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ServiceNow
(NYSE:NOW)
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Rating:79Outperform
Price Target:
$162.00
▲(27.56% Upside)
Action:Upgraded
Date:08/09/26
The score is driven primarily by strong financial execution (scaling revenue, high margins, and substantial free cash flow) and supportive technical momentum. The main offsets are a premium valuation (high P/E with no dividend support) and near-term risk factors highlighted on the earnings call, including margin pressure from hyperscaler/AI consumption and some timing-related benefit to recent results.
Positive Factors
Recurring subscription growth
Strong subscription growth reflects continued demand for ServiceNow’s cloud workflow platform and supports predictable, recurring revenue. Expansion across enterprise customers can improve revenue visibility, provide a foundation for cross-selling additional modules, and reinforce the platform’s role in core business processes.
Negative Factors
Hyperscaler and AI cost pressure
Faster AI usage can increase infrastructure and hyperscaler costs before pricing and scale benefits fully offset them. If consumption continues to grow faster than monetization or efficiency improves, subscription margins could remain below the company’s long-term potential and constrain operating leverage.
Read all positive and negative factors
Positive Factors
Negative Factors
Recurring subscription growth
Strong subscription growth reflects continued demand for ServiceNow’s cloud workflow platform and supports predictable, recurring revenue. Expansion across enterprise customers can improve revenue visibility, provide a foundation for cross-selling additional modules, and reinforce the platform’s role in core business processes.
Read all positive factors
ServiceNow Key Performance Indicators (KPIs)
Any
Revenue by Geography
Splits revenue across regions, showing where ServiceNow is strongest and where it faces growth opportunities or risks from economic conditions and currency swings. Geographic trends help assess exposure to regional slowdowns and the company’s success in international expansion.
Splits revenue across regions, showing where ServiceNow is strongest and where it faces growth opportunities or risks from economic conditions and currency swings. Geographic trends help assess exposure to regional slowdowns and the company’s success in international expansion.
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The Fly
The FlyServiceNow (NOW) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$135.57B
Dividend YieldN/A
Average Volume (3M)17.60M
Price to Earnings (P/E)81.5
Beta (1Y)1.45
Revenue Growth22.19%
EPS Growth0.19%
CountryUS
Employees29,187
SectorTechnology
Sector Strength88
IndustrySoftware - Application
Share Statistics
EPS (TTM)1.61
Shares Outstanding1,034,000,000
10 Day Avg. Volume17,005,512
30 Day Avg. Volume17,600,130
Financial Highlights & Ratios
PEG Ratio4.04
Price to Book (P/B)12.25
Price to Sales (P/S)11.96
P/FCF Ratio34.72
Enterprise Value/Market Cap<0.01
Enterprise Value/Revenue<0.01
Enterprise Value/Gross Profit<0.01
Enterprise Value/Ebitda<0.01
Forecast
1Y Price Target
$141.75Price Target Upside11.61% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering30
EPS Forecast (FY)4.07
Revenue Forecast (FY)$16.21B
ServiceNow Business Overview & Revenue Model
Company Description
ServiceNow, Inc. specializes in delivering cloud-based solutions designed to streamline and automate critical business services for organizations across the globe. Its flagship "Now Platform" serves as the foundation, leveraging technologies such ...
How the Company Makes Money
ServiceNow primarily makes money through subscription revenue from customers that license access to its cloud software (the Now Platform and associated workflow applications). These subscriptions are typically sold under term-based contracts (comm...
ServiceNow Earnings Call Summary
Earnings Call Date:Jul 22, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Oct 28, 2026
Earnings Call Sentiment Positive
The call presented a strong set of operational and financial results with broad-based demand, accelerating AI monetization, large deal momentum and profitability outperformance. Management raised FY guidance modestly while calling out that part of the beat was timing-related (on‑prem pull‑forward) and acknowledged short-term gross margin pressure from hyperscaler and AI consumption ramps. Key risks include near-term margin variability, integration and headcount impacts from recent acquisitions, and general competitive/market noise, but management emphasized durable renewal rates, platform differentiation and robust AI/security tailwinds.Positive Updates
Strong Subscription Revenue Growth
Subscription revenues of $3.877 billion in Q2, up 23% year-over-year in constant currency and ~150 basis points above the high end of guidance.
Negative Updates
Short-term Gross Margin Pressure from Hyperscaler & AI Consumption Ramp
Management acknowledged short-term pressure on subscription gross margin driven by faster-than-expected hyperscaler ramp and increased AI consumption. Guidance assumes mid-term improvement but near-term margin headwinds exist.
Read all updates
Q2-2026 Updates
Positive
Negative
Strong Subscription Revenue Growth
Subscription revenues of $3.877 billion in Q2, up 23% year-over-year in constant currency and ~150 basis points above the high end of guidance.
Read all positive updates
Company Guidance
ServiceNow modestly raised full‑year 2026 subscription revenue guidance by $15 million at the midpoint to $15.770 billion (about 21% year‑over‑year constant‑currency), and expects FY subscription gross margin of 81%, non‑GAAP operating margin of 31.5%, free cash flow margin of 35% and GAAP diluted weighted‑average shares of ~1.04 billion; for Q3 the company guided subscription revenue of $3.975–3.980 billion (≈20% YoY CC), CRPO growth of 20% CC, an operating margin of 31% and ~1.05 billion GAAP diluted shares. The raise follows a strong Q2 beat (subscription revenue $3.877 billion, +23% YoY CC and ~150 bps above the high end of guidance; CRPO/current RPO growth 21.5%/21.5% CC with RPO ≈$29B and current RPO $13.2B; non‑GAAP operating margin 29.5% and Q2 free cash flow margin 16%), alongside deal and adoption momentum (123 deals >$1M, +40% YoY; 658 customers >$5M ACV; 98% renewal rate; ServiceNow AI ACV >$1B and tracking to $1.5B by year‑end; agentic AI in production up 9x in 9 months; and AI pegged to reach ~30% of ACV by 2030, with early tracking ahead).ServiceNow Financial Statement Overview
Summary
Income Statement
86
Very Positive
Balance Sheet
74
Positive
Cash Flow
79
Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 14.73B | 13.28B | 10.98B | 8.97B | 7.25B | 5.90B |
| Gross Profit | 11.02B | 10.29B | 8.70B | 7.05B | 5.67B | 4.54B |
| EBITDA | 3.49B | 3.00B | 2.23B | 1.59B | 768.00M | 749.00M |
| Net Income | 1.67B | 1.75B | 1.43B | 1.73B | 325.00M | 230.00M |
Balance Sheet | ||||||
| Total Assets | 31.67B | 26.04B | 20.38B | 17.39B | 13.30B | 10.80B |
| Cash, Cash Equivalents and Short-Term Investments | 4.66B | 6.28B | 5.76B | 4.88B | 4.28B | 3.30B |
| Total Debt | 8.45B | 2.40B | 2.28B | 2.28B | 2.23B | 2.21B |
| Total Liabilities | 19.15B | 13.07B | 10.77B | 9.76B | 8.27B | 7.10B |
| Stockholders Equity | 12.52B | 12.96B | 9.61B | 7.63B | 5.03B | 3.69B |
Cash Flow | ||||||
| Free Cash Flow | 4.58B | 4.58B | 3.42B | 2.70B | 2.17B | 1.79B |
| Operating Cash Flow | 5.31B | 5.44B | 4.27B | 3.40B | 2.72B | 2.19B |
| Investing Cash Flow | -8.15B | -1.69B | -2.50B | -2.17B | -2.58B | -1.61B |
| Financing Cash Flow | 2.24B | -2.34B | -1.34B | -803.00M | -344.00M | -506.00M |
ServiceNow Technical Analysis
Positive
127.00
Price Trends
119.00
Positive
109.45
Positive
118.13
Positive
Market Momentum
5.14
Positive
51.57
Neutral
17.24
Positive
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 127 is below the 20-day moving average (MA) of 132.44, above the 50-day MA of 119.00, and above the 200-day MA of 118.13, indicating a neutral trend. The MACD of 5.14 indicates Positive momentum. The RSI at 51.57 is Neutral, neither overbought nor oversold. The STOCH value of 17.24 is Positive, 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 0 New Risks
ServiceNow Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
84 Outperform | $200.94B | 22.09 | 20.15% | 0.88% | 11.23% | 58.19% | |
79 Outperform | $135.57B | 81.47 | 13.77% | ― | 22.19% | 0.19% | |
76 Outperform | $44.84B | 37.39 | 16.78% | ― | 13.83% | 126.19% | |
69 Neutral | $80.89B | 445.94 | 4.57% | ― | 31.52% | 37.42% | |
68 Neutral | $116.95B | -103.69 | -53.56% | ― | 32.04% | 23.46% | |
67 Neutral | $44.99B | -855.10 | -4.39% | ― | 26.02% | 81.08% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% |
* Technology Sector Average
NOW
ServiceNow
132.53
-53.26
-28.67%
CRM
Salesforce
247.72
7.00
2.91%
WDAY
Workday
185.70
-37.69
-16.87%
TEAM
Atlassian
179.70
4.83
2.76%
DDOG
Datadog
221.21
84.71
62.06%
SNOW
Snowflake
328.99
107.84
48.76%
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.