ServiceNow Declines 10% in a Month: Is the Stock a Buy on the Dip?

Company Performance and Financials - ServiceNow had 15 deals greater than $5 million in net new ACV and six deals of more than$ 10 million in Q3 2024, with 96 deals exceeding $1 million in net new ACV [3] - The number of customers contributing more than$ 20 million grew nearly 40% year over year [3] - The Zacks Consensus Estimate for 2025 earnings is $16.42 per share, indicating an 18.42% year-over-year increase [9] - ServiceNow's earnings beat the Zacks Consensus Estimate in all the trailing four quarters, with an average surprise of 9.46% [9] - The consensus mark for 2025 revenues is$ 13.19 billion, suggesting 20.10% growth over the 2024 estimate of $10.98 billion [10] - ServiceNow shares have declined 10% in the past month but returned 39.3% over the trailing 12-month period, outperforming the sector and industry [16][17] AI and Technology Innovations - ServiceNow is leveraging AI and machine learning, with its total addressable market expected to reach$ 275 billion in 2026 [1] - The company is integrating Agentic AI into its platform, expected to enhance productivity and reduce issue resolution time [20] - ServiceNow added more than 150 GenAI innovations, including expanded Now Assist capabilities with AI Governance features [21] - The Xanadu update offers AI-powered industry solutions for telecom, media, technology, financial services, and the public sector [19] - Gen AI deals gained traction in Q3 2024, with 44 new Now Assist customers spending over $1 million in ACV and price increases of roughly 30% [23] Partnerships and Collaborations - ServiceNow has major partnerships with Amazon, Microsoft, and NVIDIA, along with deals with Five9, Visa, Snowflake, Zoom, Siemens, and others [5] - The company expanded its collaboration with Amazon Web Services to accelerate AI-driven business transformation by connecting Amazon Bedrock models to ServiceNow [6] - ServiceNow and Microsoft partnered to modernize front-office business processes with Microsoft Copilot and ServiceNow AI agent integration [8] - NVIDIA and ServiceNow are collaborating to develop AI agent use cases on the Now platform using NVIDIA NIM Agent Blueprints [8] Market Position and Valuation - ServiceNow's strong GenAI portfolio and partner base justify its premium valuation, with a forward 12-month Price/Sales ratio of 15.74X, higher than the sector's 6.98X [11][12] - The company has a Zacks Rank 1 (Strong Buy) and a Growth Score of B, indicating a strong investment opportunity [14] - ServiceNow shares are trading above the 200-day moving average, displaying a bullish trend [18][22] Customer Base and Growth - ServiceNow had 2,020 total customers with more than$ 1 million in annual contract value (ACV) exiting Q3 2024 [17] - The company's robust GenAI portfolio and strong partner base are expected to drive clientele growth and boost subscription revenues [14]