What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-01-29 compared with 2025-01-30 · 436 added, 305 removed, 1168 unchanged (39% of the section changed)

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We encourage investors to carefully consider our results under GAAP, as well as our supplemental non-GAAP results, to more fully understand our 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.

Our workflow applications built on the Now Platform are organized along four primary areas:

Technology, Customer and Industry, Employee and Creator.

The Now Platform is the AI platform for digital transformation.

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.

We are closely monitoring the ongoing conflicts in Russia/Ukraine and the Middle East.

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.

Our customers in these regions represented an immaterial portion of our net assets and total consolidated revenues both as of and for the years ended December 31, 2024 and December 31, 2023.

Additionally, other macroeconomic events, including higher interest rates, global inflation and bank failures, have led to economic uncertainty in the global economy.

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.

At the core of these solutions is the ServiceNow AI Platform (“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.

Our Platform’s single data fabric and integrated data layer supports organizations’ operationalization of their AI strategy with speed, scale and security.

Our workflow applications built on the Platform are grouped into four areas:

Technology, CRM and Industry, Core Business, and Creator and Other.

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.

Our one platform architecture provides the foundation for organizations to seamlessly integrate AI, data, and workflows and create intelligent processes across their enterprise.

We are closely monitoring ongoing global conflicts.

While those events are continuing to evolve and the outcomes remain highly uncertain, we do not believe they will have a material impact on our business and results of operations.

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.

To mitigate risk, our cash and cash equivalents are distributed across several large financial institutions and are not concentrated in one financial institution.

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These restrictions take industry and company concentration limits into consideration among other things.

Furthermore, the majority of our non-marketable equity investments do not have material relationships with any one financial institution, and therefore, we believe that our exposure to loss as a result of bank failure is immaterial.

We will continue to monitor the direct and indirect impact of macroeconomic events on our business and financial results.

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.

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.

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.

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 Management's Discussion and Analysis of Financial Condition and Results of Operations have been retroactively adjusted to reflect the effects of the Stock Split.

Key Business Metrics

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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.

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

separate customer.

Our customer count is subject to adjustments for acquisitions, spin-offs and other market activity;

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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 $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.

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.

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, 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.

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.

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2025 2024 2023

(in millions)

Free cash flow:

Net cash provided by operating activities $ 4,267 $ 3,398 $ 2,723

(dollars in millions)

GAAP net cash provided by operating activities

$ 5,444 $ 4,267 $ 3,398

Purchases of property and equipment (868) (852) (694)

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Legal settlements — 17 —

Free cash flow

Non-GAAP free cash flow

$ 4,636 $ 3,455 $ 2,728

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This non-GAAP measure is used by the chief operating decision maker to allocate resources and assess performance.

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.

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2025 2024 2023

(in millions)

(dollars in millions)

GAAP income from operations $ 1,824 $ 1,364 $ 762

$ 1,364 $ 762 $ 355

Stock-based compensation 1,955 1,746 1,604

1,746 1,604 1,401

Amortization of purchased intangibles 120 94 85

Business combination and other related costs 109 33 38

Impairment of assets

Severance costs

Legal settlements — 17 —

Contract termination costs 37 — —

Non-GAAP income from operations $ 4,149 $ 3,254 $ 2,489

$ 3,254 $ 2,489 $ 1,860

Renewal rate .

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Actual results may differ from these estimates under different assumptions or conditions and such differences could be material.

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.

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Revenue Recognition

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The excess of the purchase price in a business combination over the fair value of these tangible and intangible assets acquired and liabilities assumed is recorded as goodwill.

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.

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.

We typically engage third party valuation appraisal firms to assist us in determining the fair values of intangible assets, including the relief from royalty method and multi-period excess earnings method used to calculate the fair values under the income approach.

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.

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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.

Change in Accounting Estimate

In January 2024, we completed an assessment of the useful life of our data center equipment and determined we should increase the estimated useful life of data center equipment from four to five years.

This change in accounting estimate was effective beginning fiscal year 2024.

Refer to 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 for additional information on our change in estimated useful life of our data center equipment during 2024.

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Components of Results of Operations

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We also generate revenues from certain professional services and from training of customers and partner personnel, through both our direct team and indirect sales channel.

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.

For purposes of calculating revenues from our direct sales organization, revenues from systems integrators and managed services providers are included as part of the direct sales organization.

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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.

Sales and marketing expenses also include the amortization of commissions paid to our sales employees, including related payroll taxes and fringe benefits.

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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.

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General and Administrative

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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.

Subscription revenues consist of the following:

Year Ended December 31, % Change

(dollars in millions)

Digital workflow products $ 9,422 $ 7,679 23 %

ITOM products 1,224 1,001 22 %

Total subscription revenues $ 10,646 $ 8,680 23 %

Our digital workflow products include most of our product offerings and are generally priced on a per user basis.

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 $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.

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 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.

Cost of Revenues and Gross Profit Percentage

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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.

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.

Personnel-related costs, including stock- based compensation and overhead expenses, increased by $307 million as compared to the 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 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.

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To the extent future acquisitions are consummated, our cost of subscription revenues may increase due to additional non-cash charges associated with the amortization of intangible assets acquired.

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.

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.

Our professional services and other gross loss percentage improved to 2% for the year ended December 31, 2024, compared to 8% in the prior year, primarily due to an increase in revenue and a decrease in fixed personnel-related costs, including stock-based compensation, as we execute our strategy to shift a portion of professional services to variable spending with strategic third-party partners.

Our subscription gross profit percentage was 80% and 82% for the years ended December 31, 2025 and 2024, respectively.

We expect our subscription gross profit percentage to decrease slightly for the year ending December 31, 2026 compared to the year ended December 31, 2025, primarily due to the ongoing growth of our third-party cloud services usage and incremental amortization expense of intangible assets acquired through acquisitions completed during the year ended December 31, 2025.

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.

Our professional services and other gross loss percentage was 5% for the year ended December 31, 2025, compared to 2% in the prior year, and was primarily driven by partner ecosystem spend to further help accelerate customer value realization increasing at a faster rate than revenue.

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.

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Sales and Marketing

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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.

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.

We expect sales and marketing expenses for the year ending December 31, 2026 to increase 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 increased sales productivity and marketing efficiencies.

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Percentage of revenues 22% 23%

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.

Outside services increased by $48 million during the year ended December 31, 2024, compared to the prior year.

The remaining increase was primarily due to expenses associated with software, maintenance and other costs to support the expansion of our data center capacity of $27 million for the year ended December 31, 2024, compared to the prior year.

These costs were partially offset by a decrease in program spend of $12 million for the year ended December 31, 2024, compared to the prior year.

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.

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.

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Percentage of revenues 8% 9%

General and administrative expenses (“G&A”) increased by $73 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, excluding stock-based compensation, of $37 million.

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.

These costs were partially offset by a decrease in stock-based compensation of $36 million for the year ended December 31, 2024, compared to the prior year, primarily due to the requisite service period of certain performance awards being met.

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.

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.

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.

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.

Stock-based Compensation

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We expect stock-based compensation as a percentage of revenue to decline over time as we continue to grow.

2025 Annual Report 59

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 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.

Revenues outside North America represented 37% of total revenues for each of the years ended December 31, 2025 and 2024.

Because we primarily transact in foreign currencies for sales outside of the United States, the general weakening of the U.S.

Dollar relative to other major foreign currencies had a favorable impact on our revenues for the year ended December 31, 2025.

For entities reporting in currencies other than the U.S.

Dollar, if we had translated our results for the year ended December 31, 2025 at the exchange rates in effect for the year ended December 31, 2024 rather than the actual exchange rates in effect during the period, our reported subscription revenues would have been $128 million lower, excluding the impact of our cash flow hedging program.

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.

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Interest income $ 451 $ 419 8 %

$ 419 $ 302 39 %

Percentage of revenues 3% 4%

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.

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.

Other Expense, net

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Other expense, net $ (14) $ (45) (69 %)

$ (45) $ (56) (20 %)

Percentage of revenues —% —%

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.

Other expense, net decreased by $31 million during the year ended December 31, 2025, compared to the prior year, primarily driven by unrealized gains on strategic investments.

To mitigate our risks associated with fluctuations in foreign currency exchange rates, we enter into foreign currency forward contracts with maturities of 12 months or less to hedge a portion of our net outstanding monetary assets and liabilities.

These hedging contracts may reduce, but cannot entirely eliminate, the impact of adverse currency exchange rate movements.

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.

Provision for (benefit from) Income Taxes

The gains recognized for foreign currency forward contracts from derivatives not designated as hedging instruments in other expense, net of $97 million, primarily offset the remeasurement losses of the related foreign currency denominated assets and liabilities of $113 million for the

year ended December 31, 2025.

The gains (losses) recognized for these foreign currency forward contracts in other expense, net, were immaterial for the year ended December 31, 2024.

Provision for Income Taxes

Year Ended December 31, % Change

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Income before income taxes $ 2,261 $ 1,738 30 %

Provision for (benefit from) income taxes

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

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.

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 benefit was primarily attributable to the release of the valuation allowance of certain U.S.

federal and state deferred tax assets.

We regularly assess the need for a valuation allowance against our deferred tax assets.

In making that assessment, we consider both positive and negative evidence related to the likelihood of realization of the deferred tax assets to determine, based on the weight of available evidence, whether it is more likely than not that some or all of the deferred tax assets will not be realized.

As of June 30, 2023, we achieved cumulative U.S.

income during the prior twelve quarters when considering pre-tax income adjusted for permanent differences and other comprehensive losses.

Based on all available positive and negative evidence, having demonstrated sustained profitability which is objective and verifiable, and taking into account anticipated future earnings, we concluded it is more likely than not that our U.S.

federal and state deferred tax assets will be realizable, with the exception of California.

We released $1.05 billion of our valuation allowance during the year ended December 31, 2023.

As of December 31, 2024, we continue to maintain a valuation allowance 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.

We will continue to monitor the need for a valuation allowance against our deferred tax assets on a quarterly basis.

On July 4, 2025, H.R.

1, the "One Big Beautiful Bill Act," was enacted into law, bringing significant amendments to the U.S.

This legislation extends and modifies provisions from the 2017 Tax Cuts and Jobs Act and introduces new tax measures affecting both businesses and individuals.

The enacted legislation had an immaterial impact on the Company’s effective tax rate for the year ended December 31, 2025.

The Company will continue to monitor any future changes in its business or interpretations of the new tax law that could affect its tax position in subsequent periods.

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.

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.

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.

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 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.

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.

Our capital requirements are principally comprised of capital expenditures to support data center capacity expansion, non-contract workforce salaries, bonuses, commissions, and benefits and, to a lesser extent, cancellable and non-cancellable licenses, operating leases and services arrangements that are integral to our business operations.

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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.

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.

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.

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.

Our supply chain finance (“SCF”) program provides suppliers with the opportunity to sell their receivables due from us to a global financial institution.

A supplier’s election to receive early payment at a discounted amount from the financial institution does not change the amount that we must remit to the financial institution on our payment date, which is generally 90 days from the invoice date.

As of December 31, 2025, our outstanding payment

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obligations to suppliers participating in the SCF program totaled $87 million.

These obligations are included in accounts payable in our consolidated balance sheets, and all activity related to these obligations is presented within operating activities in the consolidated statements of cash flows.

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.

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.

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, 2024, approximately $266 million of the originally authorized amount under the share repurchase program remained available for future repurchases.

As of December 31, 2025, approximately $1.4 billion of the authorized amount under the share repurchase program remained available for future repurchases.

In January 2026, our board of directors authorized an additional $5.0 billion in repurchases under the Share Repurchase Program.

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”).

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.

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.

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.

We anticipate cash flows generated from operations, cash, cash equivalents, marketable securities and long-term marketable securities will be sufficient to meet our liquidity needs for at least the next 12 months, although we do expect to seek additional debt financing to fund our acquisition of Armis Security Ltd.

discussed in Note 5 “Business Combinations” in the notes to our consolidated financial statements.

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.

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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.

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 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 cash used in investing activities was primarily due to a $167 million increase in net purchases of investments, a $158 million increase in purchases of property and equipment, a $106 million increase in purchases of non-marketable investments and a $37 million increase in purchases of other intangible assets, partially offset by a $166 million decrease in cash used in business combinations.

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 net decrease in cash used in investing activities was primarily due to a $2,603 million decrease in net purchases of marketable securities, partially offset by an $875 million increase in purchases of strategic investments and a $971 million increase in cash used in business combinations.

Financing Activities

Net cash used in financing activities for the year ended December 31, 2025 was $2,340 million compared to $1,343 million for the prior year.

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.

Contractual Obligations and Commitments

1 unchanged sentence

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

Qualitative and Quantitative Disclosures About Market Risk

6 unchanged sentences

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 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.

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This analysis disregards the impact from the Company’s cash flow hedging program and possibilities that rates can move in opposite directions and that losses from one geographic area may be offset by gains from another geographic area.

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.

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.

Derivative contracts related to hedging of forecasted revenues and operating expenses are designated as cash flow hedges for accounting purposes.

For contracts qualifying as cash flow hedges, the derivative’s gain or loss is initially reported as a component of accumulated other comprehensive income (loss) and subsequently reclassified into earnings in the same period the forecasted transaction affects earnings.

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.

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.

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.

Dollar from its value as of December 31, 2025 would decrease the fair value of our foreign currency contracts by $18 million.

4 unchanged sentences

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.

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.

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.

We had an aggregate of $10.1 billion in cash, cash equivalents, marketable securities and long-term marketable securities as of December 31, 2025.

This amount was invested primarily in money market funds, certificates of deposit, corporate notes and bonds, government and agency securities and other debt securities with a minimum rating of BBB by Standard & Poor’s, Baa2 by Moody’s or BBB by Fitch.

The primary objectives of our investment activities are the preservation of capital and support of our liquidity requirements.

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.

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.

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.

As 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.

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.

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.

3 unchanged sentences

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.

Our non-marketable equity investments are primarily accounted for using:

As of December 31, 2025 and 2024, we had $1,542 million and $472 million, respectively, of strategic investments in privately held companies.

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.

2 unchanged sentences

These changes could be material based on market conditions and events.

All of our non-marketable equity investments in privately held companies are subject to a risk of partial or total loss of invested capital.

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

Consolidated Financial Statements and Supplementary Data

8 unchanged sentences

Notes to Consolidated Financial Statements

Note 1 - Description of the Business

Note 2 - Summary of Significant Accounting Policies

Note 3 - Investments

Note 4 - Fair Value Measurements

Note 5 - Business Combinations

Note 6 - Goodwill and Intangible Assets

Note 7 - Property and Equipment

Note 8 - Derivative Contracts

Note 9 - Supply Chain Finance Program

Note 10 - Deferred Revenue and Performance Obligations

Note 11 - Accrued Expenses and Other Current Liabilities

Note 12 - Debt

Note 13 - Accumulated Other Comprehensive Income (Loss)

Note 14 - Stockholders’ Equity

Note 15 - Equity Awards

Note 16 - Net Income Per Share

Note 17 - P rovision for (Benefit From) Income Taxes

Note 18 - Commitments and Contingencies

Note 19 - Segment and Geographic Information

Report of Independent Registered Public Accounting Firm

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We believe that our audits provide a reasonable basis for our opinions.

2025 Annual Report 67

Definition and Limitations of Internal Control over Financial Reporting

6 unchanged sentences

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Revenue Recognition – Subscription Revenue

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These procedures included testing the effectiveness of controls relating to the revenue recognition process for subscription revenue.

These procedures also included, among others (i) testing subscription revenue transactions, on a sample basis, by obtaining and inspecting source documents, such as contracts, invoices and cash receipts, and recalculating revenue recognized and (ii) testing outstanding customer invoice balances as of December 31, 2024, on a sample basis, by obtaining and inspecting source documents, such as contracts and subsequent cash receipts.

These procedures also included, among others (i) testing subscription revenue transactions, on a sample basis, by obtaining and inspecting source documents, such as contracts, invoices and cash receipts, and recalculating revenue recognized and (ii) testing outstanding customer invoice balances as of December 31, 2025, on a sample basis, by obtaining and inspecting source documents, such as invoices and subsequent cash receipts.

Acquisition of Moveworks, Inc.

– Valuation of Developed Technology

As described in Notes 2 and 5 to the consolidated financial statements, on December 15, 2025, the Company acquired all outstanding shares of Moveworks, Inc.

(Moveworks) for total purchase consideration of $2.4 billion.

Of the acquired intangible assets recorded, $505 million related to Moveworks’ developed technology intangible asset.

Fair value of the developed technology intangible asset is determined by management using a relief from royalty method under the income approach.

Critical estimates include, but are not limited to, future expected cash flows, discount rates, revenue growth rates, royalty rates, and technology migration rates.

The principal considerations for our determination that performing procedures relating to the valuation of developed technology acquired in the acquisition of Moveworks is a critical audit matter are (i) the significant judgment by management when developing the fair value estimate of the developed technology acquired;

(ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to the revenue growth rate, royalty rate, and technology migration rate;

and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to the acquisition accounting, including controls over management’s valuation of the developed technology.

These procedures also included, among others (i) reading the purchase agreement;

(ii) testing management’s process for developing the fair value estimate of the developed technology acquired;

(iii) evaluating the appropriateness of the relief from royalty method used by management;

(iv) testing the completeness and accuracy of the underlying data used in the relief from royalty method;

and (v) evaluating the reasonableness of the significant assumptions used by management related to the revenue growth rate, royalty rate, and technology migration rate.

Evaluating management’s assumptions related to the revenue growth rate, royalty rate, and technology migration rate involved considering the consistency with external market and industry data and whether the assumptions were consistent with evidence obtained in other areas of the audit, and for the revenue growth rate and royalty rate, considering the current and past performance of the Moveworks business.

Professionals with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the relief from royalty method and (ii) the reasonableness of the royalty rate and technology migration rate assumptions.

/s/ PricewaterhouseCoopers LLP

2 unchanged sentences

We have served as the Company’s auditor since 2011.

2025 Annual Report 69

ServiceNow, Inc.

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Cash and cash equivalents $ 3,726 $ 2,304

Short-term investments 3,458 2,980

Marketable securities 2,558 3,458

Accounts receivable, net 2,627 2,240

3 unchanged sentences

Deferred commissions, less current portion 1,114 999

Long-term investments 4,111 3,203

Long-term marketable securities 3,771 4,111

Strategic investments 1,542 472

Property and equipment, net 2,289 1,763

17 unchanged sentences

Total liabilities 13,074 10,774

Commitments and contingencies

Commitments and contingencies (Note 18)

Stockholders’ equity:

12 unchanged sentences

Additional paid-in capital 10,747 7,401

Accumulated other comprehensive loss ( 68 ) ( 37 )

Accumulated other comprehensive income (loss) 19 ( 68 )

Retained earnings 5,242 3,494

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Other expense, net ( 14 ) ( 45 ) ( 56 )

( 45 ) ( 56 ) ( 38 )

Income before income taxes 2,261 1,738 1,008

5 unchanged sentences

Weighted-average shares used to compute net income per share - diluted 1,046,691 1,042,113 1,027,953

Other comprehensive (loss) income:

Other comprehensive income (loss):

Foreign currency translation adjustments $ 148 $ ( 93 ) $ 27

Unrealized gains (losses) on investments, net of tax 12 38 ( 66 )

Unrealized gains (losses) on derivative instruments, net of tax

Other comprehensive (loss) income ( 31 ) 65 ( 136 )

Unrealized gains on marketable securities, net of tax 27 12 38

Unrealized (losses) gains on derivative instruments, net of tax

Other comprehensive income (loss) 87 ( 31 ) 65

Comprehensive income $ 1,835 $ 1,394 $ 1,796

10 unchanged sentences

See accompanying notes to consolidated financial statements

2025 Annual Report 71

ServiceNow, Inc.

1 unchanged sentence

(in millions, except number of shares which are reflected in thousands)

Common Stock Treasury Stock

Capital Retained Earnings (Accumulated Deficit) Accumulated

Comprehensive Income (Loss) Total

Common Stock Treasury Stock Additional

Capital Retained

Comprehensive

(Loss) Income

Stockholders’

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Balance as of December 31, 2022 1,014,411 $ 1 — $ — $ 4,795 $ 338 $ ( 102 ) $ 5,032

Cumulative effect adjustment from adoption of Accounting Standards Update (ASU) 2020-06 — — — — ( 19 ) 17 — ( 2 )

Common stock issued under employee stock plans 2,671 — — — 177 — — 177

Common stock and Treasury stock issued under employee stock plans 13,683 — 27 3 190 — — 193

Common stock repurchased — — ( 4,500 ) ( 538 ) — — — ( 538 )

Taxes paid related to net share settlement of equity awards — — — — ( 459 ) — — ( 459 )

Stock-based compensation — — — — 1,604 — — 1,604

Settlement of 2022 Warrants 603 — — — — — — —

Settlement of 2022 Notes conversion feature — — — — ( 233 ) — — ( 233 )

Benefit from exercise of 2022 Note Hedge — — — — 233 — — 233

Other comprehensive loss, net of tax — — — — — — ( 136 ) ( 136 )

Other comprehensive income, net of tax — — — — — — 65 65

Net income — — — — — 1,731 — 1,731

4 unchanged sentences

Stock-based compensation — — — — 1,746 — — 1,746

Other comprehensive income, net of tax — — — — — — 65 65

Other comprehensive loss, net of tax — — — — — — ( 31 ) ( 31 )

Net income — — — — — 1,425 — 1,425

4 unchanged sentences

Stock-based compensation — — — — 1,955 — — 1,955

Other comprehensive loss, net of tax — — — — — — ( 31 ) ( 31 )

Issuance of common stock for business combinations 13,235 — — — 1,901 — — 1,901

Equity awards assumed in business combinations

— — — — 4 — — 4

Other comprehensive income, net of tax — — — — — — 87 87

Net Income — — — — — 1,748 — 1,748

26 unchanged sentences

Purchases of other intangibles ( 43 ) ( 40 ) ( 3 )

Purchases of investments ( 5,031 ) ( 4,634 ) ( 4,038 )

Purchases of non-marketable investments ( 181 ) ( 75 ) ( 167 )

Sales and maturities of investments 3,752 3,522 2,245

Purchases of marketable securities ( 2,814 ) ( 5,031 ) ( 4,634 )

Purchases of strategic investments ( 1,056 ) ( 181 ) ( 75 )

Sales and maturities of marketable securities 4,138 3,752 3,522

Other 38 ( 36 ) ( 4 )

1 unchanged sentence

Cash flows from financing activities:

Repayments of convertible senior notes attributable to principal — — ( 94 )

Proceeds from employee stock plans 270 237 194

Repurchases of common stock ( 1,840 ) ( 696 ) ( 538 )

( 696 ) ( 538 ) —

Taxes paid related to net share settlement of equity awards ( 770 ) ( 700 ) ( 459 )

1 unchanged sentence

Net cash used in financing activities ( 2,340 ) ( 1,343 ) ( 803 )

( 1,343 ) ( 803 ) ( 344 )

Foreign currency effect on cash, cash equivalents and restricted cash 7 ( 17 ) 1

6 unchanged sentences

Total cash, cash equivalents and restricted cash shown in the consolidated statements of cash flows

$ 3,732 $ 2,310 $ 1,904

Supplemental disclosures of other cash flow information:

2 unchanged sentences

Non-cash investing and financing activities:

Settlement of 2022 Notes conversion feature — — 233

Benefit from exercise of 2022 Note Hedge — — 233

Property and equipment included in accounts payable, accrued expenses and other liabilities 154 55 44

Fair value of common stock issued for business combinations 1,901 — —

(1) Income taxes paid, net of refunds, disaggregated by jurisdiction, are outlined below:

Year Ended December 31,

2025 2024 2023

$ 46 $ 64 $ 2

Income taxes paid, net of refunds

$ 283 $ 230 $ 127

Income taxes paid, net of refunds exceeding 5 percent of total income taxes paid, net of refunds

$ 38 $ 25 $ 19

*The amount of income taxes paid during the year does not meet the 5% disaggregation threshold.

See accompanying notes to consolidated financial statements

4 unchanged sentences

(1) Description of the Business

ServiceNow was founded on a simple premise:

to make work flow better.

Our workflow applications built on the Now Platform are organized along four primary areas:

Technology, Customer and Industry, Employee and Creator.

The products under each of our workflows help customers connect, automate and empower work across systems and silos to enable great outcomes for businesses and great experiences for people.

The Now Platform is the AI platform for digital transformation.

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 preferred systems of record and collaboration platforms.

ServiceNow delivers solutions that help public and private organizations govern, secure and manage artificial intelligence (“AI”) and digitalize and streamline workflows to drive collaboration, productivity and better experiences across the enterprise.

Our Platform’s single data fabric and integrated data layer supports organizations’ operationalization of their AI strategy with speed, scale and security.

Our workflow applications built on the Platform are grouped into four areas:

Technology, CRM and Industry, Core Business, and Creator and Other.

Our one platform architecture provides the foundation for organizations to seamlessly integrate AI, data, and workflows and create intelligent processes across their enterprise.

(2) Summary of Significant Accounting Policies

3 unchanged sentences

All intercompany transactions and balances have been eliminated upon consolidation.

Common Stock Split

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.

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.

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 in the accompanying consolidated financial statements and applicable disclosures have been retroactively adjusted to reflect the effects of the Stock Split.

Use of Estimates

3 unchanged sentences

Actual results could differ from those estimates.

This change in accounting estimate was effective beginning fiscal year 2024.

Based on the carrying amount of data center equipment included in property and equipment, net as of December 31, 2023, the effect of this change in estimate for the year ended December 31, 2024, was a reduction in depreciation expense of $ 101 million and an increase in net income of $ 81 million, or $ 0.39 per share basic and $ 0.39 per share diluted.

Our chief operating decision maker (“CODM”), the Chief Executive Officer, manages the Company’s business activities as a single operating and reportable segment at the consolidated level.

Accordingly, our CODM uses consolidated net income to measure segment profit or loss, allocate resources and assess performance.

Further, the CODM reviews and utilizes functional expenses (cost of revenues, sales and marketing, research and development, and general and administrative) at the consolidated level to manage the Company’s operations.

Other segment items included in consolidated net income are interest income, other expense, net and the provision for (benefit from) income taxes, which are reflected in the consolidated statements of comprehensive income.

2025 Annual Report 74

Foreign Currency Translation and Transactions

58 unchanged sentences

Individual accounts receivable are written off when we become aware of a specific customer’s inability to meet its financial obligation, and all collection efforts are exhausted.

Investments consist of commercial paper, corporate notes and bonds, certificates of deposit, U.S.

2025 Annual Report 76

Marketable Securities

Marketable securities consist of commercial paper, corporate notes and bonds, certificates of deposit, U.S.

government and agency securities and mortgage-backed and asset-backed securities.

We classify investments in debt securities as available-for-sale at the time of purchase.

All investments are recorded at estimated fair value, and investments with original maturities of less than one year at time of purchase are classified as short-term.

All marketable securities are recorded at estimated fair value with original maturities of less than one year at time of purchase classified as short-term and original maturities of greater than one year at time of purchase classified as long-term.

Unrealized gains and losses are included in accumulated other comprehensive income (loss), net of tax, a component of stockholders’ equity, except for credit-related impairment losses for available-for-sale debt securities.

9 unchanged sentences

These investments are measured at cost less any impairment, plus or minus our share of equity method investee income or loss.

Our share of the investee’s results of operations is recorded in other expense, net on our consolidated statements of comprehensive income.

For those privately held equity securities that do not have readily determinable fair values and for which we do not have a controlling financial interest or exercise significant influence, we have elected to apply the measurement alternative, measuring them at cost, less any impairment, plus or minus adjustments resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer.

Upward and downward adjustments to the carrying value are recorded in other expense, net on our consolidated statements of comprehensive income.

An impairment loss is recorded when an event or circumstance indicates a decline in value has occurred.

We include these strategic investments in other assets on our consolidated balance sheets.

Derivative Financial Instruments

1 unchanged sentence

We record derivatives at fair value as either assets or liabilities on our consolidated balance sheets.

For derivative contracts entered into to hedge a portion of our forecasted foreign currency denominated revenues that are designated and qualify as cash flow hedges, the unrealized gain or loss on the derivative instrument is reported as a component of accumulated other comprehensive income (loss) and reclassified into earnings as subscription revenues when the hedged transaction affects earnings.

For derivative contracts entered into to hedge a portion of our forecasted foreign currency denominated revenues and operating expenses that are designated and qualify as cash flow hedges, the unrealized gain or loss on the derivative instrument is reported as a component of accumulated other comprehensive income (loss) and reclassified into earnings as subscription revenues, research and development expenses, or sales and marketing expenses, as appropriate, when the hedged transaction affects earnings.

The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions.

12 unchanged sentences

Furniture and fixtures 3 - 7 years

Leasehold and other improvements shorter of the lease term or estimated useful life

Leasehold and other improvements shorter of the lease term or 10 years

Capitalized Software Development Costs

9 unchanged sentences

Additionally, we do not record leases on the balance sheet that, at the lease commencement date, have a lease term of 12 months or less.

2025 Annual Report 78

Operating leases are included in operating lease right-of-use assets, current portion of operating lease liabilities, and operating lease liabilities, less current portion in our consolidated balance sheets.

4 unchanged sentences

Allocation of the purchase price requires significant estimates in determining the fair value of acquired assets and assumed liabilities, especially with respect to intangible assets.

Critical estimates 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.

Critical estimates 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.

During the measurement period, which may not be later than one year from the acquisition date, the Company may record adjustments to the fair value of these tangible and intangible assets acquired and liabilities assumed, with the corresponding offset to goodwill.

5 unchanged sentences

Intangible assets consist of developed technologies and other intangible assets, including patents and contractual agreements.

Intangible assets are amortized over the period of estimated benefit using the straight-line method and estimated useful lives ranging from three to twelve years .

Intangible assets are amortized over the period of estimated benefit using the straight-line method and estimated useful lives ranging from two to twelve years .

Impairment of Long-Lived Assets

7 unchanged sentences

We recognize compensation expense related to stock options and restricted stock units (“RSUs”) with only service conditions on a straight-line basis over the requisite service period.

For stock options and RSUs with service, performance and market conditions (performance-based RSUs (“PRSUs”)), expenses are recognized on a graded vesting basis over the requisite service period and for awards with performance conditions, when it is probable that the performance condition will be achieved.

For stock options and RSUs with service, performance and market conditions (performance-based RSUs (“PRSUs”)), expenses are recognized on a graded

vesting basis over the requisite service period and for awards with performance conditions, when it is probable that the performance condition will be achieved.

The probability of achievement is assessed periodically to determine whether the performance metric continues to be probable.

13 unchanged sentences

We had one customer, a U.S.

federal channel partner and systems integrator, that represented 12 % of our accounts receivable balance as of December 31, 2024 and 11 % of our total revenues for the year ended December 31, 2024.

federal channel partner and systems integrator, that represented 11 % and 12 % of our accounts receivable balance as of December 31, 2025 and 2024, respectively, and 11 % of our total revenues for the years ended December 31, 2025 and 2024.

Based on our periodic credit evaluations, there have been no historical collection concerns with this customer.

There were no customers that individually exceeded 10% of our accounts receivable balance as of December 31, 2023 or our total revenues for the year ended December 31, 2023.

There were no customers that individually exceeded 10% of our total revenues for the year ended December 31, 2023.

For purposes of assessing concentration of credit risk and significant customers, a group of customers under common control or customers that are affiliates of each other are regarded as a single customer.

5 unchanged sentences

In determining the need for a valuation allowance, we consider future growth, forecasted earnings, forecasted taxable income, the mix of earnings in the jurisdictions in which we operate, historical earnings, taxable income in prior years, if carryback is permitted under the law, carryforward periods and prudent and feasible tax planning strategies.

2025 Annual Report 80

Our tax positions are subject to income tax audits by multiple tax jurisdictions throughout the world.

9 unchanged sentences

Certain prior period amounts have been reclassified to conform to the current period presentation.

These reclassifications did not result in a restatement of prior period consolidated financial statements.

Revision of Prior Period Financial Statements

During the quarter ended June 30, 2024, the Company identified an immaterial error in the condensed consolidated statements of cash flows for the period ended March 31, 2024 relating to a misclassification between investing cash outflows and financing cash outflows.

The second installment payment for a business combination completed during the quarter ended September 30, 2023, totaling $ 184 million, was incorrectly classified as an investing cash outflow instead of a financing cash outflow.

The Company determined that the error was not material to any previously issued financial statements and will revise such error in its Quarterly Report on Form 10-Q for the three months ending March 31, 2025.

Strategic investments, previously presented within other assets, were reclassified to be presented separately on our consolidated balance sheets.

The reclassification had no impact on our previously reported total assets or net cash from operating or investing activities and did not result in a restatement of prior period consolidated financial statements.

Recently Issued Accounting Pronouncement Adopted

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, “Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures,” which expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses.

We adopted this standard effective January 1, 2024 using a retrospective method.

For further information, refer to the Segments section in Note 2 “Summary of Significant Accounting Policies.”

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, “Income Taxes - Improvements to Income Tax Disclosures,” which requires enhancement and further transparency to certain income tax disclosures, most notably the tax rate reconciliation and income taxes paid.

We adopted this standard effective January 1, 2025 using a retrospective approach.

Refer to our consolidated statements of cash flows and Note 17 “Provision for (Benefit from) Income Taxes” for further information.

Recently Issued Accounting Pronouncements Pending Adoption

In September 2025, the FASB issued ASU 2025-06, “Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40):

Targeted Improvements to the Accounting for Internal-Use Software,” which modernizes the recognition and disclosure framework for internal-use software costs by removing all references to software development project stages so that the guidance is neutral to different software development methods.

This ASU is effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods, and can be applied using a prospective, retrospective or modified transition approach with early adoption permitted.

We are currently evaluating the impact of the adoption of this standard.

In November 2024, the FASB issued ASU 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures:

Disaggregation of Income Statement Expenses,” which requires disclosure of disaggregated information about specific categories underlying certain income statement expense line items in the footnotes to the financial statements for both annual and interim periods.

This ASU is effective for fiscal years beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027.

Early adoption is permitted.

We are currently evaluating the impact of the adoption of this standard.

In December 2023, the FASB issued ASU 2023-09, “Income Taxes - Improvements to Income Tax Disclosures,” which requires enhancement and further transparency to certain income tax disclosures, most notably the tax rate reconciliation and income taxes paid.

This ASU is effective for fiscal years beginning after December 15, 2024 on either a prospective or retrospective basis, with early adoption permitted.

This ASU is effective for fiscal years beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027 with early adoption permitted.

We are currently evaluating the impact of the adoption of this standard.

(3) Investments

Marketable Debt Securities

The following is a summary of our available-for-sale debt securities recorded within short-term and long-term investments on the consolidated balance sheets (in millions):

Marketable Securities

The following is a summary of our available-for-sale debt securities recorded within marketable securities and long-term marketable securities on the consolidated balance sheets (in millions):

December 31, 2025

7 unchanged sentences

Total available-for-sale debt securities $ 6,303 $ 40 $ ( 14 ) $ 6,329

$ 7,576 $ 18 $ ( 25 ) $ 7,569

December 31, 2024

14 unchanged sentences

Total $ 6,329

As of December 31, 2024, unrealized losses of $ 18 million from available-for-sale debt securities are from securities in a continuous unrealized loss position greater than 12 months.

As of December 31, 2024, the fair value of available-for-sale debt securities in a continuous unrealized loss position totaled $ 2,419 million, the majority of which has been in a continuous unrealized loss position for less than 12 months.

As of December 31, 2023, the fair value of available-for-sale debt securities in a continuous unrealized loss position totaled $ 3,731 million and unrealized losses of $ 26 million from available-for-sale debt securities are from securities in a continuous unrealized loss position greater than 12 months.

As of December 31, 2025 and 2024, unrealized losses of $ 14 million and $ 18 million, respectively, are from available-for-sale debt securities in a continuous unrealized loss position greater than 12 months.

As of December 31, 2025, the fair value of available-for-sale debt securities in a continuous unrealized loss position totaled $ 171 million, the majority of which was in a continuous unrealized loss position for greater than 12 months.

As of December 31, 2024, the fair value of available-for-sale debt securities in a continuous unrealized loss position totaled $ 2,419 million, the majority of which was in a continuous unrealized loss position for less than 12 months.

2025 Annual Report 82

For all available-for-sale debt securities that were in unrealized loss positions, we have determined that it is more likely than not we will hold the securities until maturity or a recovery of the cost basis.

Unrealized losses on available-for-sale debt securities were due primarily to changes in market interest rates, and credit-related impairment losses were immaterial as of December 31, 2025.

Non-Marketable Equity Investments

As of December 31, 2024 and 2023, the total amount of non-marketable equity investments in privately held companies included in other assets on our consolidated balance sheets was $ 469 million and $ 268 million, respectively.

Our non-marketable equity investments are primarily accounted for using the measurement alternative, which measures the investments at cost minus impairment, if any, plus or minus changes resulting from qualifying observable price changes resulting from the issuance of similar or identical securities in an orderly transaction by the same issuer.

Strategic Investments

As of December 31, 2025 and 2024, the total amount of strategic investments in privately held companies included in our consolidated balance sheets was $ 1,542 million and $ 472 million, respectively.

Our strategic investments are predominantly comprised of non-marketable equity investments, which are primarily accounted for using the measurement alternative.

Under this approach, the investments are measured at cost minus impairment, if any, plus or minus changes resulting from qualifying observable price changes resulting from the issuance of similar or identical securities in an orderly transaction by the same issuer.

Determining whether an observed transaction is similar to a security within our portfolio requires judgment based on the rights and preferences of the securities.

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The adjustments made during the years ended December 31, 2025, 2024 and 2023 were immaterial.

The remaining strategic investments are accounted for using the equity method of accounting as we have the ability to exercise significant influence but not control over the investee.

For the years ended December 31, 2025, 2024 and 2023, our share of the investees’ results of operations included in other expense, net in our consolidated statements of comprehensive income was immaterial.

We classify these fair value measurements as Level 3 within the fair value hierarchy.

In September 2025, the Company purchased $ 750 million of preferred shares of Genesys, a privately held AI-powered experience orchestration software company.

(4) Fair Value Measurements

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Such market prices may be quoted prices in active markets for identical assets (Level 1 inputs), pricing determined using inputs other than quoted prices that are observable either directly or indirectly (Level 2 inputs) or using unobservable inputs that are supported by little or no market activity (Level 3 inputs).

Our non-marketable equity investments are not included in the table above and are discussed in Note 3.

Refer to Note 8 for the fair value measurement of our derivative contracts and Note 11 for the fair value measurement of our long-term debt, which are also not included in the table above.

Our marketable equity investments are classified within Level 1 and were immaterial as of December 31, 2024 and 2023.

Our strategic investments are not included in the table above and are discussed in Note 3 “Investments”.

Refer to Note 8 “Derivative Contracts” for the fair value measurement of our derivative contracts and Note 12 “Debt” for the fair value measurement of our long-term debt, which are also not included in the table above.

(5) Business Combinations

2025 Business Combinations

Moveworks, Inc.

On December 15, 2025, we acquired all outstanding shares of Moveworks, Inc.

(“Moveworks”), a privately held company that provides enterprise search and front-end virtual agent technology.

The acquisition is intended to drive use of our Platform to accelerate enterprise adoption and innovation across key growth areas, including CRM.

The preliminary aggregate purchase price consideration for Moveworks was $ 2.4 billion, which was comprised of the following (in millions):

Fair value of common stock issued (1)

Settlement of pre-existing loan

Stock-based compensation awards attributable to pre-combination services

Total purchase consideration $ 2,407

(1) The fair value of the stock consideration is based on the December 15, 2025 closing price of ServiceNow common stock at $ 153.04 and approximately 9.6 million shares of ServiceNow common stock.

2025 Annual Report 84

The allocation of the total purchase price is summarized below (in millions):

Purchase Price

Allocation Asset Life

Current assets $ 48

Intangible assets 770 2 - 5 years

Goodwill 1,748 Indefinite

Other assets 124

Assets acquired $ 2,690

Current liabilities assumed 83

Long-term liabilities assumed 13

Deferred tax liabilities, non-current 187

Net assets acquired $ 2,407

Identifiable intangible assets acquired in connection with the Moveworks acquisition (in millions) and the weighted-average lives are as follows:

Assets Asset Life (years)

Developed technology $ 505 5

Customer relationships 220 5

Order backlog

Goodwill, which is not deductible for income tax purposes, is primarily attributed to the value expected from synergies resulting from the business combination.

The fair values assigned to tangible and intangible assets acquired, liabilities assumed and income taxes payable and deferred taxes are based on management’s estimates and assumptions.

The provisional measurements of fair value for certain assets and liabilities may be subject to change as additional information is received.

The Company expects to finalize the valuation as soon as practicable, but not later than one year from the acquisition date.

As contemplated by the terms of the merger agreement, in August 2025, the Company and Moveworks entered into a term loan credit agreement pursuant to which Moveworks drew $ 25 million.

In December 2025, Moveworks drew an additional $ 5 million on the term loan credit agreement.

The loan was settled on the closing date of the Moveworks acquisition.

Logik.io Inc.

On May 30, 2025, we acquired all outstanding shares of Logik.io Inc., a provider of an AI-powered, composable Configure, Price, Quote (“CPQ”) solution for total purchase consideration of $ 506 million, which consists primarily of approximately 2.1 million shares of ServiceNow common stock with a value of approximately $ 434 million and $ 62 million in cash.

The fair value of the stock consideration is based on the May 30, 2025 closing price of ServiceNow common stock at $ 202.22 .

The acquisition is intended to expand our growing CRM footprint and accelerate our sales and order management capabilities with the acquired CPQ solutions technology.

The purchase price was allocated based on the estimated fair value of the developed technology intangible asset of $ 85 million ( five-year estimated useful life), customer-related and backlog assets of $ 14 million ( three -year estimated useful life), net tangible assets of $ 25 million, deferred tax liabilities of $ 22 million and goodwill of $ 404 million, which is not deductible for income tax purposes.

Goodwill is primarily attributed to the value expected from synergies resulting from the business combination.

The fair values assigned to tangible and intangible assets acquired, liabilities assumed and income taxes payable and deferred taxes are based on management’s estimates and assumptions.

Other Acquisitions

In July 2025, we completed the acquisition of data.world, Inc., a leader in enterprise data cataloging and governance.

The acquisition is intended to strengthen the Company’s AI platform by allowing customers to enrich data with meaning, context and relationships while enabling AI agents and workflows to operate.

The acquisition is not material to our consolidated financial statements.

During the year ended December 31, 2025, we also completed other acquisitions that were not material to our consolidated financial statements, either individually or in the aggregate.

Pending Business Combinations

In December 2025, we signed a definitive agreement to acquire Veza Technologies, Inc., a privately held company that provides a unified access platform, with native products offering access search, access intelligence, access monitoring and access workflows, for approximately $ 1.25 billion cash consideration, subject to customary adjustments.

The acquisition is expected to close during the first half of 2026, subject to customary regulatory approvals and closing conditions.

In December 2025, we signed a definitive agreement to acquire Armis Security Ltd.

a cyber-exposure management and cyber-physical security solutions provider, for approximately $ 7.75 billion cash consideration, subject to customary adjustments.

The acquisition is expected to close during the second half of 2026, subject to customary regulatory approvals and closing conditions.

2024 Business Combinations

During the year ended December 31, 2024, we completed certain acquisitions for total purchase consideration of $ 112 million, primarily to enhance our products with the acquired technology and engineering workforce.

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The consideration was paid in two installments, with the first payment made in July 2023 and the second payment made in February 2024.

The acquisition is intended to enhance our Now Platform with the acquired smart Internet of Things technology, enabling businesses to intelligently action digital and in-store data with enterprise-grade workflows.

The acquisition is intended to enhance our Platform with the acquired smart Internet of Things technology, enabling businesses to intelligently action digital and in-store data with enterprise-grade workflows.

The purchase price was allocated based on the fair value of the developed technology intangible asset of $ 75 million ( six-year estimated useful life), net tangible liabilities of $ 1 million, deferred tax liabilities of $ 23 million and goodwill of $ 414 million, which is not deductible for income tax purposes.

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The fair values assigned to tangible and intangible assets acquired, liabilities assumed and income taxes payable and deferred taxes are based on management’s estimates and assumptions.

2022 Business Combinations

During the year ended December 31, 2022, we completed certain acquisitions for total purchase consideration of $ 92 million primarily to enhance our products with the acquired technology and engineering workforce.

The acquisitions were not material to our consolidated financial statements, either individually or in the aggregate.

2025 Annual Report 86

We have included the financial results of business combinations in the consolidated financial statements from the respective dates of acquisition, which were not material.

Aggregate acquisition-related costs associated with business combinations were not material for each of the years ended December 31, 2024, 2023 and 2022, respectively, and were included in general and administrative expenses in our consolidated statements of comprehensive income as incurred.

Aggregate acquisition-related costs associated with business combinations were $ 96 million for the year ended December 31, 2025 and immaterial for each of the years ended December 31, 2024 and 2023, and were included in general and administrative expenses in our consolidated statements of comprehensive income as incurred.

(6) Goodwill and Intangible Assets

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Developed technology $ 1,316 $ 581

Customer relationships 238 5

Patents 83 83

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The following table presents the estimated future amortization expense related to intangible assets held as of December 31, 2025 (in millions):

Years Ending December 31,

Fiscal Period:

Total future amortization expense $ 1,121

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Derivatives Designated as Hedging Instruments

We entered into forward contracts to hedge a portion of our forecasted foreign currency denominated revenues during the year ended December 31, 2024.

We enter into forward contracts to hedge a portion of our forecasted foreign currency denominated revenues, and beginning in the fourth quarter of 2025, we also entered into forward contracts to hedge a portion of our forecasted foreign currency denominated expenses.

These forward contracts are recorded at fair value and have maturities of up to 34 months.

As of December 31, 2024, we had outstanding cash flow hedges with total notional values of $ 1.7 billion.

We had outstanding cash flow hedges with total notional values of $ 2.2 billion and $ 1.7 billion as of December 31, 2025 and 2024, respectively.

We classify cash flows related to our cash flow hedges as operating activities in our consolidated statements of cash flows.

The total gross fair values of derivatives designated as hedging instruments recorded within the consolidated balance sheets were as follows (in millions):

December 31, 2024

Consolidated Balance Sheets Location

Consolidated Balance Sheets Location December 31, 2025 December 31, 2024

Prepaid expenses and other current assets $ 11 $ 55

Other assets $ 3 $ 10

Accrued expenses and other current liabilities $ ( 49 ) $ ( 1 )

Other long-term liabilities $ ( 8 ) $ —

As of December 31, 2024, approximately $ 54 million of the pre-tax derivative gains from accumulated other comprehensive income (loss) is expected to be recognized in subscription revenues within the next 12 months.

As of December 31, 2025, approximately $ 38 million of the pre-tax derivative loss from accumulated other comprehensive income (loss) is expected to be recognized in subscription revenues within the next 12 months.

2025 Annual Report 88

All hedging relationships are formally documented at the inception of the hedge and the hedges must be highly effective in offsetting changes to future cash flows on hedged transactions.

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We report changes in fair value of these cash flow hedges as a component of accumulated other comprehensive income (loss) and subsequently reclassify into earnings in the same period the forecasted transaction affects earnings.

Amounts reclassified to subscription revenues were a gain of $ 14 million for the year ended December 31, 2024.

There was no ineffectiveness in the Company’s cash flow hedging program for the year ended December 31, 2024.

Amounts reclassified to subscription revenues were a loss of $ 42 million for the year ended December 31, 2025 and a gain of $ 14 million for the year ended December 31, 2024.

There were no net gains or losses recognized in research and development expenses and sales and marketing expenses for the year ended December 31, 2025.

There was no ineffectiveness in the Company’s cash flow hedging program for the years ended December 31, 2025 and 2024.

Derivatives not Designated as Hedging Instruments

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The gross fair value of these foreign currency forward contracts was immaterial as of December 31, 2025 and 2024.

The gains recognized for foreign currency forward contracts from derivatives not designated as hedging instruments in other expense, net of $ 97 million, primarily offset the remeasurement losses of the related foreign currency denominated assets and liabilities of $ 113 million for the year ended December 31, 2025.

The gains (losses) recognized for foreign currency forward contracts from derivatives not designated as hedging instruments were immaterial for the years ended December 31, 2024 and 2023.

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All foreign currency forward contracts, both designated and not designated as hedging instruments, are classified within Level 2 as the valuation inputs are based on quoted prices and market observable data of similar instruments in active markets, such as currency spot and forward rates.

(9) Supply Chain Finance Program

Our supply chain finance (“SCF”) program provides suppliers with the opportunity to sell their receivables due from us to a global financial institution acting as our paying agent.

Participating suppliers negotiate their sales of receivables directly with the financial institution at their sole discretion and we have no economic interest in a supplier’s decision to participate in the SCF program.

We do not have pledged assets or other guarantees under our SCF program.

These obligations are included in accounts payable in our consolidated balance sheets and all activity related to these obligations is presented within operating activities in our consolidated statements of cash flows.

The summary of our outstanding payment obligations under the SCF program is as follows (in millions):

Year Ended December 31, 2025

Obligations outstanding at the beginning of the year $ —

Invoices added during the year

Invoices paid during the year

Obligations outstanding at the end of the year $ 87

(10) Deferred Revenue and Performance Obligations

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For the periods ended December 31, 2025 and 2024, the carrying value of our outstanding debt was $ 1,491 million and $ 1,489 million, respectively, net of unamortized debt discount and issuance costs of $ 9 million and $ 11 million, respectively.

We consider the fair value of the 2030 Notes at December 31, 2024 and December 31, 2023 to be a Level 2 measurement.

The estimated fair value of the 2030 Notes based on the closing trading price per $100, was $ 1,247 million and $ 1,236 million at December 31, 2024 and December 31, 2023, respectively.

We consider the fair value of the 2030 Notes at December 31, 2025 and 2024 to be a Level 2 measurement.

The estimated fair value of the 2030 Notes based on the closing trading price per $100, was $ 1,324 million and $ 1,247 million at December 31, 2025 and 2024, respectively.

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”).

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The 2030 Notes are unsecured obligations and the indentures governing the 2030 Notes contain customary events of default and covenants that, among others and subject to exceptions, restrict our ability to incur or guarantee debt secured by liens on specified assets or enter into sale and lease-back transactions with respect to specified properties.

2022 Notes, Note Hedge and Warrants

In May and June 2017, we issued an aggregate of $ 782.5 million of 0 % convertible senior notes (the “2022 Notes”), which were converted prior to or settled on June 1, 2022, in accordance with their terms.

To minimize the impact of potential economic dilution upon conversion of the 2022 Notes, we entered into convertible note hedge transactions (the “2022 Note Hedge”) with certain investment banks to purchase 6 million shares for $ 128 million with respect to our common stock concurrently with the issuance of the 2022 Notes.

The 2022 Note Hedge expired upon the maturity date of the 2022 Notes, which was on June 1, 2022.

Separately, we entered into warrant transactions with certain investment banks, whereby we sold warrants to acquire 6 million shares of our common stock with aggregate proceeds of $ 54 million (the “2022 Warrants”).

The 2022 Warrants were not part of the 2022 Notes or 2022 Note Hedge.

The 2022 Warrants were settled during the quarter ended June 30, 2022 and are no longer outstanding.

2025 Annual Report 90

(13) Accumulated Other Comprehensive Income (Loss)

The following tables show the components of accumulated other comprehensive income (loss), net of tax, in the stockholders’ equity section of our consolidated balance sheets (in millions):

Unrealized Gains (Losses) on Derivative Instruments

Unrealized Gains (Losses) on Investments

Foreign Currency Translation Adjustment

Unrealized Gains

Foreign Currency

Balance as of December 31, 2024

$ 50 $ ( 27 ) $ ( 91 ) $ ( 68 )

Other comprehensive income (loss) before reclassifications 64 12 ( 93 ) ( 17 )

Other comprehensive (loss) income before reclassifications

( 130 ) 27 148 45

Amounts reclassified from accumulated other comprehensive loss

Net current period other comprehensive income (loss)

Net current period other comprehensive (loss) income

( 88 ) 27 148 87

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$ ( 38 ) $ — $ 57 $ 19

Unrealized Gains (Losses) on Derivative Instruments Unrealized Gains (Losses) on Investments

Foreign Currency Translation Adjustment

Unrealized Gains

Securities Foreign Currency

Adjustment Total

Balance as of December 31, 2023

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Amounts reclassified from accumulated other comprehensive loss

( 14 ) — — ( 14 )

Net current period other comprehensive income (loss)

50 12 ( 93 ) ( 31 )

Balance as of December 31, 2024

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(14) Stockholders' Equity

We are authorized to issue a total of 600 million shares of common stock as of December 31, 2024.

We are authorized to issue a total of 3.0 billion shares of common stock as of December 31, 2025.

Holders of our common stock are not entitled to receive dividends unless declared by our board of directors.

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Total shares of common stock reserved for future issuance 107,349

(1) Represents the number of shares issuable upon settlement of outstanding restricted stock units (“RSUs”) and performance-based RSUs (“PRSUs”), as discussed in Note 14.

(2) Refer to Note 14 for a description of these plans.

(1) Represents the number of shares issuable upon settlement of outstanding restricted stock units (“RSUs”) and performance-based RSUs (“PRSUs”), as discussed in Note 15 “Equity Awards”.

(2) Refer to Note 15 “Equity Awards” for a description of these plans.

During the years ended December 31, 2025 and 2024, we issued a total of 11.9 million and 12.8 million shares, respectively, from stock option exercises, vesting of RSUs, net of employee payroll taxes, and purchases from the employee stock purchase plan (“ESPP”).

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In May 2023, our board of directors authorized a program to repurchase up to $ 1.5 billion of our common stock (the “Share Repurchase Program”).

Under the program, we may repurchase our common stock from time to time through open market purchases, in privately negotiated transactions, or by other means, including through the use of trading plans intended to qualify under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, in accordance with applicable securities laws and other restrictions.

In January 2025, our board of directors authorized an additional $ 3.0 billion in repurchases under the Share Repurchase Program.

Under the program, we may repurchase our common stock from time to time through open market purchases, accelerated share repurchase transactions, privately negotiated transactions, or by other means, including through the use of trading plans intended to qualify under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, in accordance with applicable securities laws and other restrictions.

The Share Repurchase Program does not have a fixed expiration date, may be suspended or discontinued at any time, and does not obligate us to acquire any amount of common stock.

The timing, manner, price, and amount of any repurchases will be determined by us at our discretion and will depend on a variety of factors, including business, economic and market conditions, prevailing stock prices, corporate and regulatory requirements, and other considerations.

During the year ended December 31, 2024, the Company repurchased 0.8 million shares of its common stock for $ 696 million.

During the year ended December 31, 2023, the Company repurchased 0.9 million shares of its common stock for $ 538 million.

During the years ended December 31, 2025 and 2024, the Company repurchased approximately 10.3 million and 4.0 million shares of its common stock for $ 1.8 billion and $ 696 million, respectively.

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, 2024, $ 266 million of the originally authorized amount under the Share Repurchase Program remained available for future repurchases.

As of December 31, 2025, approximately $ 1.4 billion of the authorized amount under the Share Repurchase Program remained available for future repurchases.

In January 2026, our board of directors authorized an additional $ 5.0 billion in repurchases under the Share Repurchase Program.

2025 Annual Report 92

Preferred Stock

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A summary of stock option activity for the year ended December 31, 2025 was as follows:

Shares Weighted-

Price Per Share Weighted-

Term Aggregate

Intrinsic Value

(in thousands) (in years) (in millions)

(in thousands) Weighted-

Share Weighted-

(in years) Aggregate

(in millions)

Outstanding as of December 31, 2024 4,739 $ 123.88

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Vested and exercisable as of December 31, 2025 2,550 $ 113.87 5.3 $ 100

(1) Relates to stock options assumed in business combinations.

Aggregate intrinsic value represents the difference between the estimated fair value of our common stock and the exercise price of outstanding, in-the-money options.

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The total fair value of shares vested was $ 26 million, $ 98 million and $ 7 million for the years ended December 31, 2025, 2024 and 2023, respectively.

No stock options were granted during the years ended December 31, 2024 and December 31, 2023.

The weighted-average grant-date fair value of stock options granted was $ 273.63 per share for the year ended December 31, 2022.

The weighted-average grant-date fair value of stock options granted was $ 133.64 for the year ended December 31, 2025.

No stock options were granted during the years ended December 31, 2024 and 2023.

During the year ended December 31, 2021, a one-time long-term performance-based option award was granted to the Chief Executive Officer (“2021 CEO Performance Award”) and to certain executives (collectively “2021 Performance Awards”) under the 2021 Plan at a total grant date fair value of $ 232 million.

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Shares acquired upon exercise of the options cannot be sold, transferred or disposed until after the end of the Performance Period and the 2021 Performance Awards will expire ten years from the respective date of grant.

As of December 31, 2024, the first three tranches were vested based on achievement of both the performance and market conditions.

As of December 31, 2025, the first four tranches were vested based on achievement of both the performance and market conditions.

The fair value of the 2021 Performance Awards and the corresponding derived service periods were estimated using the Monte Carlo simulation.

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As of December 31, 2025, total unrecognized compensation cost, adjusted for estimated forfeitures, related to unvested stock options was approximately $ 47 million.

The weighted-average remaining vesting period of unvested stock options as of December 31, 2024 was approximately one year .

The weighted-average remaining vesting period of unvested stock options as of December 31, 2025 was approximately two years .

2025 Annual Report 94

A summary of RSU activity for the year ended December 31, 2025 was as follows:

Shares Weighted-Average Grant-Date Fair Value Per Share

Shares Weighted-

Fair Value Per

(in thousands)

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Expected to vest as of December 31, 2025 23,500

RSUs outstanding as of December 31, 2024 were comprised of 5.3 million RSUs with only service conditions and 0.5 million RSUs with both service conditions and performance conditions, including certain RSUs with additional market conditions.

RSUs outstanding as of December 31, 2025 were comprised of 24.3 million RSUs with only service conditions and 1.7 million RSUs with both service and performance conditions, including certain RSUs with additional market conditions.

The total intrinsic value of the RSUs vested was $ 2.6 billion, $ 2.4 billion and $ 1.6 billion for the years ended December 31, 2025, 2024 and 2023, respectively.

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Total stock-based compensation expense for the years ended December 31, 2025, 2024 and 2023 was $ 1,955 million, $ 1,746 million and $ 1,604 million, respectively.

For the years ended December 31, 2024 and 2023, we recorded $ 340 million and $ 296 million, respectively, of tax benefits on total stock-based compensation expense, which are reflected in the provision for (benefit from) income taxes in the consolidated statements of comprehensive income.

Tax benefits on stock-based compensation for the year ended December 31, 2022 was immaterial .

Valuation Assumption s

For the years ended December 31, 2025, 2024 and 2023, we recorded $ 365 million, $ 340 million and $ 296 million, respectively, of tax benefits on total stock-based compensation expense, which are reflected in the provision for (benefit from) income taxes in the consolidated statements of comprehensive income.

Valuation Assumptions

The following assumptions were used in the Black-Scholes options pricing model and the Monte Carlo simulation model, to estimate our stock-based compensation on the date of grant for ESPP, stock options and PRSUs, respectively, as applicable.

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PRSU 4.18 % - 4.24 %

3.97 % - 4.56 %

Expected Term (in years)

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Basic net income per share attributable to common stockholders is computed by dividing net income attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period.

Diluted net income per share is computed by dividing net income attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period, adjusted for the effects of dilutive shares of common stock, which are comprised of outstanding stock options, RSUs, ESPP obligations, the 2022 Notes and the 2022 Warrants.

Stock awards with performance or market conditions are included in dilutive shares to the extent all conditions are met.

The potentially dilutive shares of common stock are computed using the treasury stock method or the as-if converted method, as applicable.

The effects of outstanding stock options, RSUs, ESPP obligations, 2022 Notes and 2022 Warrants are excluded from the computation of diluted net income per share in periods in which the effect would be antidilutive.

The following table presents the calculation of basic and diluted net income per share attributable to common stockholders (in millions, except for number of shares reflected in thousands and per share data):

The effects of outstanding stock options, RSUs and ESPP obligations are excluded from the computation of diluted net income per share in periods in which the effect would be antidilutive.

2025 Annual Report 96

The following table presents the calculation of basic and diluted net income per share attributable to common stockholders, as adjusted to give effect to the Stock Split (in millions, except for number of shares reflected in thousands and per share data):

Year Ended December 31,

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Weighted-average shares outstanding - basic 1,036,740 1,029,169 1,020,685

205,834 204,137 201,430

Weighted-average effect of potentially dilutive securities:

Common stock options, RSUs and ESPP obligations 9,951 12,944 7,268

2,589 1,454 1,672

2022 Notes settlements — — 280

Settlement of 2022 Warrants — — 153

Weighted-average shares outstanding - diluted 1,046,691 1,042,113 1,027,953

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2025 2024 2023

Tax computed at U.S.

federal statutory rate $ 365 $ 212 $ 84

State taxes, net of federal benefit 42 47 10

tax on foreign earnings ( 7 ) 42 96

Tax rate differential for international subsidiaries 24 29 18

federal statutory tax rate $ 475 21.0 % $ 365 21.0 % $ 212 21.0 %

State and local income tax, net of federal benefit (1)

51 2.3 % 33 1.9 % ( 81 ) ( 8.1 ) %

Foreign tax effects

Statutory tax rate difference between Ireland and United States

( 45 ) ( 2.0 ) % ( 31 ) ( 1.8 ) % ( 20 ) ( 1.9 ) %

Other ( 17 ) ( 0.7 ) % 1 — % 12 1.2 %

Withholding 30 1.3 % 18 1.0 % — — %

Other — — % 2 0.1 % 10 0.9 %

Other foreign jurisdictions 63 2.8 % 58 3.3 % 21 2.1 %

Effect of cross-border tax laws

Global intangible low-taxed income ( 22 ) ( 1.0 ) % ( 29 ) ( 1.6 ) % 45 4.5 %

Other ( 1 ) ( 0.1 ) % ( 6 ) ( 0.3 ) % ( 1 ) ( 0.1 ) %

Research and development tax credits ( 53 ) ( 2.3 ) % ( 64 ) ( 3.7 ) % ( 74 ) ( 7.3 ) %

Changes in valuation allowances ( 1 ) ( 0.1 ) % 3 0.2 % ( 930 ) ( 92.2 ) %

Nontaxable or nondeductible items

Stock-based compensation ( 66 ) ( 2.9 ) % ( 78 ) ( 4.5 ) % 25 2.5 %

Executive compensation 28 32 22

Tax credits ( 98 ) ( 93 ) ( 70 )

Officer’s compensation 32 1.4 % 28 1.6 % 32 3.2 %

Other 29 1.3 % 13 0.8 % 16 1.5 %

Valuation allowance 25 ( 1,032 ) ( 100 )

Change in unrecognized tax benefits 11 0.5 % 3 0.2 % 9 0.9 %

Acquisition-related effects 29 1.3 % ( 5 ) ( 0.3 ) % 3 0.3 %

Other ( 2 ) ( 0.1 ) % 2 0.1 % ( 2 ) ( 0.2 ) %

Provision for (benefit from) income taxes $ 513 22.7 % $ 313 18.0 % $ ( 723 ) ( 71.7 ) %

(1) The states that contribute to the majority (greater than 50%) of the tax effect in this category include Illinois, New Jersey, Virginia, Minnesota, and New York for 2025;

Virginia, New York, Illinois, Minnesota, and Georgia for 2024;

and Illinois, Virginia, Minnesota, and Pennsylvania for 2023.

Significant components of our deferred tax assets are shown below (in millions).

A valuation allowance has been recognized to offset our deferred tax assets, as necessary, by the amount of any tax benefits that, based on evidence, are not expected to be realized.

2025 Annual Report 98

Deferred tax assets:

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Depreciation and amortization 465 514

Other 168 167

Accrued expenses

Total deferred tax assets 1,868 1,883

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Depreciation and amortization ( 375 ) ( 113 )

( 113 ) ( 90 )

Other ( 56 ) ( 61 )

Net deferred tax assets $ 1,014 $ 1,339

As of December 31, 2024, we had no unremitted earnings when evaluating our outside basis difference relating to our U.S.

investment in foreign subsidiaries.

However, there could be local withholding taxes due to various foreign countries and/or U.S.

state taxes if certain lower tier earnings are distributed.

During 2024, a decision was made to change our indefinite reinvestment assertion such that we no longer permanently reinvest all foreign earnings.

Foreign withholding taxes after U.S.

foreign tax credit and/or state taxes that would be payable upon remittance of these lower tier earnings are currently estimated to be immaterial.

As of December 31, 2025, the Company does not expect to incur material additional income taxes upon the distribution of earnings from its foreign subsidiaries.

While the Company intends to repatriate these foreign earnings, there may be local withholding taxes due to various foreign countries and/or U.S.

state taxes payable upon distribution of certain lower-tier earnings.

The estimated impact of these foreign withholding taxes, after considering available U.S.

foreign tax credits, and state taxes is currently immaterial to the Company’s consolidated financial statements.

As of December 31, 2025, we had U.S.

11 unchanged sentences

The increase in the 2025 valuation allowance of $ 21 million was primarily attributable to California tax credit generation.

The increase in the 2024 valuation allowance of $ 24 million was primarily attributable to California tax credit generation.

The decrease in the 2023 valuation allowance of $ 1.03 billion was primarily attributable to the $ 1.05 billion release of certain U.S.

12 unchanged sentences

We will continue to monitor the need for a valuation allowance against our deferred tax assets on a quarterly basis.

The $ 98 million decrease in the 2022 valuation allowance was primarily attributable to a decrease in deferred tax assets related to the utilization of net operating losses.

A reconciliation of the beginning and ending balance of total unrecognized tax benefits is as follows (in millions):

1 unchanged sentence

2025 2024 2023

Balance, beginning period $ 221 $ 159 $ 124

Balance at the beginning of the period

$ 291 $ 221 $ 159

Tax positions taken in prior period:

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Settlements — ( 3 ) ( 1 )

Balance, end of period $ 291 $ 221 $ 159

Balance at the end of the period

$ 404 $ 291 $ 221

As of December 31, 2025, we had gross unrecognized tax benefits of approximately $ 404 million, of which $ 304 million would impact the effective tax rate, if recognized.

2 unchanged sentences

The amount of unrecognized tax benefits could be reduced upon expiration of the applicable statutes of limitations.

The potential reduction in unrecognized tax benefits during the next 12 months is not expected to be material.

Interest and penalties accrued on these uncertain tax positions are recognized as income tax expense and will be released upon the expiration of the statutes of limitations.

5 unchanged sentences

We periodically evaluate our exposures associated with our tax filing positions and believe that adequate amounts have been reserved for adjustments that may result from tax examinations.

On July 4, 2025, H.R.

1, the "One Big Beautiful Bill Act," was enacted into law, bringing significant amendments to the U.S.

This legislation extends and modifies provisions from the 2017 Tax Cuts and Jobs Act and introduces new tax measures affecting both businesses and individuals.

The enacted legislation had an immaterial impact on the Company’s effective tax rate for the year ended December 31, 2025.

2025 Annual Report 100

(18) Commitments and Contingencies

7 unchanged sentences

Maturities of operating lease liabilities as of December 31, 2025 are presented in the table below (in millions):

Years Ending December 31,

Fiscal Period:

Thereafter 383

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Present value of operating lease liabilities $ 912

In addition to the amounts above, as of December 31, 2024, we have operating leases, primarily for offices, that have not yet commenced with undiscounted cash flows of $ 157 million.

These operating leases are expected to commence in 2025 with lease terms of ten to eleven years .

In addition to the amounts above, as of December 31, 2025, we have leases, primarily for offices, that have not yet commenced with minimum undiscounted cash flows of $ 381 million.

These leases are expected to commence between 2026 and 2027 with lease terms of five to sixteen years .

Other Commitments

1 unchanged sentence

Future minimum payments under our non-cancellable purchase commitments as of December 31, 2025 are presented in the table below (in millions):

Purchase Obligations (1)

Years Ending December 31,

Fiscal Period:

Cloud Services

Obligations Other Purchase

Total Purchase

2026 $ 372 $ 691 $ 1,063

2027 331 498 829

2028 500 1,606 2,106

2029 630 216 846

2030 2,826 119 2,945

Thereafter — 157 157

Total $ 4,659 $ 3,287 $ 7,946

(1) Not included in the table above are certain purchase commitments related to our future annual Knowledge user conferences and other customer or sales conferences to be held in 2025 and future years.

If we had canceled these contractual commitments as of December 31, 2024, we would have been obligated to pay cancellation penalties of approximately $ 56 million in aggregate.

We have entered into various non-cancellable agreements with cloud service providers, under which we have committed to spend an aggregate of $ 805 million through 2029 on cloud services.

We have entered into various non-cancellable agreements with cloud service providers, under which we have committed to spend an aggregate of approximately $ 4.8 billion through 2030 on cloud services.

In addition, we have entered into a non-cancellable agreement with an information technology equipment provider, under which we have committed to spend $ 1.9 billion through 2028 on capital expenditures to expand our data centers.

1 unchanged sentence

In addition to the amounts above, the repayment of our 2030 Notes with an aggregate principal amount of $ 1.5 billion is due on September 1, 2030.

Refer to Note 11 for further information regarding our 2030 Notes.

Refer to Note 12 “Debt” for further information regarding our 2030 Notes.

Legal Proceedings

2 unchanged sentences

We accrue for loss contingencies when it is both probable that we will incur the loss and when we can reasonably estimate the amount of the loss or range of loss.

On July 5, 2022, InQuisient Inc.

(“Plaintiff”) filed a complaint against ServiceNow, Inc.

District Court for the District of Delaware, alleging the Now Platform’s use of relational databases infringes three of Plaintiff’s patents and seeking injunctive relief and unspecified damages.

The Company denied Plaintiff’s allegations and asserted Plaintiff’s patents were, among other things, invalid, not infringed and otherwise unenforceable.

In December 2024, the parties entered into a confidential settlement agreement resolving the matter for an immaterial amount.

Any adverse determination related to intellectual property claims or other litigation could prevent us from offering our services and adversely affect our financial condition and results of operations.

For additional information regarding intellectual property litigation, see “Risk Factors—We may not be able to protect or enforce our intellectual property rights.”

As previously disclosed, through its internal processes, the Company received a complaint that raised potential compliance issues related to one of its government contracts.

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As a result of the investigation, the Company’s board of directors determined that the Company’s President and Chief Operating Officer and the hired individual violated Company policy regarding a possible conflict relating to such individual’s hiring.

On July 24, 2024, the Company and its President and Chief Operating Officer came to a mutual agreement that he would resign from all positions

with the Company, effective immediately.

On July 24, 2024, the Company and its President and Chief Operating Officer came to a mutual agreement that he would resign from all positions with the Company, effective immediately.

The other individual also has departed the Company.

The Company has informed the Department of Justice, the Department of Defense Office of Inspector General and the Army Suspension and Debarment Office of the investigation and is continuing to cooperate with the Department of Justice, which has commenced its own investigation into these matters.

The Company cannot predict the timing, outcome or possible impact of the investigation.

2025 Annual Report 102

Indemnification Provisions

1 unchanged sentence

In addition, we have entered into indemnification agreements with our directors, executive officers and certain other officers that will require us, among other things, to indemnify them against certain liabilities that may arise as a result of their affiliation with us.

We have not incurred any costs as a result of such indemnification obligations and have not recorded any liabilities related to such obligations in the consolidated financial statements.

(18) Information about Geographic Areas and Products

We have not incurred any material costs as a result of such indemnification obligations and have not recorded any material liabilities related to such obligations in the consolidated financial statements.

(19) Segment and Geographic Information

Segment Information

Our chief operating decision maker (“CODM”), the Chief Executive Officer, manages the Company’s business activities as a single operating and reportable segment at the consolidated level.

Accordingly, our CODM uses consolidated net income to measure segment profit or loss, allocate resources and assess performance.

Geographic Information

Revenues by geographic area, based on the location of our users, were as follows for the periods presented (in millions):

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(2) Europe, the Middle East and Africa (“EMEA”).

(3) Property and equipment, net attributed to the United States were 79 % of property and equipment, net attributable to North America as of December 31, 2024 and 2023, respectively.

Subscription revenues consist of the following (in millions):

Year Ended December 31,

2024 2023 2022

Digital workflow products $ 9,422 $ 7,679 $ 6,077

ITOM products 1,224 1,001 814

Total subscription revenues $ 10,646 $ 8,680 $ 6,891

Our digital workflow products include most of our product offerings and are generally priced on a per user basis.

Our remaining product offerings, primarily comprised of our IT Operations Management (“ITOM”) products, are generally priced on a subscription unit basis.

(19) Subsequent Event

In January 2025, our board of directors authorized an additional $ 3.0 billion in repurchases under the Share Repurchase Program.

Refer to Note 13 “Stockholders’ Equity” for additional information about the Share Repurchase Program.

(3) Property and equipment, net attributed to the United States were 82 % and 79 % of property and equipment, net attributable to North America as of December 31, 2025 and 2024, respectively.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis