liquidity and Capital Resources We generate cash inflows from operations primarily from selling subscription services which are generally paid in advance of provisioning services, and expend cash outflows to develop new services and core technologies that further enhance the Now Platform, engage our customers and enhance their experience, and enable and transform our business operations.
Liquidity and Capital Resources We generate cash inflows from operations primarily from selling subscription services which are generally paid in advance of provisioning services, and expend cash outflows to develop new services and core technologies that further enhance the Platform, engage our customers and enhance their experience, and enable and transform our business operations.
Comparison of the years ended December 31, 2024 and 2023 Revenues Year Ended December 31, % Change 2024 2023 (dollars in millions) Revenues: Subscription $ 10,646 $ 8,680 23 % Professional services and other 338 291 16 % Total revenues $ 10,984 $ 8,971 22 % Percentage of revenues: Subscription 97 % 97 % Professional services and other 3 % 3 % Total 100 % 100 % 44 Table of Contents Subscription revenues increased by $2.0 billion for the year ended December 31, 2024, compared to the prior year, primarily driven by increased purchases by new and existing customers.
Comparison of the years ended December 31, 2025 and 2024 Revenues Year Ended December 31, % Change 2025 2024 (dollars in millions) Revenues: Subscription $ 12,883 $ 10,646 21 % Professional services and other 395 338 17 % Total revenues $ 13,278 $ 10,984 21 % Percentage of revenues: Subscription 97 % 97 % Professional services and other 3 % 3 % Total 100 % 100 % Subscription revenues increased by $2.2 billion for the year ended December 31, 2025, compared to the prior year, primarily driven by increased purchases by new and existing customers.
When assessing sources of liquidity, we also include cash and cash equivalents, short-term investments and long-term investments totaling $9.9 billion as of December 31, 2024.
When assessing sources of liquidity, we also include cash and cash equivalents, marketable securities and long-term marketable securities totaling $10.1 billion as of December 31, 2025.
In May 2023, our board of directors authorized a program to repurchase up to $1.5 billion of our common stock. During the year ended December 31, 2024, the Company repurchased 0.8 million shares of our common stock for $696 million. All repurchases were made in open market transactions.
In May 2023, our board of directors authorized a program to repurchase up to $1.5 billion of our common stock and authorized an additional $3.0 billion in repurchases under the program in January 2025. During the year ended December 31, 2025, the Company repurchased 10.3 million shares of our common stock for $1.8 billion.
The estimate of the potential outcome of any uncertain tax issue is subject to management’s assessment of relevant risks, facts and circumstances existing at that time. To the extent the assessment of such tax position changes, we record the change in estimate in the period in which we make the determination.
The estimate of the potential outcome of any uncertain tax issue is subject to management’s assessment of relevant risks, facts and circumstances existing at that time.
We believe information regarding the total number of customers with ACV greater than $1 million provides useful information to investors because it is an indicator of our growing customer base and demonstrates the value customers are receiving from the Now Platform. 38 Table of Contents Free cash flow.
Foreign exchange rate fluctuations could cause some variability in the number of customers with ACV greater than $5 million. We believe information regarding the total number of customers with ACV greater than $5 million provides useful information to investors because it is an indicator of our growing customer base and demonstrates the value customers are receiving from the Platform.
The transaction price allocated to the related support and updates are recognized ratably over the contract term. 40 Table of Contents We enter into contracts that can include various combinations of products and services, which are generally capable of being distinct and accounted for as separate performance obligations.
We enter into contracts that can include various combinations of products and services, which are generally capable of being distinct and accounted for as separate performance obligations. For these contracts, the transaction price is allocated to the separate performance obligations on a relative SSP basis.
Such assets arise because of temporary differences between the financial reporting and tax bases of assets and liabilities, as well as from net operating loss and tax credit carryforwards.
Deferred tax assets represent amounts available to reduce income taxes payable on taxable income in future years. Such assets arise because of temporary differences between the financial reporting and tax bases of assets and liabilities, as well as from net operating loss and tax credit carryforwards.
Significant judgment is required in determining our tax expense (benefit) and in evaluating our tax positions, including evaluating uncertainties and the complexity of taxes on foreign earnings. We review our tax positions quarterly and adjust the balances as new information becomes available. Deferred tax assets represent amounts available to reduce income taxes payable on taxable income in future years.
Tax laws are complex and subject to different interpretations by the taxpayer and respective government taxing authorities. Significant judgment is required in determining our tax expense (benefit) and in evaluating our tax positions, including evaluating uncertainties and the complexity of taxes on foreign earnings. We review our tax positions quarterly and adjust the balances as new information becomes available.
Sales and marketing expenses also include the amortization of commissions paid to our sales employees, including related payroll taxes and fringe benefits.
Sales and Marketing Sales and marketing expenses consist primarily of personnel-related expenses directly associated with our sales and marketing staff, including salaries, benefits, bonuses, stock-based compensation and allocated overhead. Sales and marketing expenses also include the amortization of commissions paid to our sales employees, including related payroll taxes and fringe benefits.
We evaluate these estimates and assumptions as new information is obtained and may record adjustments to the fair value of the tangible and intangible assets acquired and liabilities assumed but not later than one year from the acquisition date.
We evaluate these estimates and assumptions as new information is obtained and may record adjustments to the fair value of the tangible and intangible assets acquired and liabilities assumed but not later than one year from the acquisition date. 52 Table of Contents Part II Income Taxes Our annual tax rate is based on our income, statutory tax rates and tax planning opportunities available to us in the various jurisdictions in which we operate.
We primarily transact in certain foreign currencies for sales outside of the United States. The movement of the U.S. Dollar had an immaterial impact on our revenues for the year ended December 31, 2024. In addition, we primarily transact in several foreign currencies for cost of revenues and operating expenses outside of the United States. The movement of the U.S.
The impact from the foreign currency movements for the year ended December 31, 2025 compared to December 31, 2024 was not material for professional services and other revenues. In addition, we primarily transact in several foreign currencies for cost of revenues and operating expenses outside of the United States. The movement of the U.S.
Repurchases of common stock are recognized as treasury stock and held for future issuance. As of December 31, 2024, approximately $266 million of the originally authorized amount under the share repurchase program remained available for future repurchases. In January 2025, our board of directors authorized an additional $3.0 billion in repurchases under the share repurchase program.
All repurchases were made in open market transactions. Repurchases of common stock are recognized as treasury stock and held for future issuance. As of December 31, 2025, approximately $1.4 billion of the authorized amount under the share repurchase program remained available for future repurchases.
Cost of Revenues and Gross Profit Percentage Year Ended December 31, % Change 2024 2023 (dollars in millions) Cost of revenues: Subscription $ 1,942 $ 1,606 21 % Professional services and other 345 315 10 % Total cost of revenues $ 2,287 $ 1,921 19 % Gross profit (loss) percentage: Subscription 82 % 82 % Professional services and other (2 %) (8 %) Total gross profit percentage 79 % 79 % Gross profit: $ 8,697 $ 7,050 23 % 45 Table of Contents Cost of subscription revenues increased by $336 million for the year ended December 31, 2024, compared to the prior year, primarily due to increased headcount and increased costs to support the growth of our subscription offerings including costs to support customers in regulated markets.
We expect professional services and other revenues for the year ending December 31, 2026 to increase in absolute dollars and remain relatively flat as a percentage of revenue compared to the year ended December 31, 2025. 56 Table of Contents Part II Cost of Revenues and Gross Profit Percentage Year Ended December 31, % Change 2025 2024 (dollars in millions) Cost of revenues: Subscription $ 2,569 $ 1,942 32 % Professional services and other 414 345 20 % Total cost of revenues $ 2,983 $ 2,287 30 % Gross profit (loss) percentage: Subscription 80 % 82 % Professional services and other (5 %) (2 %) Total gross profit percentage 78 % 79 % Gross profit: $ 10,295 $ 8,697 18 % Cost of subscription revenues increased by $627 million for the year ended December 31, 2025, compared to the prior year, primarily due to increased headcount and increased costs to support the growth of our subscription offerings including costs to support customers in regulated markets.
We expect sales and marketing expenses for the year ending December 31, 2025 to increase in absolute dollars and to decrease slightly as a percentage of revenue compared to the year ended December 31, 2024, as we continue to see leverage from increased sales productivity and marketing efficiencies. 46 Table of Contents Research and Development Year Ended December 31, % Change 2024 2023 (dollars in millions) Research and development $ 2,543 $ 2,124 20 % Percentage of revenues 23 % 24 % Research and development expenses (“R&D”) increased by $419 million during the year ended December 31, 2024, compared to the prior year, primarily due to increased headcount resulting in an increase in personnel-related costs including stock-based compensation and overhead expenses of $350 million compared to prior year.
Research and Development Year Ended December 31, % Change 2025 2024 (dollars in millions) Research and development $ 2,960 $ 2,543 16 % Percentage of revenues 22% 23% Research and development expenses (“R&D”) increased by $417 million during the year ended December 31, 2025, compared to the prior year, primarily due to increased headcount resulting in an increase in personnel- related costs including stock-based compensation and overhead expenses of $383 million compared to the prior year.
Sales and Marketing Year Ended December 31, % Change 2024 2023 (dollars in millions) Sales and marketing $ 3,854 $ 3,301 17 % Percentage of revenues 35 % 37 % Sales and marketing expenses increased by $553 million for the year ended December 31, 2024, compared to the prior year, primarily due to increased headcount resulting in an increase in personnel-related costs including stock-based compensation and overhead expenses of $330 million, compared to the prior year.
We expect our professional services and other gross loss percentage to increase for the year ending December 31, 2026 compared to the year ended December 31, 2025. 2025 Annual Report 57 Table of Contents Part II Sales and Marketing Year Ended December 31, % Change 2025 2024 (dollars in millions) Sales and marketing $ 4,388 $ 3,854 14 % Percentage of revenues 33% 35% Sales and marketing expenses increased by $534 million for the year ended December 31, 2025, compared to the prior year, primarily due to increased headcount resulting in an increase in personnel-related costs including stock-based compensation and overhead expenses of $332 million, compared to the prior year.
Year Ended December 31, 2024 2023 2022 (in millions) GAAP income from operations $ 1,364 $ 762 $ 355 Stock-based compensation 1,746 1,604 1,401 Amortization of purchased intangibles 94 85 80 Business combination and other related costs 33 38 24 Legal settlements 17 — — Non-GAAP income from operations $ 3,254 $ 2,489 $ 1,860 39 Table of Contents Renewal rate.
The following table shows the reconciliation of our reported consolidated income from operations to non-GAAP consolidated income from operations. 50 Table of Contents Part II Year Ended December 31, 2025 2024 2023 (dollars in millions) GAAP income from operations $ 1,824 $ 1,364 $ 762 Stock-based compensation 1,955 1,746 1,604 Amortization of purchased intangibles 120 94 85 Business combination and other related costs 109 33 38 Impairment of assets 30 — — Severance costs 74 — — Legal settlements — 17 — Contract termination costs 37 — — Non-GAAP income from operations $ 4,149 $ 3,254 $ 2,489 Renewal rate .
We expect stock-based compensation as a percentage of revenue to decline over time as we continue to grow. Foreign Currency Exchange Our international operations have provided and will continue to provide a significant portion of our total revenues. Revenues outside North America represented 37% and 36% of total revenues for the years ended December 31, 2024 and 2023, respectively.
We expect stock-based compensation as a percentage of revenue to decline over time as we continue to grow. 2025 Annual Report 59 Table of Contents Part II Foreign Currency Exchange Our international operations have provided and will continue to provide a significant portion of our total revenues.
Our subscription gross profit percentage was 82% for each of the years ended December 31, 2024 and 2023. We expect our subscription gross profit percentage to decrease slightly for the year ended December 31, 2025 compared to the year ended December 31, 2024.
Our subscription gross profit percentage was 80% and 82% for the years ended December 31, 2025 and 2024, respectively.
Refer to Note 13 “Stockholders’ Equity” to our consolidated financial statements included in this Annual Report on Form 10-K for additional information. We have also issued long-term debt to finance our business . In August 2020, we issued 1.40% fixed rate ten-year notes with an aggregate principal amount of $1.5 billion due on September 1, 2030 (the “2030 Notes”).
In January 2026, our board of directors authorized an additional $5.0 billion in repurchases under the Share Repurchase Program. We have also issued long-term debt to finance our business . In August 2020, we issued 1.40% fixed rate ten-year notes with an aggregate principal amount of $1.5 billion due on September 1, 2030 (the “2030 Notes”).
Cost of revenues associated with our professional services engagements contracted with third-party partners as a percentage of professional services and other revenues was 24%, 10% and 12% for the years ended December 31, 2024, 2023 and 2022, respectively. 43 Table of Contents Sales and Marketing Sales and marketing expenses consist primarily of personnel-related expenses directly associated with our sales and marketing staff, including salaries, benefits, bonuses and stock-based compensation.
Cost of revenues associated with our professional services engagements contracted with third- party partners as a percentage of professional services and other revenues was 35%, 24% and 10% for the years ended December 31, 2025, 2024 and 2023, respectively.
Cost of professional services and other revenues increased by $30 million for the year ended December 31, 2024 as compared to the prior year, primarily due to an increase in partner ecosystem investments to further accelerate customer value realization, partially offset by a decrease in fixed personnel-related costs, including stock-based compensation, due to decreased internal headcount.
Cost of professional services and other revenues increased by $69 million for the year ended December 31, 2025 as compared to the prior year, primarily driven by an increase in partner ecosystem spend to further help accelerate customer value realization.
We define non-GAAP consolidated income from operations as income from operations excluding certain non-cash or non-recurring items, including stock-based compensation expense, amortization of purchased intangibles, legal settlements and business combination and other related costs. We believe these adjustments provide useful supplemental information to investors and facilitate the analysis of our operating results and comparison of those results across reporting periods.
We define non-GAAP consolidated income from operations as income from operations excluding certain non-cash or non-recurring items, including stock-based compensation expense, amortization of purchased intangibles, legal settlements, impairment of assets, severance costs, contract termination costs and business combination and other related costs including compensation expense.
This larger mix of contracts with 12-month renewal terms in the third quarter will generally cause variability in our RPO and cRPO in subsequent quarters until they are renewed. Although these seasonal factors may be common in the technology industry, historical patterns should not be considered a reliable indicator of our future sales activity or performance.
This larger mix of contracts with 12-month renewal terms in the third quarter will generally cause variability in our RPO and cRPO in subsequent quarters until they are renewed.
The remaining increase was primarily due to an increase in other corporate expenses and outside services of $67 million for the year ended December 31, 2024, compared to the prior year.
The remaining increase was primarily due to an increase in contract termination costs of $37 million and impairment of assets of $30 million for the year ended December 31, 2025, compared to the prior year.
Provision for (benefit from) Income Taxes Year Ended December 31, % Change 2024 2023 (dollars in millions) Income before income taxes $ 1,738 $ 1,008 72 % Provision for (benefit from) income taxes 313 (723) NM Effective tax rate 18 % (72 %) NM NM - Not meaningful The income tax provision was $313 million for the year ended December 31, 2024.
Provision for Income Taxes Year Ended December 31, % Change 2025 2024 (dollars in millions) Income before income taxes $ 2,261 $ 1,738 30 % Provision for income taxes 513 313 64 % Effective tax rate 23% 18% The income tax provision was $513 million and $313 million for the years ended December 31, 2025 and 2024, respectively.
While our significant accounting policies are more fully described in Note 2 in the notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K, we believe that the following accounting policies are critical to the process of making significant judgments and estimates in the preparation of our audited consolidated financial statements.
While our significant accounting policies are more fully described in Note 2 “Summary of Significant Accounting Policies” in the notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K, we believe that the following accounting policies are critical to the process of making significant judgments and estimates in the preparation of our audited consolidated financial statements. 2025 Annual Report 51 Table of Contents Part II Revenue Recognition We derive our revenues predominately from subscription revenues, which are primarily comprised of subscription fees that give customers access to the ordered subscription service, related support and updates, if any, to the subscribed service during the subscription term.
As we look beyond the next 12 months, we seek to continue to grow free cash flows necessary to fund our operations and grow our business.
As we look beyond the next 12 months, we seek to continue to grow cash flows necessary to fund our operations and grow our business. If we require additional capital resources, we may seek to finance our operations from the current funds available or additional equity or debt financing.
General and Administrative General and administrative expenses consist primarily of personnel-related expenses for our executive, finance, legal, human resources, facilities and administrative personnel, including salaries, benefits, bonuses, stock-based compensation, external legal, accounting and other professional services fees, other corporate expenses, amortization of intangible assets and allocated overhead.
Research and development expenses also include data center capacity costs, costs associated with outside services contracted for research and development purposes and depreciation of infrastructure hardware equipment that is used solely for research and development purposes. 2025 Annual Report 55 Table of Contents Part II General and Administrative General and administrative expenses consist primarily of personnel-related expenses for our executive, finance, legal, human resources, facilities and administrative personnel, including salaries, benefits, bonuses, stock-based compensation, external legal, accounting and other professional services fees, other corporate expenses, amortization of intangible assets and allocated overhead.
Personnel-related costs, including stock-based compensation and overhead expenses, increased by $230 million as compared to prior year. Expenses associated with software, maintenance, and other costs to support the expansion of our data center capacity increased by $85 million for the year ended December 31, 2024, as compared to prior year.
Depreciation expense related to infrastructure hardware equipment and expenses associated with software, maintenance, third-party cloud services and other costs, which together support the expansion of data center capacity increased by $277 million for the year ended December 31, 2025, as compared to the prior year.
We make exceptions for holding companies, government entities and other organizations for which the GULT, in our judgment, does not accurately represent the ServiceNow customer. For example, while all U.S. government agencies roll up to “Government of the United States” under the GULT, we count each government agency that we contract with as a separate customer.
For example, while all U.S. government agencies roll up to “Government of the United States” under the GULT, we count each government agency that we contract with as a 2025 Annual Report 49 Table of Contents Part II separate customer.
We expect G&A expenses for the year ending December 31, 2025 to increase in absolute dollars but remain relatively flat as a percentage of revenue compared to the year ended December 31, 2024, as we continue to see leverage from continued G&A productivity. 47 Table of Contents Stock-based Compensation Year Ended December 31, % Change 2024 2023 (dollars in millions) Cost of revenues: Subscription $ 250 $ 202 24 % Professional services and other 46 52 (12 %) Operating expenses: Sales and marketing 565 505 12 % Research and development 655 579 13 % General and administrative 230 266 (14 %) Total stock-based compensation $ 1,746 $ 1,604 9 % Percentage of revenues 16 % 18 % Stock-based compensation increased by $142 million during the year ended December 31, 2024, compared to the prior year, primarily due to additional grants to current and new employees.
Stock-based Compensation Year Ended December 31, % Change 2025 2024 (dollars in millions) Cost of revenues: Subscription $ 300 $ 250 20 % Professional services and other 44 46 (4 %) Operating expenses: Sales and marketing 586 565 4 % Research and development 791 655 21 % General and administrative 234 230 2 % Total stock-based compensation $ 1,955 $ 1,746 12 % Percentage of revenues 15% 16% Stock-based compensation increased by $209 million during the year ended December 31, 2025, compared to the prior year, primarily due to additional grants to current and new employees.
We expect R&D expenses for the year ending December 31, 2025 to increase in absolute dollars but remain relatively flat as a percentage of revenue compared to the year ended December 31, 2024, as we continue to improve the existing functionality of our services, develop new applications to fill market needs and enhance our core platform.
We expect R&D expenses for the year ending December 31, 2026 to increase in absolute dollars but remain relatively flat as a percentage of revenue compared to the year ended December 31, 2025, as we continue to improve the existing functionality of our services, develop new applications to fill market needs and enhance our core platform. 58 Table of Contents Part II General and Administrative Year Ended December 31, % Change 2025 2024 (dollars in millions) General and administrative $ 1,123 $ 936 20 % Percentage of revenues 8% 9% General and administrative expenses (“G&A”) increased by $187 million during the year ended December 31, 2025, compared to the prior year, primarily due to increased headcount resulting in an increase in personnel- related costs including stock-based compensation of $39 million and an increase in outside services of $78 million.
Our remaining product offerings, primarily comprised of our IT Operations Management (“ITOM”) products, are predominantly priced on a subscription unit basis. Professional services and other revenues increased by $47 million for the year ended December 31, 2024, compared to the prior year, due to an increase in services and trainings provided to new and existing customers.
Professional services and other revenues increased by $57 million for the year ended December 31, 2025, compared to the prior year, due to an increase in services and trainings provided to new and existing customers.
See the “Risk Factors” section in Part I, Item 1A of this Annual Report for further discussion of the possible impact of conflicts and macroeconomic events on our business and financial results . 37 Table of Contents Key Business Metrics Remaining performance obligations.
See the “Risk Factors” section in Part I, Item 1A of this Annual Report for further discussion of the possible impact of conflicts and macroeconomic events on our business and financial results. 48 Table of Contents Part II On December 5, 2025, our board of directors approved and declared a 5-for-1 split of our common stock (“Stock Split”), with a proportionate increase in the number of shares of authorized common stock.
We expect professional services and other revenues for the year ending December 31, 2025 to remain relatively flat both in absolute dollars and as a percentage of revenue compared to the year ended December 31, 2024.
We expect G&A expenses for the year ending December 31, 2026 to decrease in absolute dollars and to decrease slightly as a percentage of revenue compared to the year ended December 31, 2025, as we continue to see leverage from continued G&A productivity.
Our free cash flows, together with our other sources of liquidity, are available to service our liabilities as well as our cancellable and non-cancellable arrangements. We anticipate cash flows generated from operations, cash, cash equivalents and investments will be sufficient to meet our liquidity needs for at least the next 12 months.
Our operating cash flows, together with our other sources of liquidity, are available to service our liabilities as well as our cancellable and non-cancellable arrangements.
If we require additional capital resources, we may seek to finance our operations from the current funds available or additional equity or debt financing. 50 Table of Contents Year Ended December 31, 2024 2023 (dollars in millions) Net cash provided by operating activities $ 4,267 $ 3,398 Net cash used in investing activities (2,501) (2,167) Net cash used in financing activities (1,343) (803) Net increase in cash, cash equivalents and restricted cash 406 429 Operating Activities Net cash provided by operating activities was $4.3 billion for the year ended December 31, 2024 compared to $3.4 billion for the prior year.
Year Ended December 31, 2025 2024 (dollars in millions) Net cash provided by operating activities $ 5,444 $ 4,267 Net cash used in investing activities (1,689) (2,501) Net cash used in financing activities (2,340) (1,343) Net increase in cash, cash equivalents and restricted cash 1,422 406 Operating Activities Net cash provided by operating activities was $5,444 million for the year ended December 31, 2025 compared to $4,267 million for the prior year.
The income tax provision was primarily attributable to the mix of earnings and losses in countries with differing statutory tax rates, offset by excess tax benefits of stock-based compensation. The income tax benefit was $723 million for the year ended December 31, 2023.
The income tax provision was primarily attributable to the mix of earnings and losses in countries with differing statutory tax rates, offset by excess tax benefits of stock-based compensation. On July 4, 2025, H.R. 1, the "One Big Beautiful Bill Act," was enacted into law, bringing significant amendments to the U.S. tax code.
While these events are still evolving and the outcomes remain highly uncertain, we do not believe these conflicts will have a material impact on our business and results of operations. However, if the conflicts continue or worsen, leading to greater global economic disruptions and uncertainty, our business and results of operations could be materially impacted.
However, if the conflicts persist or worsen, leading to greater global economic disruptions and uncertainty, our business and results of operations could be materially impacted. Additionally, other macroeconomic events, including interest rates, global inflation and tariffs, have led to economic uncertainty in the global economy.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

14 edited+4 added−1 removed9 unchanged
Biggest changeAs of December 31, 2023, we had an aggregate of $8.1 billion in cash, cash equivalents, short-term investments and long-term investments, and a hypothetical 100 basis point increase in interest rates would have resulted in an approximate $60 million decline of the fair value of our available-for-sale debt securities. 52 Table of Contents Market Risk In August 2020, we issued 1.40% fixed rate ten-year notes with an aggregate principal amount of $1.5 billion due on September 1, 2030.
Biggest changeMarket Risk In August 2020, we issued 1.40% fixed rate ten-year notes with an aggregate principal amount of $1.5 billion due on September 1, 2030. The 2030 Notes were issued at 99.63% of principal and we incurred approximately $13 million of debt issuance costs.
These foreign currency forward contracts are intended to offset gains or losses related to remeasuring monetary assets and liabilities and to reduce foreign exchange impact on our forecasted revenues. Derivative contracts related to hedging of forecasted revenues are designated as cash flow hedges for accounting purposes.
These foreign currency forward contracts are intended to offset gains or losses related to remeasuring monetary assets and liabilities and to reduce foreign exchange impact on our forecasted revenues and operating expenses. Derivative contracts related to hedging of forecasted revenues and operating expenses are designated as cash flow hedges for accounting purposes.
To mitigate our risks associated with fluctuations in foreign currency exchange rates, we enter into foreign currency forward contracts to hedge a portion of our net outstanding monetary assets, liabilities and forecasted foreign currency denominated revenues.
To mitigate our risks associated with fluctuations in foreign currency exchange rates, we enter into foreign currency forward contracts to hedge a portion of our net outstanding monetary assets, liabilities and forecasted foreign currency denominated revenues and operating expenses.
Our non-marketable equity investments are primarily accounted for using: (i) measurement alternative which measures the investments at cost minus impairment, if any, and adjusted for observable transactions for the same or similar investments of the same issuer and (ii) equity method which measures the investment at cost minus impairment, plus or minus our share of equity method investee income or loss.
Our strategic investments are predominantly comprised of non-marketable equity investments and are primarily accounted for using: (i) measurement alternative which measures the investments at cost minus impairment, if any, and adjusted for observable transactions for the same or similar investments of the same issuer and (ii) equity method which measures the investment at cost minus impairment, plus or minus our share of equity method investee income or loss.
Dollar from its value as of December 31, 2024 would decrease the fair value of our foreign currency contracts by $164 million. These foreign currency forward contracts expose us to credit risk to the extent that the counterparties may be unable to meet the terms of the arrangement.
Dollar from its value as of December 31, 2025 would decrease the fair value of our foreign currency contracts by $18 million. These foreign currency forward contracts expose us to credit risk to the extent that the counterparties may be unable to meet the terms of the arrangement.
Dollar relative to these currencies and, conversely, are adversely affected by a strengthening of the U.S. Dollar relative to these currencies. Revenues denominated in U.S. Dollar as a percentage of total revenues were 71% for each of the years ended December 31, 2024 and 2023 and 72% for the year ended December 31, 2022.
Dollar relative to these currencies and, conversely, are adversely affected by a strengthening of the U.S. Dollar relative to these currencies. Revenues denominated in U.S. Dollar as a percentage of total revenues were 71% for each of the years ended December 31, 2025, 2024 and 2023. A hypothetical 10% increase in the U.S.
A hypothetical 10% increase in the U.S. Dollar against other currencies would have resulted in a decrease in operating income of $150 million, $107 million and $75 million for the years ended December 31, 2024, 2023 and 2022, respectively.
Dollar against other currencies would have resulted in a decrease in operating income of $177 million, $150 million and $107 million for the years ended December 31, 2025, 2024 and 2023, respectively.
We hold cash balances with multiple financial institutions in various countries and these balances routinely exceed deposit insurance limits. As of December 31, 2024 and 2023, we had $469 million and $268 million, respectively, of non-marketable equity investments in privately held companies.
We hold cash balances with multiple financial institutions in various countries and these balances routinely exceed deposit insurance limits. As of December 31, 2025 and 2024, we had $1,542 million and $472 million, respectively, of strategic investments in privately held companies.
The 2030 Notes were issued at 99.63% of principal and we incurred approximately $13 million of debt issuance costs. Interest is payable semi-annually in arrears on March 1 and September 1 of each year, beginning on March 1, 2021, and the entire outstanding principal amount is due at maturity on September 1, 2030.
Interest is payable semi-annually in arrears on March 1 and September 1 of each year, beginning on March 1, 2021, and the entire outstanding principal amount is due at maturity on September 1, 2030.
All of our non-marketable equity investments in privately held companies are subject to a risk of partial or total loss of invested capital. 53 Table of Contents
All of our strategic investments in privately held companies are subject to a risk of partial or total loss of invested capital. 2025 Annual Report 65 Table of Contents Part II
For contracts not designated as cash flow hedges for accounting purposes, the derivative’s gain or loss is recognized immediately in earnings within our consolidated statements of comprehensive income. A sensitivity analysis performed on our cash flow hedge portfolio as of December 31, 2024 indicated that a hypothetical 10% depreciation of the U.S.
For contracts not designated as cash flow hedges for accounting purposes, the derivative’s gain or loss is recognized immediately in earnings within our consolidated statements of comprehensive income.
Our investments are exposed to market risk due to fluctuations in interest rates, which may affect our interest income and the fair market value of our investments. As of December 31, 2024, a hypothetical 100 basis point increase in interest rates would have resulted in an approximate $78 million decline of the fair value of our available-for-sale debt securities.
As of December 31, 2024, we had an aggregate of $9.9 billion in cash, cash equivalents, marketable securities and long-term marketable securities, and a hypothetical 100 basis point increase in interest rates would have resulted in an approximate $78 million decline in the fair value of our available-for-sale debt securities.
We are not required to pledge, and are not entitled to receive, cash collateral related to these derivative instruments. We do not enter into derivative contracts for trading or speculative purposes. Refer to Note 8 in the notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information.
We are not required to pledge, and are not entitled to receive, cash collateral related to these derivative instruments. We do not enter into derivative contracts for trading or speculative purposes.
This estimate is based on a sensitivity model that measures market value changes when changes in interest rates occur.
As of December 31, 2025, a hypothetical 100 basis point increase in interest rates would have resulted in an approximate $62 million decline of the fair value of our available-for-sale debt securities. This estimate is based on a sensitivity model that measures market value changes when changes in interest rates occur.
Removed
Interest Rate Sensitivity We had an aggregate of $9.9 billion in cash, cash equivalents, short-term investments and long-term investments as of December 31, 2024.
Added
A sensitivity analysis performed on our cash flow hedge portfolio relating to the hedging of forecasted revenues as of December 31, 2025 and 2024 indicated that a hypothetical 10% depreciation of the U.S.
Added
Dollar from its value as of December 31, 2025 and 2024 would decrease the fair value of our foreign currency contracts by $199 million and $164 million, respectively. A sensitivity analysis performed on our cash flow hedge portfolio relating to the hedging of forecasted operating expenses as of December 31, 2025 indicated that a hypothetical 10% appreciation of the U.S.
Added
Refer to Note 8 “Derivative Contracts” in the notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information. 64 Table of Contents Part II Interest Rate Sensitivity We had an aggregate of $10.1 billion in cash, cash equivalents, marketable securities and long-term marketable securities as of December 31, 2025.
Added
Our marketable securities and long-term marketable securities are exposed to market risk due to fluctuations in interest rates, which may affect our interest income and the fair market value of our investments.

Other NOW 10-K year-over-year comparisons