ZACKS·2025-11-24 11:31Core Insights - ServiceNow is expanding its partnership with Microsoft, integrating its AI Control Tower with Microsoft Foundry and Copilot Studio to enhance enterprise-grade orchestration and governance across AI agents and workflows [2][3][4] Company Developments - ServiceNow's subscription revenue guidance for 2025 has been raised to between $12.835 billion and $12.845 billion, indicating a growth of 20% on a non-GAAP constant currency basis and 20.5% on a reported basis compared to 2024 [5] - The company is facing challenges due to tightening budgets from U.S. federal agencies, which may negatively impact subscription revenues in the fourth quarter of 2025 [5] Competitive Landscape - ServiceNow is experiencing stiff competition from Atlassian and Salesforce, with Atlassian focusing on subscription-based solutions that have seen a CAGR of approximately 40% from fiscal 2020 to fiscal 2025 [6] - Salesforce is enhancing its AI capabilities and data cloud business, reporting a 140% year-over-year increase in Data Cloud customer adoption in the second quarter of fiscal 2026 [7][8] Financial Performance - ServiceNow shares have declined by 24.6% year to date, underperforming the broader Zacks Computer and Technology sector, which has returned 25.9% [9] - The forward 12-month price/sales ratio for ServiceNow is 10.83X, significantly higher than the broader sector's 6.61X, indicating that the stock may be overvalued [10]