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.
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.
Cash and equivalents totaled $92 million at quarter end, down $17 million from Q1 due to working capital investments and $7 million in capital expenditures.
Charges of $5.7 million were recorded between Q1 and Q2 for exit costs related to personnel, fixed assets, and facilities as part of global operations consolidation.
Net interest expense was $1.6 million, aligned with expectations.
Non-GAAP net income tax expense was $3.2 million, higher than forecast due to acceleration of the Pillar Two tax into Q2, impacting EPS by $0.07.
Operating expenses were roughly flat to Q1 at $23.8 million, resulting in operating income of $6.1 million for Q2.
Q2 gross margin was 12.5%, a slight increase of 10 basis points from Q1 but at the low end of expectations due to hiring challenges limiting machine component output.
Reported EPS for Q2 was $0.03 per share.
Second quarter revenues were $240.3 million, at the upper end of guidance, up 18% year-over-year but 2% lower than Q1.
Total debt was $126 million with a net debt coverage ratio of 1.5x, well below covenant thresholds.
Adjusted EBITDA was $61 million with a 12.7% margin, a 50 basis point expansion year-over-year.
Cash balances were $301 million at quarter end, down from $377 million at year-end, reflecting pension contributions and refinancing activities.
Cloud, Applications & Infrastructure Solutions revenue was $185 million, down 4.9% year-over-year but up 2% sequentially.
Digital Workplace Solutions revenue was $138 million, up 4.6% year-over-year, with 13% sequential growth in Q2.
Enterprise Computing Solutions revenue was $140 million, up 8.2% year-over-year, with L&S revenue at $88 million, exceeding expectations.
Excluding License and Support (L&S), revenue was essentially flat year-over-year at $396 million, with 8.5% sequential growth in constant currency.
Gross profit was $130 million with a 26.9% margin, slightly down from 27.2% last year; Ex-L&S gross margin was 17.6%, down 110 basis points due to restructuring charges.
Net income was negative $20 million, or a loss of $0.28 per share; adjusted net income was $14 million or $0.19 per share.
Net leverage ratio including pension obligations was 3.4x, stable year-over-year.
Non-GAAP operating profit margin improved to 7.6% from 6.1%, driven by higher L&S revenue and operational efficiencies.
Pre-pension free cash flow was negative $58 million due to working capital fluctuations; free cash flow was negative $337 million reflecting a $250 million discretionary pension contribution.
Second quarter reported revenue increased 12% sequentially and 1% year-over-year as reported and in constant currency, exceeding prior expectations.