ServiceNow (NOW) — Company Research

ServiceNow, Inc. (NYSE: NOW) is a US enterprise-software company whose cloud-based "Now Platform" automates digital workflows across IT, customer service, HR, security and, increasingly, AI ("Now Assist" and agentic AI). It sells to large enterprises and governments on a subscription basis. For fiscal 2025 (year to 31 December 2025) the company reported revenue of $13.278bn (up 21% year over year), GAAP operating income of $1.824bn (a 13.7% GAAP operating margin), GAAP diluted EPS of $1.67 and free cash flow of $4.533bn (revenue, operating income and EPS per the FY2025 10-K, filed 2026-01-29, and EDGAR XBRL OperatingIncomeLoss; FCF per yfinance annual financials, pulled 2026-05-31). ServiceNow completed a 5-for-1 stock split effective 17 December 2025; all per-share and share-count figures below are split-adjusted. The shares trade at $124.37, within a 52-week range of $81.24 to $211.48 (per yfinance, pulled 2026-05-31). The next earnings report (Q2 2026) is scheduled for 22 July 2026.

1. Company Snapshot

Field	Value
Name	ServiceNow, Inc.
Ticker / Exchange	NOW / New York Stock Exchange
Sector / Industry	Technology / Application Software (per yfinance)
Market cap	$128.3bn (per yfinance, pulled 2026-05-31)
Enterprise value	$125.5bn (per yfinance, pulled 2026-05-31)
FY2025 revenue	$13.278bn (per the FY2025 10-K, filed 2026-01-29)
FY2025 operating income (EDGAR XBRL)	$1.824bn GAAP (per EDGAR XBRL OperatingIncomeLoss; matches the 10-K)
FY2025 free cash flow	$4.533bn (operating cash flow $5.444bn less capex $0.911bn, per yfinance annual financials)
Gross margin	76.6% (per yfinance, TTM)
Net margin	12.6% (per yfinance, TTM)
Employees	approximately 29,187 (per yfinance, pulled 2026-05-31)
CEO	Bill McDermott, Chairman & Chief Executive Officer
Headquarters	Santa Clara, California, USA
Website	https://www.servicenow.com
Fiscal year-end	31 December
Next earnings	22 July 2026 — Q2 2026
Dividend yield	None (no dividend)
52-week high	$211.48 (split-adjusted, per yfinance, pulled 2026-05-31)
52-week low	$81.24 (split-adjusted, per yfinance, pulled 2026-05-31)
Short interest	57.9m shares short; short ratio 2.1 days (per yfinance, pulled 2026-05-31)

2. Bull Case vs Bear Case

Bull Case

• Durable 20%+ subscription growth. Per the Q1 2026 results (released 22 April 2026), subscription revenue grew 22% year over year (19% in constant currency) to $3,671m, and FY2025 total revenue rose 21% to $13.278bn (per the FY2025 10-K, filed 2026-01-29) — rare scale-plus-growth for a company of this size.

• Large, visible backlog. Per the Q1 2026 results (22 April 2026), current remaining performance obligations (cRPO) reached $12.64bn, up 22.5% year over year, giving strong forward revenue visibility.

• AI monetisation is ramping. Per ServiceNow's Knowledge 2026 announcements and Q1 2026 commentary (May 2026), the company raised its Now Assist AI revenue ambition for 2026 to approximately $1.5bn (from a prior $1bn target), and is extending agentic-AI capabilities across the platform.

• Strong, growing cash generation. Per yfinance annual financials (pulled 2026-05-31), FY2025 free cash flow was $4.533bn (up from $3.375bn in FY2024), supporting share buybacks (the board authorised an additional $5bn repurchase in early 2026).

• High switching costs and enterprise stickiness. Per the FY2025 10-K (Item 1, filed 2026-01-29), the Now Platform is embedded in customers' core IT and operational workflows, supporting high renewal rates and expansion.

Bear Case

• Modest GAAP profitability for the valuation. Per EDGAR XBRL and the FY2025 10-K (filed 2026-01-29), the FY2025 GAAP operating margin was 13.7%; per yfinance the shares trade at roughly 74x trailing GAAP earnings and about 9x sales, leaving little room for disappointment.

• Stock-based compensation depresses GAAP results. Per the FY2025 10-K (filed 2026-01-29), GAAP operating income ($1.824bn) is well below the company's emphasised non-GAAP profitability, reflecting significant equity compensation.

• The shares have de-rated sharply. Per yfinance (pulled 2026-05-31), the stock sits at $124.37 versus a split-adjusted 52-week high of $211.48 — a decline of roughly 41% from the high.

• Acquisition-heavy strategy adds integration risk. Per ServiceNow's Knowledge 2026 announcements (May 2026), the company is integrating multiple acquisitions (including Moveworks and security/identity assets) into its platform, which carries execution and integration risk.

• Macro sensitivity of enterprise IT budgets. Per the FY2025 10-K (Item 1A, filed 2026-01-29), demand depends on customers' willingness to invest in digital-transformation software, which can soften in downturns and lengthen sales cycles.

3. What Does ServiceNow Actually Do?

ServiceNow sells a single cloud platform — the Now Platform — on which customers build and run automated digital workflows. The company reports as a single operating segment and splits revenue into two lines (per the FY2025 10-K, filed 2026-01-29):

Revenue line	What it is	FY2025
Subscription	Recurring access to the Now Platform and applications	the large majority of $13.278bn total
Professional services & other	Implementation, training and support	the small remainder

A precise subscription-versus-services dollar split for the full year is not reproduced in this report's source data, but on a quarterly basis subscription revenue was $3,671m of total Q1 2026 revenue (per the Q1 2026 results, 22 April 2026), i.e. roughly 97% of revenue. Because ServiceNow operates as a single segment, a segment donut chart is not applicable.

In plain English, ServiceNow began with IT service management (the digital "system of action" for IT help desks and operations) and has expanded into customer service management, HR service delivery, security operations, and now AI workflow automation. Its products let large organisations replace manual processes and disconnected tools with automated, auditable workflows across departments. Geographically, ServiceNow sells worldwide with a majority of revenue from North America; a precise current geographic breakdown is not reproduced in this report's source data.

4. The Business Model

ServiceNow runs a subscription SaaS model: customers pay recurring fees, typically multi-year, for platform access priced by users and products, with upsell as they adopt more workflow modules and AI ("Now Assist") capabilities (per the FY2025 10-K, Item 1, filed 2026-01-29). Revenue is overwhelmingly subscription (around 97% in Q1 2026 per the 22 April 2026 results), producing high visibility — cRPO was $12.64bn at the end of Q1 2026.

The moat rests on high switching costs (the platform becomes the system of record and action for IT and operations), a broad and expanding product suite, deep enterprise relationships, and a large partner ecosystem. Distribution is direct enterprise sales plus global system-integrator partners. Unit economics are strong on a gross and cash basis: a 76.6% gross margin (per yfinance) and FY2025 free cash flow of $4.533bn (per yfinance), though GAAP operating margin is a more modest 13.7% because of heavy stock-based compensation. Growth comes from new customers, seat and product expansion within existing accounts, AI attach, and acquisitions. Capital is returned via buybacks (no dividend).

5. Financial Health

Five-year trend (fiscal years to 31 December; $bn unless stated). Operating income is the GAAP figure per EDGAR XBRL; revenue, net income and diluted EPS per EDGAR / the 10-K; FCF per yfinance. EPS is split-adjusted for the December 2025 5-for-1 split.

Metric	FY2022	FY2023	FY2024	FY2025
Revenue	7.245	8.971	10.984	13.278
Operating income (GAAP, EDGAR)	0.355	0.762	1.364	1.824
Net income	0.325	1.731	1.425	1.748
Diluted EPS ($, split-adjusted)	0.32	1.68	1.37	1.67
Free cash flow	2.173	2.701	3.375	4.533

Source: revenue/operating income/net income/diluted EPS per EDGAR XBRL and the FY2025 10-K (filed 2026-01-29); FCF per yfinance annual financials (pulled 2026-05-31). FY2023 net income and EPS were lifted by a large deferred-tax benefit.

Balance sheet (fiscal year-ends; $bn):

Metric	FY2022	FY2023	FY2024	FY2025
Cash & short-term investments	4.28	4.88	5.76	6.28
Total debt	2.23	2.28	2.28	2.40
Total stockholders' equity	5.03	7.63	9.61	12.96
Shares outstanding (period-end, bn, split-adjusted)	1.014	1.024	1.032	1.047

Source: yfinance annual financials (pulled 2026-05-31).

Quarterly trend (last five quarters; GAAP; $bn except EPS):

Quarter (period end)	Revenue	Operating income	Net income	Diluted EPS ($, split-adj.)
Q1 2025 (31 Mar 2025)	3.088	0.451	0.460	0.44
Q2 2025 (30 Jun 2025)	3.215	0.358	0.385	0.37
Q3 2025 (30 Sep 2025)	3.407	0.572	0.502	0.48
Q4 2025 (31 Dec 2025)	3.568*	0.443*	0.401*	0.38*
Q1 2026 (31 Mar 2026)	3.770	0.503	0.469	0.45

Source: 10-Q periods per EDGAR XBRL; Q1 2026 also per the Q1 2026 results (22 April 2026). *Q4 2025 figures are derived as the FY2025 full year less the first nine months and are approximate; EPS is computed on split-adjusted shares. Directionally, revenue has grown steadily each quarter while GAAP operating margin runs in the low-to-mid teens.

6. Valuation & Market Data

Raw market data only — no commentary on cheap or expensive.

Metric	Value (per yfinance, pulled 2026-05-31)
Share price	$124.37
Previous close	$108.73
Day range	$116.29 – $124.65
52-week high / low (split-adj.)	$211.48 / $81.24
Market cap	$128.3bn
Enterprise value	$125.5bn
Shares outstanding	1.031bn
Float	1.028bn
Average daily volume (10d)	38.0m shares
Volume (date)	not disclosed in this report's source data
Beta	0.82
Trailing P/E (GAAP)	74.0x
Forward P/E	24.7x
P/S (TTM)	9.19x
P/B	10.94x
EV/Revenue	8.99x
EV/EBITDA	43.46x
P/FCF	not disclosed in this report's source data
Gross margin (TTM)	76.6%
Operating margin (TTM, GAAP)	13.3%
Net margin (TTM)	12.6%
ROE	16.1%
ROA	5.7%
Debt-to-equity	20.7%
Current ratio	0.85x
Dividend yield	None
Short interest	57.9m shares (short ratio 2.1 days)
Put/call ratio	not disclosed in this report's source data

7. What Are They Building / What's Coming

ServiceNow's roadmap is centred on agentic AI on top of its workflow platform. Per the company's Knowledge 2026 announcements (May 2026), it expanded its "AI Control Tower" governance layer and "Autonomous Workforce" capabilities, and introduced "Action Fabric," which lets external AI agents (such as third-party assistants) perform identity-verified, permission-scoped and auditable actions within ServiceNow workflows, and "Otto," an AI assistant that combines its generative-AI features with the Moveworks conversational assistant. Per Q1 2026 commentary (May 2026), management raised its Now Assist AI revenue ambition for 2026 to approximately $1.5bn from a prior $1bn target.

On capital allocation and M&A, ServiceNow has pursued an active acquisition strategy to extend its platform — integrating Moveworks (agentic assistant) and security and identity assets into its Autonomous Security & Risk offering (per Knowledge 2026 announcements, May 2026) — and the board authorised an additional $5bn for share repurchases alongside the FY2025 results (per the Q4/FY2025 results, January 2026). The company does not pay a dividend. No third-party analyst forecasts are used in this report; figures above are company disclosures.

8. Competitive Landscape

ServiceNow competes with large platform vendors and specialised enterprise-software providers. Peer market data (per yfinance, pulled 2026-05-31):

Company	Ticker	Market cap	Revenue (TTM)	Gross margin	P/S
ServiceNow	NOW	$128.3bn	$13.3bn	76.6%	9.19x
Microsoft	MSFT	$3,344.6bn	$318.3bn	68.3%	10.51x
Oracle	ORCL	$649.4bn	$64.1bn	67.1%	10.13x
Salesforce	CRM	$156.5bn	$42.8bn	77.6%	3.65x
SAP	SAP	€214.3bn	€37.3bn	73.7%	5.74x
Workday	WDAY	$36.1bn	$9.9bn	75.8%	3.66x
Atlassian	TEAM	$27.3bn	$6.2bn	84.8%	4.41x

Footnote on currency: SAP figures are reported in euros; all other companies are reported in US dollars. Figures are not FX-converted and are not directly comparable across currencies. ServiceNow trades on one of the higher price-to-sales multiples in this enterprise-software group, reflecting its faster growth and high margins, while remaining far smaller than Microsoft and Oracle. No view is offered here on relative winners or losers.

9. Leadership and Ownership

Bill McDermott serves as Chairman and Chief Executive Officer of ServiceNow (the former CEO of SAP, he joined ServiceNow in 2019). Gina Mastantuono serves as President and Chief Financial Officer. Detailed individual tenures and compensation are set out in the company's proxy statement (DEF 14A) and are not fully reproduced in this report's source data.

Ownership is overwhelmingly institutional. Per yfinance (pulled 2026-05-31), institutions hold approximately 88.4% and insiders approximately 0.2%. The largest reported institutional holders (per yfinance, as at 31 March 2026):

Holder	Stake	Shares
BlackRock, Inc.	9.46%	97.5m
Vanguard (Capital Mgmt)	6.59%	68.0m
State Street Corporation	4.66%	48.1m
T. Rowe Price Associates	3.31%	34.1m
JPMorgan Chase & Co.	3.01%	31.0m

Recent specific insider transactions are not disclosed in this report's source data.

10. Risks and Challenges

• Premium valuation and growth dependence (Market & Demand): Per the FY2025 10-K (Item 1A, filed 2026-01-29) and yfinance (pulled 2026-05-31), the shares trade at roughly 74x trailing GAAP earnings and 9x sales, a level that depends on sustained high growth; any deceleration could materially affect the share price.
• Stock-based compensation and GAAP dilution (Financial): Per the FY2025 10-K (Item 1A, filed 2026-01-29), heavy equity compensation reduces GAAP profitability and can dilute shareholders, a gap between GAAP and non-GAAP results.
• Competition (Competitive): Per the FY2025 10-K (Item 1A, filed 2026-01-29), ServiceNow competes with much larger platform vendors (including Microsoft and Oracle) and specialised providers that could bundle or undercut its offerings.
• AI execution and adoption (Market & Demand): Per the FY2025 10-K (Item 1A, filed 2026-01-29), the strategy increasingly depends on customers adopting and paying for new AI ("Now Assist", agentic AI) capabilities; slower-than-expected adoption would weigh on growth.
• Acquisition integration (Operational): Per the FY2025 10-K (Item 1A, filed 2026-01-29), ServiceNow has grown partly through acquisitions that carry integration, retention and impairment risk.
• Cybersecurity and data protection (Cyber & Physical): Per the FY2025 10-K (Item 1A, filed 2026-01-29), the platform stores sensitive customer and operational data, so a breach or outage could cause liability, customer loss and reputational damage.
• Data privacy and AI regulation (Regulatory): Per the FY2025 10-K (Item 1A, filed 2026-01-29), evolving global privacy and AI rules increase compliance costs and could constrain product capabilities.
• Macroeconomic sensitivity of IT spending (Market & Demand): Per the FY2025 10-K (Item 1A, filed 2026-01-29), demand is tied to enterprise and government willingness to invest in software, which can weaken in downturns.

11. Recent Developments

Most recent first.

• Early May 2026 — Knowledge 2026 AI announcements: At its annual Knowledge user conference, ServiceNow expanded its agentic-AI portfolio, introducing "Action Fabric" (allowing external AI agents to perform governed actions inside ServiceNow workflows), "Otto" (an AI assistant combining its generative-AI features with the Moveworks assistant), and updates to its AI Control Tower and Autonomous Workforce, and indicated a raised Now Assist 2026 revenue ambition of approximately $1.5bn. Source: ServiceNow Knowledge 2026 announcements (technology press coverage, May 2026).

12. Key Dates Coming Up

• 22 July 2026: Q2 2026 earnings (quarter to 30 June 2026). Source: yfinance earnings calendar (pulled 2026-05-31).
• Mid-2026: Annual Meeting of Stockholders. The 2026 proxy statement (DEF 14A) was filed in April 2026; the precise meeting date is not reproduced in this report's source data.

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