ServiceNow (NOW) AI Stock Analysis

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ServiceNow

(NYSE:NOW)

Rating:79Outperform

Price Target:

$1,080.00

▲(18.19% Upside)

ServiceNow's overall stock score is driven by strong financial performance and positive earnings call results, which highlight robust growth and strategic advancements. However, the high valuation presents a potential risk, and technical indicators suggest mixed short-term signals.

Positive Factors

Financial Performance

ServiceNow outperformed on all key metrics in strong F2Q25 results, leading to a Buy rating and raised Price Target.

Revenue Growth

ServiceNow reported better-than-expected results with total revenue increasing by 22.5% YoY, surpassing consensus estimates.

Negative Factors

Comparative Challenges

Several near-term factors keep analysts on the sideline for now, including tough comps ahead in Federal.

Guidance

The FY25 guidance raise was underwhelming, reflecting continued conservatism as management noted an overall unchanged macro environment.

ServiceNow (NOW) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$186.90B

Dividend YieldN/A

Average Volume (3M)1.89M

Price to Earnings (P/E)113.1

Beta (1Y)1.44

Revenue Growth21.12%

EPS Growth43.91%

CountryUS

Employees26,293

SectorTechnology

Sector Strength84

IndustrySoftware - Application

Share Statistics

EPS (TTM)4.09

Shares Outstanding208,000,000

10 Day Avg. Volume1,644,170

30 Day Avg. Volume1,890,721

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)0.00

Price to Sales (P/S)0.00

P/FCF Ratio0.00

Enterprise Value/Market Cap1.13

Enterprise Value/Revenue17.54

Enterprise Value/Gross Profit22.34

Enterprise Value/Ebitda81.15

Forecast

1Y Price Target

$1,154.00

Price Target Upside26.29% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering32

ServiceNow Business Overview & Revenue Model

Company DescriptionServiceNow, Inc. is a leading provider of cloud-based digital workflow solutions designed to streamline and automate business processes across various sectors including IT, human resources, customer service, and security. Founded in 2004, ServiceNow's platform enables organizations to improve operational efficiency and enhance service delivery through its suite of applications and services, such as IT Service Management (ITSM), IT Operations Management (ITOM), and IT Business Management (ITBM). The company's innovative solutions cater to a diverse range of industries, empowering businesses to transform their operations and drive digital transformation.

How the Company Makes MoneyServiceNow primarily generates revenue through a subscription-based model, where customers pay for access to its cloud platform and associated services. The main revenue streams include subscription fees for its various products, such as ITSM, ITOM, and customer service management solutions. Additionally, the company earns revenue from professional services, which encompass consulting, implementation, and training services that help organizations effectively deploy and utilize their solutions. ServiceNow has established significant partnerships with technology giants and system integrators that enhance its market reach and service capabilities, contributing to its overall growth and profitability.

ServiceNow Key Performance Indicators (KPIs)

Any

Large Customers

Large Customers
Tracks the number of large enterprises using ServiceNow's platform, indicating market penetration, customer retention, and potential for upselling.

Chart InsightsServiceNow's large customer base has consistently expanded, surpassing 2,000 by the end of 2024, reflecting strong market penetration and customer trust. The latest earnings call underscores this growth, highlighting a record-breaking performance with significant deal closures and strategic AI advancements. The company's focus on AI, with a 150% growth in Pro Plus AI offerings, positions it well for future expansion. Despite challenges like federal business seasonality and FX headwinds, ServiceNow's strategic partnerships and robust financial outlook suggest continued momentum in acquiring large customers.

Data provided by:

Main Street Data

ServiceNow Earnings Call Summary

Earnings Call Date:Jul 23, 2025

(Q2-2025)

% Change Since: |

Next Earnings Date:Oct 22, 2025

Earnings Call Sentiment Positive

The earnings call demonstrated strong performance across subscription revenue and AI product adoption, with significant growth in large deals and operating margins. Despite market challenges in the U.S. federal sector, the overall outlook remains positive due to robust new logo acquisition and exceptional execution.

Q2-2025 Updates

Positive Updates

Record Subscription Revenue Growth

Subscription revenue grew by 21.5% year-over-year in constant currency, 200 basis points above the high end of the guidance range, driven by strong execution and early on-prem renewals.

Significant Increase in Large Deals

ServiceNow closed 89 deals greater than $1 million in net new ACV, including 11 deals over $5 million. This includes notable wins with companies like ExxonMobil and Standard Chartered.

Strong AI Product Adoption

Now Assist net new ACV to date exceeded expectations, with a 50% quarter-on-quarter increase in key AI Pro Plus deal count. ITAM Now Assist net new ACV increased nearly 6x quarter-over-quarter.

Operating and Free Cash Flow Margin Growth

Operating margin was 29.5%, over 250 basis points above guidance, and free cash flow margin was 16.5%, up 300 basis points year-over-year.

Successful New Logo Acquisition

ServiceNow landed 11 deals over $1 million in net new ACV with new logos, including 2 over $5 million. Average new logo ACV grew over 100% year-over-year.

Negative Updates

U.S. Federal Market Challenges

U.S. federal agencies are experiencing tightening budgets and shifting mission demands, which has introduced some uncertainty in the U.S. public sector market.

Conservative Guidance Due to Market Conditions

Despite strong performance, guidance is cautious due to market conditions, particularly in the U.S. federal sector and the timing of Moveworks acquisition.

Company Guidance

During ServiceNow's Q2 2025 earnings call, the company provided guidance for the upcoming third quarter and full year 2025, reflecting strong performance and growth expectations. For the full year, ServiceNow raised its subscription revenue guidance by $125 million at the midpoint, bringing it to a range of $12.775 billion to $12.795 billion, representing a 20% year-over-year growth. The company also expects a subscription gross margin of 83.5%, operating margin of 30.5%, and a free cash flow margin of 32%. For Q3 2025, ServiceNow anticipates subscription revenues between $3.260 billion and $3.265 billion, with a year-over-year growth rate of 20% to 20.5%, and an operating margin of 30.5%. Current Remaining Performance Obligation (cRPO) growth is projected at 18.5% year-over-year. The guidance reflects ServiceNow's strong execution and demand for its AI-driven solutions, including the Now Assist products, which have been contributing significantly to its performance.

ServiceNow Financial Statement Overview

Summary

ServiceNow demonstrates strong financial performance with consistent revenue growth, improved profitability, and a solid balance sheet. The company effectively manages its cash flow, supporting strategic growth initiatives and reducing leverage.

Income Statement

Very Positive

ServiceNow demonstrates strong performance in the income statement with consistent revenue growth from $4.52B in 2020 to $12.06B TTM. The gross profit margin is healthy at approximately 78.5% TTM, and the net profit margin has improved to 13.8% TTM from 2.6% in 2020, showing significant profitability growth. EBIT and EBITDA margins have also shown consistent improvement, indicating operational efficiency.

Balance Sheet

Very Positive

The company's balance sheet reflects solid financial health with a debt-to-equity ratio declining from 0.75 in 2020 to 0.08 TTM, indicating reduced financial leverage. The equity ratio has improved to 49.6% TTM from 32.5% in 2020, strengthening the company's capital structure. ROE has increased to 15.2% TTM, showcasing effective utilization of equity to generate profits.

Cash Flow

Very Positive

ServiceNow's cash flow statement indicates robust operational cash flow growth to $4.70B TTM, supporting a strong free cash flow position. The operating cash flow to net income ratio is 2.83 TTM, suggesting efficient conversion of income into cash. The free cash flow to net income ratio is 2.32 TTM, highlighting the company's ability to generate cash for reinvestment and debt reduction.

Breakdown	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	10.98B	8.97B	7.25B	5.90B	4.52B
Gross Profit	8.70B	7.05B	5.67B	4.54B	3.53B
EBITDA	2.23B	1.59B	768.00M	729.00M	452.93M
Net Income	1.43B	1.73B	325.00M	230.00M	119.00M
Balance Sheet
Total Assets	20.38B	17.39B	13.30B	10.80B	8.71B
Cash, Cash Equivalents and Short-Term Investments	5.76B	4.88B	4.28B	3.30B	3.09B
Total Debt	2.28B	2.28B	2.23B	2.21B	2.13B
Total Liabilities	10.77B	9.76B	8.27B	7.10B	5.88B
Stockholders Equity	9.61B	7.63B	5.03B	3.69B	2.83B
Cash Flow
Free Cash Flow	3.42B	2.70B	2.17B	1.79B	1.35B
Operating Cash Flow	4.27B	3.40B	2.72B	2.19B	1.79B
Investing Cash Flow	-2.50B	-2.17B	-2.58B	-1.61B	-1.51B
Financing Cash Flow	-1.34B	-803.00M	-344.00M	-506.00M	597.00M

ServiceNow Technical Analysis

Technical Analysis Sentiment

Neutral

Last Price913.80

Price Trends

50DMA

938.11

Negative

100DMA

953.40

Negative

200DMA

968.26

Negative

Market Momentum

MACD

-4.90

Negative

RSI

51.53

Neutral

STOCH

68.77

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For NOW, the sentiment is Neutral. The current price of 913.8 is above the 20-day moving average (MA) of 885.92, below the 50-day MA of 938.11, and below the 200-day MA of 968.26, indicating a neutral trend. The MACD of -4.90 indicates Negative momentum. The RSI at 51.53 is Neutral, neither overbought nor oversold. The STOCH value of 68.77 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral 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

Overall Rating

UnderperformOutperform

Sector (61)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
NOW	79 Outperform	$186.90B	113.10	16.95%	―	21.12%	43.91%
CRM	75 Outperform	$232.30B	35.43	11.20%	0.65%	8.33%	19.69%
WDAY	73 Outperform	$61.71B	106.89	6.66%	―	14.21%	-62.56%
DDOG	68 Neutral	$45.96B	380.76	4.45%	―	26.00%	-25.64%
SNOW	68 Neutral	$74.04B	―	-42.45%	―	28.37%	-35.49%
Sector *	61 Neutral	$35.52B	8.84	-11.06%	1.87%	8.55%	-8.14%
TEAM	58 Neutral	$44.09B	―	-21.58%	―	19.66%	15.17%

* Technology Sector Average

Performance Comparison

NOW

ServiceNow

913.80

58.22

6.80%

CRM

Salesforce

250.76

6.44

2.64%

WDAY

Workday

231.08

-22.44

-8.85%

TEAM

Atlassian

172.43

9.74

5.99%

DDOG

Datadog

136.08

28.38

26.35%

SNOW

Snowflake

225.58

115.62

105.15%

ServiceNow Corporate Events

M&A TransactionsRegulatory Filings and Compliance

ServiceNow Files Prospectus for Share Resale Post-Acquisition

Neutral

May 30, 2025

On May 30, 2025, ServiceNow, Inc. filed a prospectus supplement with the SEC related to the resale of shares by certain stockholders. These shares were acquired through ServiceNow’s acquisition of Logik.io Inc., indicating a strategic move to integrate and expand its technological capabilities.

The most recent analyst rating on (NOW) stock is a Hold with a $960.00 price target. To see the full list of analyst forecasts on ServiceNow stock, see the NOW Stock Forecast page.

Executive/Board ChangesShareholder Meetings

ServiceNow Shareholders Approve Key Governance Amendments

Neutral

May 27, 2025

At the 2025 annual meeting of shareholders held on May 22, 2025, ServiceNow, Inc. announced that shareholders approved amendments to the company’s Certificate of Incorporation, which include reflecting Delaware law provisions regarding officer exculpation and eliminating supermajority voting provisions. Additionally, the shareholders elected directors, approved executive compensation, and ratified the appointment of PricewaterhouseCoopers LLP as the independent auditor for 2025. The meeting also saw shareholders voting against proposals related to the right to cure nomination defects and removing the one-year holding period for calling special meetings, indicating a preference for maintaining existing governance structures.

The most recent analyst rating on (NOW) stock is a Hold with a $960.00 price target. To see the full list of analyst forecasts on ServiceNow stock, see the NOW Stock Forecast page.

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.Date of analysis: Aug 01, 2025