ServiceNow (NOW) AI Stock Analysis

• Market Cap: $202.31B
• Dividend Yield: N/A
• Average Volume (3M): 2.20M
• Price to Earnings (P/E): 132.7
• Beta (1Y): 1.53
• Revenue Growth: 21.01%
• EPS Growth: -20.93%
• Country: US
• Employees: 26,293
• Sector: Technology
• Sector Strength: 69
• Industry: Software - Application
• EPS (TTM): 7.37
• Shares Outstanding: 207,000,000
• 10 Day Avg. Volume: 2,409,906
• 30 Day Avg. Volume: 2,204,433
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.00
• Price to Cash Flow (P/CF): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: 0.80
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: 18.68
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $1,047.72
• Price Target Upside: 7.20% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 35

ServiceNow showcases strong financial performance with remarkable revenue and cash flow growth. The technical indicators suggest a positive trend, although the high valuation poses a risk. The earnings call highlights robust growth prospects with a strategic AI focus, while the Moveworks acquisition further positions the company for future innovation and market expansion. Despite macroeconomic uncertainties, the company remains fundamentally sound and well-positioned for continued success.

Positive Factors

AI Leadership

NOW has a leadership position in the AI race, with strong connectivity in the IT organization and growing use cases with knowledge workers.

Financial Performance

ServiceNow announced 1Q25 financial results: total revenue grew by 19% YoY to US$3.09bn, in line with Bloomberg consensus estimate.

M&A Strategy

The $2.8 billion Moveworks deal is the largest ever for the company and signifies a shift in M&A philosophy with the integration of complementary technology.

Negative Factors

Federal Business Risks

One of the key risks swirling around ServiceNow this year has been the potential impact of DOGE on their federal business.

Federal Business Strategy

Management added greater conservatism in its US Fed business while still maintaining its growth guide.

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, machine learning, robotic process automation, performance analytics, electronic service catalogs and portals, configuration management systems, data benchmarking, encryption, and collaboration and development tools. The company also provides information technology (IT) service management applications; IT service management product suite for enterprise's employees, customers, and partners; IT business management product suite; IT operations management product that connects a customer's physical and cloud-based IT infrastructure; IT Asset Management to automate IT asset lifecycles; and security operations that connects with internal and third party. In addition, it offers governance, risk, and compliance product to manage risk and resilience; human resources, legal, and workplace service delivery products; safe workplace applications; customer service management product; and field service management applications. Further, it provides App Engine product; IntegrationHub enables application to extend workflows; and professional, industry solutions, and customer support services. It serves government, financial services, healthcare, telecommunications, manufacturing, IT services, technology, oil and gas, education, and consumer products through direct sales team and resale partners. It has a strategic partnership with Celonis to help customers identify and prioritize processes that are suitable for automation. The company was formerly known as Service-now.com and changed its name to ServiceNow, Inc. in May 2012. The company was founded in 2004 and is headquartered in Santa Clara, California.

How the Company Makes Money

ServiceNow generates revenue primarily through the sale of subscription-based licenses for its cloud-based platform and related applications. This subscription model provides a steady and predictable revenue stream as customers pay ongoing fees to access the platform's various services. Additionally, ServiceNow offers professional services, including consulting, implementation, and training, which contribute to its revenue. The company also forms strategic partnerships and alliances with other technology firms, which can enhance its product offerings and expand its market reach, thereby supporting its revenue growth. ServiceNow's focus on continuous innovation and expanding its product suites allows it to cater to a broad range of business needs, encouraging customer retention and attracting new clients, further boosting its revenue.

ServiceNow Financial Statement Overview

Summary

ServiceNow is experiencing robust revenue growth and maintains strong profitability metrics. Its balance sheet highlights a prudent leverage strategy with a low debt-to-equity ratio, and solid cash flow generation supports ongoing investments and shareholder returns.

Income Statement

ServiceNow has demonstrated strong revenue growth with a TTM revenue increase of approximately 4.41%, following consistent annual growth over recent years. The company maintains robust profitability, evidenced by a gross profit margin of 78.96% and a net profit margin of 13.41% as of the latest TTM data. The EBIT and EBITDA margins are also solid at 12.93% and 18.01%, respectively. This reflects efficient operations and strong pricing power in the software application sector.

Balance Sheet

The balance sheet of ServiceNow indicates a healthy financial position, with a low debt-to-equity ratio of 0.09, suggesting prudent leverage management. The return on equity (ROE) is a strong 15.17%, highlighting effective use of shareholder funds. The equity ratio stands at 48.36%, indicating a balanced capital structure with substantial equity backing.

Cash Flow

ServiceNow's cash flow metrics exhibit positive trends. The operating cash flow to net income ratio is 2.99, indicating strong cash generation from operations relative to net income. Free cash flow has grown consistently, with a notable TTM free cash flow of $3,672 million. The free cash flow to net income ratio is 2.39, showing efficient conversion of earnings to cash. This strong cash flow performance supports ongoing investments and shareholder returns.

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
	EBIT
1.36B	762.00M	355.00M	257.00M	198.86M
	EBITDA
2.23B	1.59B	768.00M	257.00M	452.93M
	Net Income Common Stockholders
1.43B	1.73B	325.00M	230.00M	119.00M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
5.76B	4.88B	4.28B	3.30B	3.09B
	Total Assets
20.38B	17.39B	13.30B	10.80B	8.72B
	Total Debt
2.28B	2.28B	2.23B	2.21B	2.14B
	Net Debt
-26.00M	387.00M	762.00M	486.00M	458.37M
	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	596.65M

ServiceNow Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 977.36
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For NOW, the sentiment is Positive. The current price of 977.36 is above the 20-day moving average (MA) of 837.75, above the 50-day MA of 848.54, and above the 200-day MA of 929.78, indicating a bullish trend. The MACD of 35.15 indicates Negative momentum. The RSI at 68.05 is Neutral, neither overbought nor oversold. The STOCH value of 95.00 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for NOW.

ServiceNow Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
WDAY	79 Outperform	$66.56B	127.18	6.15%	―	16.94%	-62.24%
CRM	76 Outperform	$263.93B	43.24	10.26%	0.60%	8.72%	51.47%
NOW	75 Outperform	$202.31B	132.67	16.86%	―	21.01%	-20.93%
TEAM	70 Outperform	$54.62B	―	-32.59%	―	23.19%	11.01%
DDOG	68 Neutral	$31.72B	179.20	7.75%	―	26.12%	274.50%
SNOW	66 Neutral	$56.02B	―	-31.43%	―	29.21%	-51.47%
Sector *	60 Neutral	$10.95B	10.52	-7.07%	3.00%	7.30%	-12.04%

ServiceNow Corporate Events

ServiceNow’s Paul Smith Resigns as President

On April 21, 2025, Paul Smith resigned as President of Global Customer and Field Operations at ServiceNow, effective April 23, 2025, with Paul Fipps succeeding him. ServiceNow reported strong financial results for Q1 2025, with subscription revenues of $3,005 million, marking a 19% year-over-year growth. The company continues to innovate with AI advancements and strategic acquisitions, such as Moveworks and Logik.ai, to enhance its platform capabilities. ServiceNow’s partnerships with companies like Aptiv and Vodafone Business further bolster its AI transformation efforts, while its recognition in industry assessments underscores its leadership in AI and innovation.

Spark’s Take on NOW Stock

According to Spark, TipRanks’ AI Analyst, NOW is a Outperform.

ServiceNow’s overall stock score is driven by its strong financial performance and strategic growth initiatives, particularly in AI. The stock’s technical indicators suggest current bearish momentum, and the high P/E ratio poses valuation concerns. However, the company’s strategic acquisitions and robust earnings call guidance highlight potential for future growth, balancing the downside risks.

To see Spark’s full report on NOW stock, click here.

ServiceNow to Acquire Moveworks for AI Expansion

On March 10, 2025, ServiceNow announced its agreement to acquire Moveworks, a move aimed at combining ServiceNow’s agentic AI and automation capabilities with Moveworks’ AI assistant and enterprise search technology. This acquisition is expected to enhance ServiceNow’s platform by accelerating enterprise AI adoption and innovation, particularly in CRM and employee engagement, while expanding its reach to millions of users and integrating seamlessly with existing systems.