ServiceNow (NOW)
NYSE:NOW
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ServiceNow
(NYSE:NOW)
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Rating:71Outperform
Price Target:
$114.00
▲(17.94% Upside)
Action:ReiteratedDate:04/23/26
The score is driven primarily by strong financial quality (high margins, strong free cash flow, and moderate leverage) and a constructive earnings update (beat-and-raise guidance with notable AI and large-deal momentum). Offsetting factors are a mixed technical picture (below key longer-term moving averages with negative MACD) and a high valuation (P/E ~90.9), which increases sensitivity to any slowdown or execution risk.
Positive Factors
High gross and operating margins
Sustained high gross and operating margins reflect a scalable cloud subscription model with strong pricing power and product-led economics. These margins provide durable operating leverage that supports reinvestment in R&D, AI product expansion, and continued profitability over the next several quarters.
Negative Factors
Revenue growth deceleration
A marked slowdown in trailing revenue growth versus prior years reduces the pace at which operating leverage and scale benefits can compound. Slower top-line momentum increases reliance on upsell, pricing, and M&A to sustain growth and raises execution risk over the medium term.
Read all positive and negative factors
Positive Factors
Negative Factors
High gross and operating margins
Sustained high gross and operating margins reflect a scalable cloud subscription model with strong pricing power and product-led economics. These margins provide durable operating leverage that supports reinvestment in R&D, AI product expansion, and continued profitability over the next several quarters.
Read all positive factors
ServiceNow (NOW) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$104.75B
Dividend YieldN/A
Average Volume (3M)18.62M
Price to Earnings (P/E)90.9
Beta (1Y)1.27
Revenue Growth21.05%
EPS Growth28.67%
CountryUS
Employees26,293
SectorTechnology
Sector Strength88
IndustrySoftware - Application
Share Statistics
EPS (TTM)0.97
Shares Outstanding1,046,000,000
10 Day Avg. Volume26,408,862
30 Day Avg. Volume18,620,177
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 Cap0.83
Enterprise Value/Revenue6.23
Enterprise Value/Gross Profit8.13
Enterprise Value/Ebitda28.43
Forecast
1Y Price Target
$148.23Price Target Upside53.35% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering38
EPS Forecast (FY)4.19
Revenue Forecast (FY)$15.98B
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 primarily makes money by selling subscriptions to its cloud software and related services. The largest revenue stream is recurring subscription revenue tied to access to the Now Platform and its workflow applications; customers generall...
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:Apr 22, 2026
(Q1-2026)
| % Change Since: |
Next Earnings Date:Jul 29, 2026
Earnings Call Sentiment Positive
The call portrayed strong execution: ServiceNow beat Q1 targets across subscription revenue, RPO, operating margin and free cash flow, reported robust large‑deal activity and rapid adoption of AI products (Now Assist, Employee Works, AI Control Tower) with upward revision to AI expectations (from $1B to ~$1.5B). Management closed Armis early and raised 2026 subscription revenue midpoint by $205M (125 bps contribution), while highlighting continued focus on margin expansion, SBC reductions and share buybacks. Key challenges were timing delays from Middle East on‑prem deals (~75 bps Q1 headwind), near‑term margin impacts from Armis integration (modest bps headwinds), and investor questions about inorganic vs. organic contribution/timing that led to a negative market reaction after hours. Overall the positives — strong beats, accelerating AI traction, large‑deal momentum, high renewal rates and cash returns — outweigh the limited timing and integration headwinds.Positive Updates
Top-line beat and strong subscription growth
Q1 subscription revenue of $3.671 billion, up 19% year-over-year in constant currency, and above the high end of guidance; company called it a "beat and raise".
Negative Updates
Geopolitical on‑prem timing impact (Middle East)
Delayed closings of several large on‑prem deals in the Middle East caused an estimated ~75 basis point headwind to Q1 subscription revenue; on‑prem revenue was ~1 point lower YoY in Q1 versus prior year due to timing.
Read all updates
Q1-2026 Updates
Positive
Negative
Top-line beat and strong subscription growth
Q1 subscription revenue of $3.671 billion, up 19% year-over-year in constant currency, and above the high end of guidance; company called it a "beat and raise".
Read all positive updates
Company Guidance
ServiceNow raised its 2026 subscription revenue guidance to $15.735–15.775 billion (a $205 million increase at the midpoint), implying 20.5%–21.0% year‑over‑year constant‑currency growth and reflecting ~125 basis points of contribution from Armis; it now expects subscription gross margin of 81.5% (including a ~25 bp Armis headwind), non‑GAAP operating margin of 31.5% (including a ~75 bp Armis headwind), free cash flow margin of 35% (including a ~200 bp Armis headwind) and ~1.04 billion GAAP diluted weighted average shares outstanding. For Q2 2026 the company guided subscription revenues of $3.815–3.820 billion (≈21%–21.5% y/y cc), RPO/CRPO growth of ~19.5% cc (both including the same 125 bp Armis contribution) and an operating margin of ~26.5% (including a 125 bp Armis headwind), while noting prudent assumptions around Middle East on‑prem timing and expecting integration efficiencies to normalize margins in 2027.ServiceNow Financial Statement Overview
Summary
Income Statement
86
Very Positive
Balance Sheet
82
Very Positive
Cash Flow
88
Very Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 13.96B | 13.28B | 10.98B | 8.97B | 7.25B | 5.90B |
| Gross Profit | 10.69B | 10.29B | 8.70B | 7.05B | 5.67B | 4.54B |
| EBITDA | 3.06B | 3.00B | 2.23B | 1.59B | 768.00M | 729.00M |
| Net Income | 1.76B | 1.75B | 1.43B | 1.73B | 325.00M | 230.00M |
Balance Sheet | ||||||
| Total Assets | 24.38B | 26.04B | 20.38B | 17.39B | 13.30B | 10.80B |
| Cash, Cash Equivalents and Short-Term Investments | 5.18B | 6.28B | 5.76B | 4.88B | 4.28B | 3.30B |
| Total Debt | 2.43B | 3.20B | 2.28B | 2.28B | 2.23B | 2.21B |
| Total Liabilities | 12.62B | 13.07B | 10.77B | 9.76B | 8.27B | 7.10B |
| Stockholders Equity | 11.73B | 12.96B | 9.61B | 7.63B | 5.03B | 3.69B |
Cash Flow | ||||||
| Free Cash Flow | 4.63B | 4.58B | 3.42B | 2.70B | 2.17B | 1.79B |
| Operating Cash Flow | 5.44B | 5.44B | 4.27B | 3.40B | 2.72B | 2.19B |
| Investing Cash Flow | -1.92B | -1.69B | -2.50B | -2.17B | -2.58B | -1.61B |
| Financing Cash Flow | -4.18B | -2.34B | -1.34B | -803.00M | -344.00M | -506.00M |
ServiceNow Technical Analysis
Negative
96.66
Price Trends
105.61
Negative
126.81
Negative
155.25
Negative
Market Momentum
-4.96
Negative
44.43
Neutral
59.67
Neutral
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 96.66 is below the 20-day moving average (MA) of 99.25, below the 50-day MA of 105.61, and below the 200-day MA of 155.25, indicating a bearish trend. The MACD of -4.96 indicates Negative momentum. The RSI at 44.43 is Neutral, neither overbought nor oversold. The STOCH value of 59.67 is Neutral, 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 |
|---|---|---|---|---|---|---|---|
71 Outperform | $104.75B | 90.88 | 14.41% | ― | 21.05% | 28.67% | |
71 Outperform | $172.70B | 27.05 | 12.37% | 0.63% | 8.41% | 22.92% | |
69 Neutral | $33.19B | 66.22 | 7.97% | ― | 13.35% | -60.76% | |
65 Neutral | $45.61B | 438.37 | 3.24% | ― | 26.63% | -46.13% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
56 Neutral | $18.85B | -250.38 | -13.32% | ― | 19.51% | 53.35% | |
56 Neutral | $52.15B | -48.84 | -60.27% | ― | 28.48% | -19.12% |
* Technology Sector Average
NOW
ServiceNow
103.07
-84.64
-45.09%
CRM
Salesforce
189.80
-72.94
-27.76%
WDAY
Workday
126.60
-110.27
-46.55%
TEAM
Atlassian
74.01
-151.07
-67.12%
DDOG
Datadog
132.14
32.54
32.67%
SNOW
Snowflake
155.57
-3.09
-1.95%
ServiceNow Corporate Events
Business Operations and StrategyStock BuybackFinancial DisclosuresM&A TransactionsPrivate Placements and Financing
ServiceNow Reports Strong Q1 Results Driven by AI Growth
Positive
Apr 22, 2026
On April 17, 2026, ServiceNow entered a $4 billion unsecured term loan credit agreement maturing October 16, 2026, using the proceeds to finance part of the cash consideration for its acquisition of Armis Security Ltd., with flexible interest rate...
Business Operations and StrategyPrivate Placements and Financing
ServiceNow Boosts Liquidity With New Credit and CP Programs
Positive
Apr 1, 2026
On April 1, 2026, ServiceNow entered into a $3 billion unsecured revolving credit facility maturing in 2031 with a bank syndicate led by JPMorgan Chase, with the option to increase commitments by up to $2 billion and to extend the maturity within ...
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...
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.