# NOW (NOW) Q2 2025 Earnings Call Summary
## Summary Introduction
In the Q2 2025 earnings call, NOW showcased robust financial performance and strategic advancements, particularly in AI-driven offerings and CRM workflows. The company reported a substantial 21.5% increase in subscription revenue in constant currency and an operating margin of 29.5%, both surpassing prior guidance. Strategic highlights included significant customer wins and the largest deal for Now Assist valued at over $20 million. NOW is actively redefining CRM with AI-powered solutions, moving from traditional systems to those driven by autonomous agents. The tone of the call was optimistic, reflecting strong investor confidence bolstered by NOW’s alignment with current macroeconomic trends such as digital transformation and AI integration. The company’s strategic positioning and operational strategies indicate a strong market opportunity amidst a competitive landscape.
## Summarized Content
– NOW reported strong financial performance in Q2 2025, with subscription revenue growth at 21.5% in constant currency, exceeding guidance by 2 points, and an operating margin of 29.5%, surpassing guidance by 2.5 points. The company also saw a free cash flow margin of 16.5%, an increase of 3% year-on-year.
– Strategic advancements highlighted include significant traction in AI-driven offerings, with the company closing its largest Now Assist deal at over $20 million and continued growth in CRM and front office workflows. NOW is redefining CRM with AI-powered solutions, emphasizing the shift from traditional CRM to systems driven by autonomous agents.
– Major customer wins and partnerships were announced,
– NOW reported Q2 subscription revenues of $3.113 billion, a 21.5% increase year-over-year, surpassing guidance expectations. The company’s non-GAAP operating margin was 29.5%, significantly above their guidance due to top-line performance and AI operational efficiencies. They also reported a robust renewal rate of 98%, indicating strong customer retention.
– The company saw significant growth in sectors like transportation, logistics, technology, media, and telecom, with substantial increases in annual contract value (ACV). NOW’s AI products, particularly Now Assist, are performing well above expectations, with significant deal volumes and sizes increasing quarter-over-quarter. The addition of Logik
– NOW is enhancing its AI capabilities, notably through the AI Control Tower, which serves as a central management system for AI deployments across various data sources and models, including partnerships with NVIDIA and options for using models from OpenAI among others. This strategic focus is aimed at streamlining and accelerating business processes through AI integration.
– The company is also aggressively expanding into CRM workflows, leveraging AI to transform front office operations such as service, sales, and marketing. NOW’s recent acquisition, Logik.ai, supports this strategy by enhancing capabilities in sales order management and CPQ (Configure, Price, Quote), addressing significant market demand and improving workflow efficiency.
– The discussion also touched on the broader industry context, where NOW positions itself as a leader
– NOW has experienced a robust financial performance with significant adoption of their Pro Plus product, which has seen usage increase by 9x over the past three months. This has led to substantial revenue growth from this segment, and the company is on track to achieve a $1 billion ACV by 2026.
– The company is actively investing in AI capabilities, seeing it as a crucial area for future growth. This includes strategic investments in engineering and sales to enhance AI product offerings and customer support. Despite these investments, NOW has managed to maintain stable operating margins, partly due to productivity gains from AI and efficient expense management.
– New customer acquisition remains strong, with an increasing average ACV per new logo, indicating effective expansion and scaling with new
– The company is experiencing strong momentum and has not planned additional hiring as investments are already included in their guidance. The focus is on deploying existing expertise to new use cases with large enterprises. NOW continues to invest in sales and marketing, particularly in technical sellers, without slowing down despite operational efficiencies gained from AI.
– Recent leadership changes across U.S., Europe, and APJ regions involve bringing in proven executives to enhance go-to-market strategies. Notable appointments include Adrian in APJ, Tom Hannigan, and Steve Walters in the U.S., with a focus on maintaining a high level of execution and leveraging their deep experience in enterprise software. The company is also expanding its product portfolio into
## Highlights
– NOW reported strong financial performance in Q2 2025, with subscription revenue growth at 21.5% in constant currency, exceeding guidance by 2 points, and an operating margin of 29.5%, surpassing guidance by 2.5 points. The company also saw a free cash flow margin of 16.5%, an increase of 3% year-on-year.
– Strategic advancements highlighted include significant traction in AI-driven offerings, with the company closing its largest Now Assist deal at over $20 million and continued growth in CRM and front office workflows. NOW is redefining CRM with AI-powered solutions, emphasizing the shift from traditional CRM to systems driven by autonomous agents.
– Major customer wins and partnerships were announced,
– **Financial Performance**: NOW reported Q2 subscription revenues of $3.113 billion, a 21.5% increase year-over-year, surpassing guidance expectations. The company’s non-GAAP operating margin was 29.5%, significantly above their guidance due to top-line performance and AI operational efficiencies. They also reported a robust renewal rate of 98%, indicating strong customer retention.
– **Strategic Updates and Product Performance**: The company saw significant growth in sectors like transportation, logistics, technology, media, and telecom, with substantial increases in annual contract value (ACV). NOW’s AI products, particularly Now Assist, are performing well above expectations, with significant deal volumes and sizes increasing quarter-over-quarter. The addition of Logik
– NOW is enhancing its AI capabilities, notably through the AI Control Tower, which serves as a central management system for AI deployments across various data sources and models, including partnerships with NVIDIA and options for using models from OpenAI among others. This strategic focus is aimed at streamlining and accelerating business processes through AI integration.
– The company is also aggressively expanding into CRM workflows, leveraging AI to transform front office operations such as service, sales, and marketing. NOW’s recent acquisition, Logik.ai, supports this strategy by enhancing capabilities in sales order management and CPQ (Configure, Price, Quote), addressing significant market demand and improving workflow efficiency.
– The discussion also touched on the broader industry context, where NOW positions itself as a leader
– NOW has experienced a robust financial performance with significant adoption of their Pro Plus product, which has seen usage increase by 9x over the past three months. This has led to substantial revenue growth from this segment, and the company is on track to achieve a $1 billion ACV by 2026.
– The company is actively investing in AI capabilities, seeing it as a crucial area for future growth. This includes strategic investments in engineering and sales to enhance AI product offerings and customer support. Despite these investments, NOW has managed to maintain stable operating margins, partly due to productivity gains from AI and efficient expense management.
– New customer acquisition remains strong, with an increasing average ACV per new logo, indicating effective expansion and scaling with new
– **Financial and Operational Highlights**: The company is experiencing strong momentum and has not planned additional hiring as investments are already included in their guidance. The focus is on deploying existing expertise to new use cases with large enterprises. NOW continues to invest in sales and marketing, particularly in technical sellers, without slowing down despite operational efficiencies gained from AI.
– **Leadership and Strategic Updates**: Recent leadership changes across U.S., Europe, and APJ regions involve bringing in proven executives to enhance go-to-market strategies. Notable appointments include Adrian in APJ, Tom Hannigan, and Steve Walters in the U.S., with a focus on maintaining a high level of execution and leveraging their deep experience in enterprise software. The company is also expanding its product portfolio into
## Key Facts and Performance
NOW’s Q2 2025 earnings revealed a dynamic growth trajectory with key financial metrics indicating strong market performance. Subscription revenues reached $3.113 billion, marking a 21.5% year-over-year increase. This growth is attributed to the company’s effective scaling strategies and the high adoption rate of AI-enhanced products like Now Assist and Pro Plus. The non-GAAP operating margin stood at 29.5%, reflecting efficient operational management and AI-driven productivity gains.
### Regional Growth
– **Americas**: Strong growth, driven by increased demand in AI solutions and strategic enterprise agreements.
– **EMEA**: Steady growth, with expansion in AI deployments and strategic customer acquisitions.
– **Asia Pacific**: Remarkable growth, particularly in technology and telecom sectors, supported by strategic leadership appointments and localized go-to-market strategies.
### Operational Performance
– **AI Products**: Significant traction with Now Assist and AI Control Tower, leading to operational efficiencies and new customer engagements.
– **CRM and Front Office Workflows**: Expansion through acquisitions like Logik.ai, enhancing capabilities in CPQ and sales order management.
### Strategic Updates
– **Investments in AI**: Continued investments in AI capabilities to bolster product offerings and customer support.
– **Leadership Restructuring**: Strategic leadership changes in key regions to enhance execution and market penetration.
### Financial Metrics
– **Revenue**: $3.113 billion from subscriptions.
– **Earnings**: High renewal rate at 98%, indicating robust earnings potential.
– **Margins**: Operating margin at 29.5%, with a free cash flow margin of 16.5%.
The financial and strategic maneuvers undertaken by NOW signify a strong competitive position and investor confidence, with AI integration playing a pivotal role in operational and financial metrics.
## Outlook
For the upcoming fiscal year, NOW projects continued revenue growth and operational efficiency improvements. The company expects to leverage its AI capabilities to drive further market penetration and enhance customer value, particularly in CRM and AI-driven workflows. Strategic risks include potential supply chain disruptions and macroeconomic fluctuations which may impact cost structures. However, NOW’s guidance remains optimistic, projecting a revenue increase and margin stability, supported by strategic investments and operational enhancements.
## Conclusion
NOW’s Q2 2025 performance underscores a resilient and innovative market stance, characterized by strong revenue growth, strategic AI advancements, and robust operational efficiencies. The company’s financial health is solid, with significant gains in subscription revenues and margins. Strategic achievements, such as the expansion in AI capabilities and CRM innovations, position NOW favorably against competitive pressures and market dynamics. Investor sentiment remains positive, buoyed by NOW’s proactive management and clear strategic direction, setting a confident outlook for future growth and market leadership.
