Key Takeaways ServiceNow raised the 2025 subscription revenue guidance to up to $12.845B, signaling 20.5% annual growth. AI product adoption is surging, with 2025 ACV seen topping $0.5B and on track to hit $1B in 2026. Expanded deals with NVDA, MSFT and Figma deepen NOW's enterprise AI and workflow integrations. ServiceNow (NOW) shares have plunged 25.4% in the past year, underperforming the Zacks Computer and Technology sector’s appreciation of 25.4% and the Zacks Computers IT Services industry’s fall of 1 ...

Core Insights - ServiceNow's subscription revenues have increased by 21% over the trailing nine-month period in 2025 compared to the previous year, driven by growing demand for its workflows [1] - The company raised its subscription revenue guidance for 2025 to between $12.835 billion and $12.845 billion, indicating a growth of approximately 20% year-over-year [2] - ServiceNow shares have underperformed, dropping 17.9% over the past year, while competitors like Oracle and SAP have seen positive returns [3] Subscription Revenue Performance - Subscription revenues account for roughly 97% of ServiceNow's total revenues, reflecting strong demand [1] - The growth rate for subscription revenues in 2025 is expected to be slower than the 23% growth rate seen in 2024 [2] Market Position and Competition - ServiceNow's stock has been affected by challenging macroeconomic conditions and increased competition, particularly from companies like Workday, Oracle, and SAP [3][7] - The stock is currently trading at a premium with a forward 12-month price/sales ratio of 11.7X, compared to the broader sector's 6.91X [8] Customer Growth and Transactions - In Q3 2025, ServiceNow had 103 transactions exceeding $1 million in net new annual contract value (ACV), with six transactions over $10 million [13] - The number of customers contributing over $5 million in ACV reached 553, with a more than 20% year-over-year increase in customers contributing $50 million or more [13] Industry Trends and Partnerships - Net new ACV in transportation and logistics grew over 90% year-over-year, with significant growth also seen in retail, hospitality, and education sectors [17] - ServiceNow's partnerships, particularly with NVIDIA, are enhancing its AI workflow capabilities, which may help mitigate some macroeconomic challenges [18] Earnings Estimates - The Zacks Consensus Estimate for Q4 2025 earnings is $4.35 per share, reflecting an 18.53% growth year-over-year, although it has seen a slight downward revision [19] - Positive trends are noted for 2025 and 2026 earnings estimates, with expected growth rates of 24.21% and 16.66%, respectively [20] Conclusion - ServiceNow's expanding portfolio and growing workflow adoption are expected to enhance top-line growth, despite concerns regarding macroeconomic conditions and valuation [21]

Core Viewpoint - ServiceNow has expanded its partnership with NVIDIA to enhance the integration of intelligent workflows and open models, aiming to scale trusted AI across various industries, with the introduction of the Apriel 2.0 model designed for efficiency and cost-effectiveness [1][2][9]. Group 1: Partnership and Collaboration - The collaboration between ServiceNow and NVIDIA focuses on delivering enterprise-grade AI solutions, including next-gen open models and secure AI agents, to address service-related challenges across different business sectors, particularly in regulated industries [2][3]. - The partnership aims to make high-performance, proven, and trusted AI accessible to every enterprise, emphasizing the importance of execution in deploying advanced intelligence [3]. Group 2: Apriel 2.0 Model - Apriel 2.0 is positioned as a frontier-level intelligence model that offers reasoning and accuracy comparable to larger models while being significantly smaller in size, expected to be in production by Q1 2026 [4][9]. - The model supports enhanced reasoning and multimodal input, allowing for better interpretation of various data formats, which is crucial for enterprise workflows [5][6]. - Apriel 2.0 is designed to facilitate autonomous and semi-autonomous agents, providing low-latency, multi-step reasoning capabilities across different systems and datasets [6][8]. Group 3: Operational Enhancements - The integration of ServiceNow workflows with NVIDIA's AI Factory reference designs is set to improve operational efficiency and customer experiences by accelerating the deployment of intelligent enterprise AI solutions [8][9]. - The collaboration will also enhance data center operations, leveraging ServiceNow's Data Center and Network Asset Management capabilities to optimize critical environmental assets [12].