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ServiceNow (NOW) AI Stock Analysis

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NOW

ServiceNow

(NYSE:NOW)

Rating:76Outperform
Price Target:
$1,124.00
▲(12.83%Upside)
The overall stock score for ServiceNow reflects strong financial performance and positive earnings call highlights, driving the score upwards. However, the high valuation and mixed technical indicators slightly dampen the score. The company's strong growth prospects, particularly in AI, and robust financial health are key strengths.
Positive Factors
Earnings
ServiceNow reported a strong quarter, delivering results 200 basis points above the high-end of guidance for both Subscription Revenue and cRPO.
Market Positioning
ServiceNow enters the Agentic battlefield with some significant strengths, a dominant positioning as the Workflow Automation platform of choice for the Enterprise.
Product Performance
Outperformance in data-related portfolio – with Workflow Data Fabric included in 17 of the top 20 deals in the quarter, and RaptorDB Pro beating expectations in every major region.
Negative Factors
Guidance
The FY25 guidance raise was underwhelming, reflecting continued conservatism as management noted an overall unchanged macro environment.
Market Challenges
Several near-term factors keep analysts on the sideline for now, including tough comps ahead in Federal.

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

ServiceNow Business Overview & Revenue Model

Company DescriptionServiceNow, 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 MoneyServiceNow generates revenue primarily through the sale of subscriptions to its cloud-based platform and related professional services. The company's subscription model allows customers to access its suite of software applications, which are typically sold on multi-year contracts. Key revenue streams include IT service management, IT operations management, and customer and employee workflow solutions. ServiceNow also earns from professional services, such as consulting and training, which help clients integrate and optimize the platform for their specific needs. Significant partnerships with major technology firms and systems integrators further enhance ServiceNow's market reach and contribute to its revenue growth.

ServiceNow Key Performance Indicators (KPIs)

Any
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: 4.16%|
Next Earnings Date:Oct 22, 2025
Earnings Call Sentiment Positive
ServiceNow delivered an outstanding quarter with significant overperformance across all key metrics, robust growth in new customer engagements, and continued success with AI products. Some uncertainty remains in the U.S. federal market and regarding the timing of the Moveworks acquisition, but these are minor compared to the overall positive performance and strategic advancements.
Q2-2025 Updates
Positive Updates
Subscription Revenue Growth
Subscription revenue growth was 21.5% in constant currency, 2 points above guidance.
CRPO Growth
CRPO growth was also 21.5% in constant currency, 2 points above guidance.
Operating Margin and Free Cash Flow
Operating margin was 29.5%, over 2.5 points above guidance. Free cash flow margin was 16.5%, up 3% year-on-year.
Significant Deal Activity
89 deals greater than $1 million in net new ACV, with 11 deals over $5 million.
AI Product Success
Now Assist net new ACV beat expectations. Key AI Pro Plus deal count was up over 50% quarter-on-quarter.
New Product Announcements
Announced Agentic Workforce Management and acquired data.world for innovative data governance.
Strong Industry Performance
Transportation and logistics delivered net new ACV over 100% year-over-year. Technology, media, and telecom grew over 70% year-over-year.
Record New Customer Engagement
Landed 11 deals over $1 million in net new ACV, including 2 over $5 million, growing average new logo ACV over 100% year-over-year.
Negative Updates
Federal Market Uncertainty
U.S. federal agencies are navigating changes from tightening budgets and evolving mission demands.
Potential Moveworks Acquisition Timing
Moveworks acquisition is expected to close late in the second half of 2025 or early 2026, adding some uncertainty.
Company Guidance
During the ServiceNow Second Quarter 2025 Earnings Conference Call, the company provided robust guidance for future quarters, reflecting strong performance metrics and growth prospects. Subscription revenue saw a year-over-year increase of 21.5% in constant currency, significantly surpassing guidance by 200 basis points. The remaining performance obligations (RPO) grew by 25.5% year-over-year in constant currency, with current RPO at $10.92 billion, also exceeding guidance by 200 basis points. Operating margin reached 29.5%, over 250 basis points above expectations, and free cash flow margin improved to 16.5%, up 300 basis points year-on-year. The company also reported 89 deals exceeding $1 million in net new annual contract value (ACV), with 11 deals over $5 million. For the full year 2025, ServiceNow raised its subscription revenue guidance to a range of $12.775 billion to $12.795 billion, expecting 20% growth year-over-year, and maintained its operating margin target at 30.5% and free cash flow margin at 32%. The guidance reflects the company's confidence in sustained demand, particularly driven by its AI capabilities and platform differentiation.

ServiceNow Financial Statement Overview

Summary
ServiceNow exhibits strong financial health characterized by robust revenue growth and profitability, with an impressive gross profit margin of 78.96% and a net profit margin of 13.41%. The company's low debt-to-equity ratio and strong return on equity reflect prudent financial management. Strong cash flow generation supports future investments.
Income Statement
85
Very Positive
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
78
Positive
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
82
Very Positive
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.
BreakdownDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue10.98B8.97B7.25B5.90B4.52B
Gross Profit8.70B7.05B5.67B4.54B3.53B
EBITDA2.23B1.59B768.00M257.00M452.93M
Net Income1.43B1.73B325.00M230.00M119.00M
Balance Sheet
Total Assets20.38B17.39B13.30B10.80B8.72B
Cash, Cash Equivalents and Short-Term Investments5.76B4.88B4.28B3.30B3.09B
Total Debt2.28B2.28B2.23B2.21B2.14B
Total Liabilities10.77B9.76B8.27B7.10B5.88B
Stockholders Equity9.61B7.63B5.03B3.69B2.83B
Cash Flow
Free Cash Flow3.42B2.70B2.17B1.79B1.35B
Operating Cash Flow4.27B3.40B2.72B2.19B1.79B
Investing Cash Flow-2.50B-2.17B-2.58B-1.61B-1.51B
Financing Cash Flow-1.34B-803.00M-344.00M-506.00M596.65M

ServiceNow Technical Analysis

Technical Analysis Sentiment
Positive
Last Price996.18
Price Trends
50DMA
1003.05
Negative
100DMA
928.95
Positive
200DMA
976.12
Positive
Market Momentum
MACD
-8.85
Positive
RSI
53.58
Neutral
STOCH
47.55
Neutral
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 996.18 is above the 20-day moving average (MA) of 989.50, below the 50-day MA of 1003.05, and above the 200-day MA of 976.12, indicating a neutral trend. The MACD of -8.85 indicates Positive momentum. The RSI at 53.58 is Neutral, neither overbought nor oversold. The STOCH value of 47.55 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 3 New Risks
1.
We may not be able to protect or enforce our intellectual property rights. Q4, 2024
2.
Incorporating AI technology into our offerings may result in operational, legal, regulatory, ethical and other challenges. Q4, 2024
3.
Our industry and business may be harmed by global economic and political conditions. Q4, 2024

ServiceNow Peers Comparison

Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
78
Outperform
$71.74B-40.16%27.50%-49.96%
77
Outperform
$255.46B41.8010.31%0.61%7.97%14.85%
76
Outperform
$50.61B317.506.48%25.54%40.02%
76
Outperform
$206.36B125.3816.95%21.12%43.91%
72
Outperform
$63.33B130.975.70%15.38%-67.58%
67
Neutral
$53.33B-34.33%19.12%-161.42%
63
Neutral
$34.70B4.89-11.39%1.66%5.53%-19.00%
* Technology Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
NOW
ServiceNow
996.18
167.39
20.20%
CRM
Salesforce
267.70
12.68
4.97%
WDAY
Workday
237.20
10.12
4.46%
TEAM
Atlassian
199.83
21.61
12.13%
DDOG
Datadog
146.56
26.25
21.82%
SNOW
Snowflake
215.02
85.43
65.92%

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: Jul 25, 2025