Education
About Us
Working with TipRanks
Follow Us
ServiceNow (NOW)
NYSE:NOW
Top Page
ServiceNow
(NYSE:NOW)
Select Model
Select Model
Rating:82Outperform
Price Target:
$1,076.00
▲(17.13% Upside)
ServiceNow's strong financial performance and positive earnings call sentiment are the primary drivers of its high score. The company's robust growth in subscription revenue and strategic focus on AI-driven solutions position it well for future success. However, the high valuation and challenges in the U.S. federal market introduce some caution.
Positive Factors
Revenue Growth
Strong revenue growth indicates robust demand for ServiceNow's solutions, enhancing its market position and supporting long-term business expansion.
Cash Flow Generation
Robust cash flow generation provides financial flexibility for reinvestment and strategic initiatives, ensuring sustainable growth and stability.
AI Product Adoption
Strong adoption of AI products positions ServiceNow as a leader in digital transformation, driving future growth and competitive advantage.
Negative Factors
U.S. Federal Market Challenges
Challenges in the U.S. federal market could limit growth opportunities and introduce uncertainty in a key sector, affecting long-term performance.
High Valuation Concerns
High valuation may limit upside potential and increase risk if growth expectations are not met, impacting investor sentiment and stock performance.
Conservative Guidance
Conservative guidance reflects potential headwinds and market uncertainties, which could temper investor expectations and affect future growth outlook.
ServiceNow (NOW) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$194.14B
Dividend YieldN/A
Average Volume (3M)1.68M
Price to Earnings (P/E)117.5
Beta (1Y)1.45
Revenue Growth21.12%
EPS Growth43.91%
CountryUS
Employees26,293
SectorTechnology
Sector Strength88
IndustrySoftware - Application
Share Statistics
EPS (TTM)4.09
Shares Outstanding208,000,000
10 Day Avg. Volume1,457,770
30 Day Avg. Volume1,682,460
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 Cap1.09
Enterprise Value/Revenue17.54
Enterprise Value/Gross Profit22.34
Enterprise Value/Ebitda81.15
Forecast
1Y Price Target
$1,165.12Price Target Upside26.84% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering31
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 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
Tracks the number of large enterprises using ServiceNow's platform, indicating market penetration, customer retention, and potential for upselling.
Tracks the number of large enterprises using ServiceNow's platform, indicating market penetration, customer retention, and potential for upselling.
Data provided by:
Main Street Data
Main Street DataServiceNow 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
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.90
Very Positive
Balance Sheet
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.85
Very Positive
Cash Flow
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.88
Very Positive
| 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
Negative
918.61
Price Trends
920.86
Negative
962.95
Negative
960.23
Negative
Market Momentum
6.06
Positive
47.63
Neutral
12.38
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 918.61 is below the 20-day moving average (MA) of 930.96, below the 50-day MA of 920.86, and below the 200-day MA of 960.23, indicating a bearish trend. The MACD of 6.06 indicates Positive momentum. The RSI at 47.63 is Neutral, neither overbought nor oversold. The STOCH value of 12.38 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
Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
82 Outperform | $194.14B | 117.48 | 16.95% | ― | 21.12% | 43.91% | |
77 Outperform | 234.09B | 35.71 | 10.86% | 0.68% | 8.33% | 19.69% | |
71 Outperform | 64.48B | 112.26 | 6.36% | ― | 14.21% | -62.56% | |
68 Neutral | 47.63B | 394.68 | 3.90% | ― | 26.00% | -25.64% | |
68 Neutral | 75.41B | -53.43 | -58.16% | ― | 28.37% | -35.49% | |
58 Neutral | 42.98B | -165.40 | -19.08% | ― | 19.66% | 15.17% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% |
* Technology Sector Average
Performance Comparison
NOW
ServiceNow
918.61
33.75
3.81%
CRM
Salesforce
240.95
-33.15
-12.09%
WDAY
Workday
242.75
-2.68
-1.09%
TEAM
Atlassian
162.42
-0.72
-0.44%
DDOG
Datadog
136.60
22.39
19.60%
SNOW
Snowflake
221.60
109.11
97.00%
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.