Entered a new $150 million revolving credit facility to enhance financial flexibility.
Free cash flow was negative $47.1 million due to $55 million purchase of the Farmers Branch facility and higher CapEx of $66.3 million.
GAAP net income was $9.1 million or $0.12 per share; non-GAAP net income was $21.2 million or $0.27 per share.
GAAP operating income was $12.3 million, up from $3.3 million in Q1; non-GAAP operating income was $22.8 million, up 35.2% from Q1.
Non-GAAP gross margin was 38.5%, at the low end of the range and 0.7 percentage points lower than Q1, mainly due to lower Systems segment margins and ramp-up costs for an HBM DRAM customer.
Probe Cards segment revenues were $162.1 million, up 18.7% sequentially, driven by foundry, logic, and DRAM markets.
Q2 revenues were $195.8 million, $0.8 million above the high end of the outlook range, with a 14.3% sequential increase and a 0.8% year-over-year decrease.
Systems segment revenues were $33.7 million, down $1.1 million sequentially, comprising 17.2% of total revenues.
Total cash and investments were $253 million, down $50 million from Q1.
Impact of Subscription Licensing Program Changes on Margins
Gross profit increased to a record $137.8 million, but gross margins declined by 40 basis points to 18.1% due to changes in partner subscription licensing programs.
The decline in gross margin was primarily driven by these licensing program adjustments, which management indicated had a significant impact in Q2.
Current Remaining Performance Obligations (RPO) ended at approximately $23.9 billion, representing 25.5% year-over-year constant currency growth.
Free cash flow margin was 16.5%, up 3% year-over-year, with a strong balance sheet including $10.8 billion in cash and investments.
Operating margin was 29.5%, over 2.5 points above guidance, driven by top line outperformance and AI operational efficiencies.
Renewal rate remained robust at 98%, underscoring ServiceNow's strategic importance as an AI platform for business transformation.
ServiceNow reported Q2 subscription revenues of $3.113 billion, growing 21.5% year-over-year in constant currency, beating guidance by 200 basis points.
Strong growth was seen across industries, notably transportation and logistics (100%+ growth), technology, media and telecom (70%+ growth), retail and hospitality, and energy & utilities (50%+ growth).
The company closed 89 deals greater than $1 million in net new ACV, including 11 deals over $5 million, with 528 customers generating over $5 million in ACV.
Dafinchi