NOW
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XBRL · SEC EDGAR2010–2025(16yr)| Metric | FY 2010 | FY 2011 | FY 2012 | FY 2013 | FY 2014 | FY 2015 | FY 2016 | FY 2017 | FY 2018 | FY 2019 | FY 2020 | FY 2021 | FY 2022 | FY 2023 | FY 2024 | FY 2025Latest | YoY |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | $43.3M | $92.6M | $243.7M | $424.6M | $682.6M | $1.0B | $1.4B | $1.9B | $2.6B | $3.5B | $4.5B | $5.9B | $7.2B | $9.0B | $11.0B | $13.3B | +20.9% |
| Gross Profit | $27.1M | $61.1M | $139.7M | $269.4M | $433.8M | $676.1M | $991.8M | $1.4B | $2.0B | $2.7B | $3.5B | $4.5B | $5.7B | $7.0B | $8.7B | $10.3B | +18.4% |
| Gross Margin | 62.6% | 65.9% | 57.3% | 63.4% | 63.6% | 67.2% | 71.3% | 74.1% | 76.1% | 77.0% | 78.2% | 77.1% | 78.3% | 78.6% | 79.2% | 77.5% | -1.6pp |
| Operating Income | -$28.2M | $10.6M | -$37.6M | -$66.3M | -$151.8M | -$166.4M | -$422.8M | -$101.4M | -$42.4M | $42.1M | $198.9M | $257.0M | $355.0M | $762.0M | $1.4B | $1.8B | +33.7% |
| Operating Margin | -65.1% | 11.4% | -15.4% | -15.6% | -22.2% | -16.5% | -30.4% | -5.2% | -1.6% | 1.2% | 4.4% | 4.4% | 4.9% | 8.5% | 12.4% | 13.7% | +1.3pp |
| Net Income | -$29.7M | $9.8M | -$37.3M | -$73.7M | -$179.4M | -$198.4M | -$451.8M | -$149.1M | -$26.7M | $626.7M | $118.5M | $230.1M | $325.0M | $1.7B | $1.4B | $1.7B | +22.7% |
| Net Margin | -68.6% | 10.6% | -15.3% | -17.4% | -26.3% | -19.7% | -32.5% | -7.7% | -1.0% | 18.1% | 2.6% | 3.9% | 4.5% | 19.3% | 13.0% | 13.2% | +0.2pp |
| Free Cash Flow | -$9.1M | $28.7M | $6.7M | $26.4M | $84.5M | $227.6M | $54.4M | $492.3M | $586.6M | $971.1M | $1.4B | $1.8B | $2.2B | $2.7B | $3.4B | $4.6B | +34.0% |
| FCF Margin | -21.0% | 31.0% | 2.7% | 6.2% | 12.4% | 22.6% | 3.9% | 25.5% | 22.5% | 28.1% | 30.3% | 30.5% | 30.0% | 30.1% | 31.1% | 34.5% | +3.4pp |
| EPS (Diluted) | $-1.31 | $0.08 | $-0.51 | $-0.54 | $-1.20 | $-1.23 | $-2.70 | $-0.68 | $-0.15 | $3.18 | $0.59 | $1.13 | $1.60 | $8.42 | $6.84 | $1.67 | -75.6% |
1. THE BIG PICTURE
ServiceNow is attempting to evolve from a back-office automation tool into the central "AI control tower" for the modern enterprise. By utilizing its "institutional knowledge" to build AI that integrates with—rather than replaces—legacy infrastructure, ServiceNow is betting that its role as an orchestrator of work will make it indispensable as companies rush to operationalize generative AI (10-K Item 1).
2. WHERE THE RISKS HIT HARDEST
ServiceNow's primary strength, its "institutional knowledge" and "operational expertise," is directly threatened by "AI integration challenges" and the high cost of technical infrastructure (10-K Item 1A). While ServiceNow aims to provide "connective tissue" for AI, the legal and ethical risks of AI—including potential copyright claims and unreliable results—could erode the reliability that enterprise customers demand (10-K Item 1A). Furthermore, the strategic push into "Public Sector Procurement" introduces "lengthy and unpredictable sales cycles" that could undermine the "predictability" of its ratable subscription revenue model, especially as 37% of revenue is now exposed to international regulatory and currency volatility.
3. WHAT THE NUMBERS SAY TOGETHER
ServiceNow maintains a robust growth profile, ranking 2nd among its peers with 20.9% TTMTTMTrailing Twelve Months — the most recent full year of financial data, updated on a rolling basis each quarter revenue growth (XBRL). However, this growth comes at a relative cost to efficiency; ServiceNow’s FCFFCFFree Cash Flow — cash left after paying for operations and capital investments; what the company can actually spend, save, or return to shareholders margin of 24.3% is the lowest in its peer group, trailing leaders like Adobe (37.8%) and Intuit (37.1%). While management touts a "Rule of 55" profile—combining growth and margin—the numbers reveal that ServiceNow is currently the least efficient cash generator among its immediate software rivals.
The most recent quarter showed subscription revenue growth of 21% (8-K), which is almost perfectly in line with its TTMTTMTrailing Twelve Months — the most recent full year of financial data, updated on a rolling basis each quarter growth of 20.9%. This suggests a highly stable trajectory, despite management's warnings of potential deceleration as the business scales. ServiceNow is also pivoting toward more aggressive capital returns, authorized by a new $5 billion share repurchase program, though its current 1.2% buyback yield remains the lowest in its peer group (XBRL).
4. IS IT WORTH IT AT THIS PRICE?
At 23.3x Forward P/EP/EPrice-to-Earnings ratio — share price divided by annual earnings per share; how much investors pay per dollar of profit. Higher P/E = higher growth expectations, ServiceNow is priced exactly in line with the peer median (XBRL). According to CAPM analysis, the market is pricing in approximately 5.8% long-term growth. This appears to be a low bar for a company currently delivering 21% subscription growth and expanding its portfolio through acquisitions like Moveworks and the pending Armis deal (8-K).
The valuation is supported by ServiceNow's 14.4% operating margin, which sits ahead of peers like CrowdStrike (-8.0%) but well behind Adobe (36.7%). If long-term growth expectations were to soften to 5.0%, the justified multiple would fall to 19.6x (CAPM analysis). The primary factor that could force investors to pay less is "pricing pressure" from larger rivals who may bundle AI capabilities into existing enterprise suites to undercut ServiceNow’s standalone subscription costs (10-K Item 1A).
5. WHAT WOULD CHANGE THIS VIEW?
- Cautious if FCFFCFFree Cash Flow — cash left after paying for operations and capital investments; what the company can actually spend, save, or return to shareholders margins remain at the bottom of the peer group despite the CFO’s stated "disciplined focus on margin expansion" (8-K).
- Constructive if the "consumption-based pricing component" for AI products begins to drive significant revenue upside beyond fixed subscription credits.
- Cautious if the "Now Assist" AI agents face "unreliable results" or legal challenges that slow adoption in the highly regulated public sector.
6. BOTTOM LINE
Structural Advantage: A massive repository of proprietary enterprise operational data and a platform architecture that orchestrates AI workflows across existing third-party software silos.
Bottom Line: ServiceNow is a high-performing incumbent priced fairly for its growth, though it must prove it can convert its AI leadership into peer-leading cash flow.
1. Top 5 Material Risks
- Market Competition and Innovation: ServiceNow must continuously innovate in AI, machine learning, and low-code/no-code development to maintain its competitive position against larger, well-resourced rivals who may bundle offerings or reduce prices.
- International Expansion: With 37% of total revenues generated outside of North America, ServiceNow faces significant operational, regulatory, and currency risks in foreign markets that may hinder its ability to scale.
- AI Integration Challenges: Incorporating AI into the platform introduces operational, legal, and ethical risks, including potential copyright infringement claims, unreliable results, and the high cost of technical infrastructure.
- Public Sector Procurement: Doing business with government entities involves lengthy, competitive, and unpredictable sales cycles, with a substantial majority of U.S. government sales flowing through a small number of third-party distributors.
- Cybersecurity and Data Privacy: As a provider of cloud services, ServiceNow is a target for sophisticated cyberattacks; any actual or perceived security breach could lead to loss of customers, litigation, and significant remediation costs.
2. Company-Specific Risks
- Subscription Revenue Model: Because ServiceNow recognizes revenue ratably over the subscription term, a decline in new or renewal contracts will not be immediately visible in current operating results but will negatively impact future periods.
- Platform Misconfiguration: Customers are responsible for configuring the ServiceNow AI Platform; errors by customers or employees in setting access levels have previously resulted in unintended data exposure.
- Internal Investigation: ServiceNow has informed U.S. government agencies of an internal investigation and is cooperating with the Department of Justice regarding certain matters.
- Debt Service Obligations: ServiceNow’s 2030 Notes impose restrictive covenants that limit its ability to grant liens, enter into mergers, or incur additional subsidiary indebtedness.
3. Regulatory/Legal Risks
- Global Tax Reform: The enactment of the One Big Beautiful Bill Act (OBBBA) and the implementation of OECD Pillar 2 global minimum tax rules (15% minimum effective tax rate) create uncertainty and potential for increased tax liabilities.
- Data Sovereignty Laws: Regulations such as the EU Data Act and the Trans-Atlantic Data Privacy Framework impose complex requirements on data storage, transfer, and portability, which may restrict ServiceNow’s ability to offer services in certain locations.
- AI Regulation: The EU AI Act introduces new compliance requirements for AI providers, which may necessitate costly modifications to data handling practices or product development efforts.
- Global Trade Compliance: ServiceNow is subject to export control and economic sanctions laws; violations—such as those related to the Russia-Ukraine conflict—could result in severe criminal or civil sanctions.
4. Financial Impact Map
Market Competition and Innovation → Operating Margins → Increased investment in R&DR&DResearch & Development — spending on creating new products or technologies and potential pricing pressure from competitors bundling offerings.
International Expansion → Total Revenues → Growth depends on increasing sales outside the U.S., which currently accounts for 37% of total revenue.
Public Sector Procurement → Operating Expenses → Significant up-front time and expense incurred during the competitive bidding process without assurance of contract awards.
Subscription Revenue Model → Deferred Revenues → A significant portion of reported revenue is derived from recognition of deferred revenues from previous periods, masking current-period sales declines.
Debt Service Obligations → Cash Flows → A substantial portion of cash flows may be dedicated to debt service and principal repayments, limiting flexibility for capital expenditures or acquisitions.
Recent Filings
| Form | Filed | Period |
|---|---|---|
| 10-K | Jan 2026 | Dec 2025 |
| 8-K | Jan 2026 | — |
| 10-Q | Oct 2025 | Sep 2025 |
AI-extracted key facts from press releases and SEC filings. Significance 1–10.
Benchmark initiates ServiceNow at Buy, cites 45% selloff as compelling entry point
- ▸Benchmark initiates coverage with Buy rating and $125 price target
- ▸Stock down 50.42% from January 2025 high of $210.87
- ▸FY2025 revenue $13.278B, +21% YoY
- ▸FY2025 free cash flow $4.576B, +34% YoY
- ▸FY2026 subscription revenue guidance $15.53B–$15.57B
ServiceNow Expands AI Platform Ecosystem Through Partnerships With Zenity, Vonage, and Cohesity
- ▸Partnerships announced with Zenity, Vonage, and Cohesity for AI-driven workflow integrations
- ▸Integrations focus on security, voice-enabled workflows, and autonomous agent data protection
- ▸Cohesity partnership targets agent resilience for mission-critical enterprise operations
- ▸ServiceNow projects $20.3B revenue and $3.3B earnings by 2028
- ▸Strategic focus remains on establishing platform as central enterprise AI control tower
ServiceNow Q4 Subscription Revenue $3.47B +21% YoY, Guides 20% Growth for 2026
- ▸Q4 subscription revenue $3.47B, up 21% YoY
- ▸Current remaining performance obligations (cRPO) grew 25% YoY
- ▸Total remaining performance obligations (RPO) reached $28.2B
- ▸244 transactions closed above $1 million in Q4
- ▸98% customer renewal rate maintained
NowVertical secures $250,000 cloud migration contract expansion using AI-powered delivery tools
- ▸Secured $250,000 contract expansion in Q1
- ▸AI-powered tools reduced migration delivery effort from 2,700 to 250 hours
- ▸Over $2.5 million in work delivered to client over last 12 months
- ▸Total project value with client exceeds $7.5 million over 4 years
- ▸Engagement focuses on migration to Google Cloud Platform environment
ServiceNow expands AI ecosystem via partnerships with Microsoft, OpenAI, and Anthropic
- ▸Partnerships with Microsoft, OpenAI, and Anthropic enable enterprise AI integration
- ▸Open architecture positions platform as central AI orchestration layer
- ▸Consensus estimates forecast revenue growth exceeding 20% in 2026
- ▸Strategy focuses on co-selling initiatives and marketplace expansion with hyperscalers
- ▸Direct competition noted from Salesforce and Microsoft in enterprise AI workflows
Wedbush analyst Dan Ives identifies five oversold software stocks as prime buy-the-dip targets
- ▸Salesforce Q4 revenue $11.2B, +12% YoY; EPS $3.81 beat $3.05 consensus
- ▸Salesforce authorized $50B share repurchase program
- ▸Palo Alto Networks Q2 next-gen security ARR grew 33% YoY
- ▸CrowdStrike Q4 ending ARR $5.25B, +24% YoY; record net new ARR $331M
- ▸CrowdStrike Q4 free cash flow reached record $376M
ServiceNow expands AI platform distribution through Carahsoft’s 10,000+ reseller network in North America
- ▸ServiceNow AI platform now available via Carahsoft’s 10,000+ reseller ecosystem
- ▸Partnership expands reach into healthcare, financial services, and critical infrastructure markets
- ▸Agreement covers U.S. and Canada commercial and industry channels
- ▸Carahsoft reports $23 billion in annual bookings
- ▸Expansion targets organizations preferring channel partners over direct enterprise sales