NOW Expands AI Adoption: Can Subscription Growth Accelerate Further?

Core Insights - ServiceNow (NOW) is enhancing AI-powered workflows to support customer growth and increase subscription revenues [1] - The company is experiencing strong enterprise demand for AI-native workflows, evidenced by 72 transactions exceeding $1 million in net new Annual Contract Value in Q1 2025 [2] Product and Technology Developments - Now Assist is gaining traction, facilitating case resolution and intelligent self-service across various workflows [2] - The introduction of the Singapore Protected Platform (SPP-SG) offers a sovereign AI cloud solution for regulated sectors, ensuring compliance with Multi-Tier Cloud Security Level 3 standards [4] - Pro Plus and RaptorDB are key offerings that enhance performance and analytics capabilities [2][10] Market Position and Competition - ServiceNow is expanding its partner ecosystem, with notable collaborations including Vodafone and Aptiv, which are implementing AI solutions across different sectors [3] - The company faces increasing competition from Salesforce and BigBear.ai, both of which are enhancing their AI capabilities [5][6][7] Financial Performance and Valuation - ServiceNow's shares have decreased by 7.5% year to date, contrasting with a 0.9% increase in the broader Zacks Computer & Technology sector [8] - The Zacks Consensus Estimate for Q2 2025 earnings is $3.53 per share, reflecting a 12.78% year-over-year growth [15] - The forward 12-month Price/Sales ratio for ServiceNow is 14.34X, compared to the industry's 18.47X, indicating a premium valuation [12]