ServiceNow’s Q3 Revenue Hits $3.4B While $7.75B Armis Deal Triggers 11% Plunge
ServiceNow reported Q3 2025 revenue of $3.4B, up 22% year-over-year, with subscription sales making up $3.3B of revenue and $11.35B in remaining performance obligations. The company spent $12B on acquisitions this year, including a $7.75B Armis buy that sparked an 11% stock drop over growth concerns.
1. Robust Subscription Model and Renewal Rates
ServiceNow reported Q3 2025 revenue of $3.4 billion, up 22% year over year, with subscription revenue accounting for $3.3 billion or 97% of total sales. The company maintains an impressive 97% customer renewal rate—even 98% when excluding the closure of a large U.S. federal agency—underscoring the stickiness of its GenAI-powered chatbot platform and the high switching costs for enterprise clients.
2. Expanding Enterprise Footprint and Contract Wins
With nearly 8,400 customers spanning 85% of the Fortune 500, ServiceNow closed 103 net new annual contract value (ACV) deals above $1 million in Q3 and ended the quarter with 553 customer contracts above $5 million in ACV, an 18% year-over-year increase. The company also holds $11.35 billion in remaining performance obligations, reflecting a substantial revenue backlog.
3. $12 B Acquisition Spree Sparks Investor Debate
In 2025, ServiceNow committed over $12 billion to strategic acquisitions and investments, led by the $7.75 billion purchase of cybersecurity firm Armis, followed by a $2.8 billion acquisition of Moveworks and a $750 million investment in Genesys. While these deals aim to bolster product offerings and drive growth, investors reacted negatively—shares plunged 11% on the day of the Armis announcement—and analysts question whether the company is reverting to M&A to offset slowing organic revenue growth.