ServiceNow (NOW)
NYSE:NOW
Top Page
ServiceNow
(NYSE:NOW)
Select Model
Select Model
Rating:77Outperform
Price Target:
$141.00
▲(36.81% Upside)
Action:ReiteratedDate:02/18/26
The score is driven primarily by strong financial performance (high margins, low leverage, and strong free cash flow) and a favorable earnings outlook with continued high-teens subscription growth and margin expansion. These positives are tempered by weak technicals (price below all key moving averages and negative MACD) and a rich valuation (P/E ~64), which increase sensitivity to any growth or margin disappointments.
Positive Factors
High gross margins and improved profitability
ServiceNow’s sustained gross margins near 77%–79% and materially higher operating/net margins show a durable unit economics advantage for its SaaS workflow platform. High margins support reinvestment in product and AI, provide buffer against competitive pricing, and enable structural operating leverage as revenue scales.
Negative Factors
Revenue growth deceleration
A pronounced slowdown in TTM revenue growth to mid-single digits risks undermining operating-leverage assumptions. If top-line growth remains muted, it could constrain future margin expansion, weaken free-cash-flow growth trajectory, and increase sensitivity to pricing or cost pressures over the next several quarters.
Read all positive and negative factors
Positive Factors
Negative Factors
High gross margins and improved profitability
ServiceNow’s sustained gross margins near 77%–79% and materially higher operating/net margins show a durable unit economics advantage for its SaaS workflow platform. High margins support reinvestment in product and AI, provide buffer against competitive pricing, and enable structural operating leverage as revenue scales.
Read all positive factors
ServiceNow (NOW) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$107.80B
Dividend YieldN/A
Average Volume (3M)18.21M
Price to Earnings (P/E)90.9
Beta (1Y)1.31
Revenue Growth21.05%
EPS Growth28.67%
CountryUS
Employees26,293
SectorTechnology
Sector Strength88
IndustrySoftware - Application
Share Statistics
EPS (TTM)0.92
Shares Outstanding1,046,000,000
10 Day Avg. Volume14,749,517
30 Day Avg. Volume18,210,148
Financial Highlights & Ratios
PEG Ratio4.05
Price to Book (P/B)12.25
Price to Sales (P/S)11.96
P/FCF Ratio34.72
Enterprise Value/Market Cap1.00
Enterprise Value/Revenue8.08
Enterprise Value/Gross Profit10.42
Enterprise Value/Ebitda35.56
Forecast
1Y Price Target
$188.90Price Target Upside83.29% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering33
EPS Forecast (FY)4.19
Revenue Forecast (FY)$15.97B
ServiceNow Business Overview & Revenue Model
Company Description
ServiceNow, Inc. provides enterprise cloud computing solutions that defines, structures, consolidates, manages, and automates services for enterprises worldwide. It operates the Now platform for workflow automation, artificial intelligence, machin...
How the Company Makes Money
ServiceNow generates revenue primarily through subscription-based licensing for its cloud platform and applications. Customers pay annual or multi-year fees to access its suite of products, which include ITSM, ITOM, and CSM solutions, along with a...
ServiceNow Key Performance Indicators (KPIs)
Any
Revenue by Geography
Breaks down revenue across different regions, revealing where ServiceNow is strongest and where it may face risk or growth potential due to local economic conditions or market share shifts.
Breaks down revenue across different regions, revealing where ServiceNow is strongest and where it may face risk or growth potential due to local economic conditions or market share shifts.
Data provided by:
The Fly
The FlyServiceNow Earnings Call Summary
Earnings Call Date:Jan 28, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Apr 29, 2026
Earnings Call Sentiment Positive
The call portrayed a strong finish to 2025 with multiple beats (revenue, RPO/CRPO, margins, free cash flow) and accelerated AI-driven monetization (Now Assist growth, workflows, partnerships). Management provided confident 2026 guidance with margin expansion and significant cash returns via a $5B repurchase authorization. Near-term headwinds include gross margin pressure from hyperscaler capacity and AI inference costs, a small mix-shift impact in Q1, and modest near-term dilution from announced security-focused acquisitions. On balance, the positives (robust growth, margin and cash-flow outperformance, large deal flow, accelerating AI adoption and partnerships) substantially outweigh the limited near-term challenges.Positive Updates
Subscription Revenue Growth and Beat
Q4 subscription revenues of $3,466,000,000, up 19.5% year-over-year in constant currency, exceeding the high end of guidance by ~150 basis points (company also cited a 21% subscription growth figure in commentary).
Negative Updates
Gross Margin Headwinds from Hyperscaler & AI Costs
Management cited gross margin pressure driven by incremental data center and public cloud investments and a shift toward hyperscaler capacity (hyperscaler arrangements currently yield slightly lower gross margins). LLM inference / API costs were discussed as a headwind but described as largely manageable and offset by OpEx efficiencies.
Read all updates
Q4-2025 Updates
Positive
Negative
Subscription Revenue Growth and Beat
Q4 subscription revenues of $3,466,000,000, up 19.5% year-over-year in constant currency, exceeding the high end of guidance by ~150 basis points (company also cited a 21% subscription growth figure in commentary).
Read all positive updates
Company Guidance
ServiceNow guided 2026 subscription revenues of $15,530M–$15,570M (≈19.5%–20% year‑over‑year CC growth, including a 1‑point contribution from Moveworks), subscription gross margin of 82%, non‑GAAP operating margin of 32% (up 100 bps YoY), and free cash flow margin of 36% (up 100 bps YoY and 350 bps ahead of the Financial Analyst Day target); GAAP diluted weighted average shares are expected to be ~1,050M. For Q1 2026 they guided subscription revenue of $3,650M–$3,655M (18.5%–19% YoY CC, including a 1‑pt contribution from Loopworks and a 1.5‑pt on‑prem→hosted mix headwind), CRPO growth of 20% CC (including a 1‑pt Moveworks benefit), and a 31.5% operating margin (with ~1,050M GAAP shares). They also expect Armis to close in H2 with roughly a 1‑pt subscription revenue contribution to 2026 (and up to a 50 bps operating‑margin headwind in 2026) and announced an incremental $5.0B share‑repurchase authorization with an immediate $2.0B ASR.ServiceNow Financial Statement Overview
Summary
Income Statement
86
Very Positive
Balance Sheet
90
Very Positive
Cash Flow
92
Very Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 13.28B | 10.98B | 8.97B | 7.25B | 5.90B |
| Gross Profit | 10.29B | 8.70B | 7.05B | 5.67B | 4.54B |
| EBITDA | 3.00B | 2.23B | 1.59B | 768.00M | 729.00M |
| Net Income | 1.75B | 1.43B | 1.73B | 325.00M | 230.00M |
Balance Sheet | |||||
| Total Assets | 26.04B | 20.38B | 17.39B | 13.30B | 10.80B |
| Cash, Cash Equivalents and Short-Term Investments | 6.28B | 5.76B | 4.88B | 4.28B | 3.30B |
| Total Debt | 3.20B | 2.28B | 2.28B | 2.23B | 2.21B |
| Total Liabilities | 13.07B | 10.77B | 9.76B | 8.27B | 7.10B |
| Stockholders Equity | 12.96B | 9.61B | 7.63B | 5.03B | 3.69B |
Cash Flow | |||||
| Free Cash Flow | 4.58B | 3.42B | 2.70B | 2.17B | 1.79B |
| Operating Cash Flow | 5.44B | 4.27B | 3.40B | 2.72B | 2.19B |
| Investing Cash Flow | -1.69B | -2.50B | -2.17B | -2.58B | -1.61B |
| Financing Cash Flow | -2.34B | -1.34B | -803.00M | -344.00M | -506.00M |
ServiceNow Technical Analysis
Negative
103.06
Price Trends
114.77
Negative
138.89
Negative
163.53
Negative
Market Momentum
-2.04
Positive
35.59
Neutral
10.52
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For NOW, the sentiment is Negative. The current price of 103.06 is below the 20-day moving average (MA) of 113.34, below the 50-day MA of 114.77, and below the 200-day MA of 163.53, indicating a bearish trend. The MACD of -2.04 indicates Positive momentum. The RSI at 35.59 is Neutral, neither overbought nor oversold. The STOCH value of 10.52 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for NOW.
ServiceNow Risk Analysis
ServiceNow disclosed 27 risk factors in its most recent earnings report. ServiceNow reported the most risks in the "Tech & Innovation" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
ServiceNow Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $107.80B | 90.88 | 15.42% | ― | 21.05% | 28.67% | |
71 Outperform | $167.95B | 27.05 | 12.37% | 0.63% | 8.41% | 22.92% | |
69 Neutral | $32.66B | 66.22 | 7.97% | ― | 13.35% | -60.76% | |
65 Neutral | $43.49B | 438.37 | 3.24% | ― | 26.63% | -46.13% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
60 Neutral | $55.52B | -48.84 | -60.27% | ― | 28.48% | -19.12% | |
56 Neutral | $17.59B | -250.38 | -13.32% | ― | 19.51% | 53.35% |
* Technology Sector Average
NOW
ServiceNow
103.06
-62.49
-37.75%
CRM
Salesforce
181.96
-94.05
-34.07%
WDAY
Workday
127.07
-117.48
-48.04%
TEAM
Atlassian
66.46
-156.18
-70.15%
DDOG
Datadog
123.29
18.44
17.59%
SNOW
Snowflake
160.61
3.63
2.31%
ServiceNow Corporate Events
Business Operations and Strategy
ServiceNow CEO Plans Significant Insider Share Purchase
Positive
Feb 17, 2026
ServiceNow disclosed that several top executives, including Chairman and CEO William R. McDermott and other senior leaders, have terminated their Rule 10b5-1 trading plans, cancelling all future pre-planned sales of ServiceNow common stock by thes...
Business Operations and StrategyExecutive/Board Changes
ServiceNow Strengthens Finance Leadership With New Accounting Chief
Positive
Feb 11, 2026
On February 10, 2026, ServiceNow’s board appointed Danielle Fontaine as Chief Accounting Officer and Corporate Controller, effective February 17, 2026, while promoting outgoing chief accounting officer Kevin McBride to Executive Vice Preside...
Business Operations and StrategyStock BuybackFinancial DisclosuresM&A TransactionsStock Split
ServiceNow tops Q4 guidance and accelerates AI expansion
Positive
Jan 28, 2026
On January 28, 2026, ServiceNow reported that it had exceeded its guidance across all fourth-quarter 2025 topline growth and profitability metrics, posting subscription revenue of $3.47 billion, up 21% year over year, and total revenue of $3.57 bi...
Business Operations and StrategyExecutive/Board ChangesRegulatory Filings and Compliance
ServiceNow Extends CEO McDermott Agreement, Updates Severance Policy
Positive
Dec 23, 2025
On December 23, 2025, ServiceNow amended the employment agreement of Chairman and CEO William R. McDermott, effective January 1, 2026, to secure his service with the company through at least December 31, 2030, in roles that may include CEO, co-CEO...
M&A TransactionsRegulatory Filings and Compliance
ServiceNow Files Prospectus for Moveworks Acquisition Shares
Neutral
Dec 15, 2025
On December 15, 2025, ServiceNow filed a prospectus supplement with the SEC for the resale of shares acquired by stockholders through the acquisition of Moveworks, Inc. This filing may impact the company’s stock liquidity and shareholder com...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.