Core Insights - ServiceNow (NOW) shares have decreased by 16.1% year to date (YTD), underperforming the Zacks Computer and Technology sector which has returned 19.6% [1][9] - The decline is attributed to macroeconomic challenges and competition from companies like Workday, Oracle, and Pegasystems [2][9] - ServiceNow has raised its subscription revenue guidance for 2025 to between $12.775 billion and $12.795 billion, indicating a growth rate of 19.5-20% on a non-GAAP constant currency basis, which is slower than the 23% growth rate expected for 2024 [3][9] Financial Performance - For Q3 2025, ServiceNow anticipates subscription revenues between $3.26 billion and $3.265 billion, suggesting a year-over-year growth of 19.5% at constant currency [7] - The Zacks Consensus Estimate for Q3 2025 subscription revenues is pegged at $3.26 billion, indicating a 20.2% growth from the previous year [7] - The Zacks Consensus Estimate for 2025 earnings is $16.82 per share, reflecting a 20.83% growth from 2024, while the 2026 estimate is $19.84 per share, suggesting a 17.94% growth over 2025 [21][22] Valuation and Market Position - ServiceNow stock is currently trading at a premium, with a forward 12-month price/sales ratio of 12.31X compared to the sector's 6.73X and competitors like Workday at 6.03X and Oracle at 11.56X [10] - The company has a Value Score of F, indicating a stretched valuation at this moment [8] Growth Drivers - ServiceNow's workflows are gaining traction, with significant deals in technology workflows and core business workflows [13][14] - The company has closed 89 deals greater than $1 million in net new annual contract value (ACV) in the reported quarter [14] - The introduction of the AI-powered Zurich platform and partnerships with NVIDIA, AWS, and Cisco are expected to drive growth [9][17][20] Strategic Collaborations - ServiceNow's collaboration with NVIDIA aims to enhance employee support through AI, while partnerships with AWS and Cisco focus on data integration and AI risk management [18][20] - The Workflow Data Fabric is included in many of ServiceNow's largest deals, combining data, analytics, and AI to improve enterprise outcomes [15][19] Investment Outlook - The expanding portfolio, growing workflow adoption, and positive earnings estimate revisions are expected to enhance top-line growth, justifying the premium valuation [23]

Core Insights - ServiceNow (NOW) is experiencing strong growth, with Q2 2025 revenues reaching $3.22 billion, a 22.4% increase year over year [1][10] - The company has raised its subscription revenue guidance for 2025 to between $12.775 billion and $12.795 billion, indicating a growth rate of 19.5-20% on a non-GAAP constant currency basis [5][10] Partner Ecosystem - ServiceNow's extensive partner network includes major companies like NVIDIA, Cisco, Amazon, and others, which enhances its innovative portfolio and drives top-line growth [1][3] - The collaboration with NVIDIA focuses on using AI to improve employee support and decision-making through the development of the Apriel Nemotron 15B model [2] - Partnerships with Amazon Web Services and Cisco aim to eliminate enterprise silos and enhance AI risk management, respectively [3] Workflow and Deal Performance - In Q2 2025, ServiceNow secured 40 technology workflow deals worth over $1 million, with significant contributions from ITSM, ITOM, ITAM, security, and risk sectors [4] - The company’s CRM and industry workflows were involved in 17 of the top 20 deals, indicating strong demand for its solutions [4] Competitive Landscape - ServiceNow faces intense competition from Atlassian and Salesforce, both of which are expanding their market presence through innovative solutions and integrations [6][7][8] - Atlassian has seen a 20-fold increase in AI interactions, while Salesforce continues to unify enterprise workflows through its Customer 360 architecture [7][8] Valuation and Stock Performance - ServiceNow's stock has underperformed, dropping 13.4% year to date, compared to a 12.9% return for the broader Zacks Computer and Technology sector [11] - The company's forward price/sales ratio stands at 12.94X, significantly higher than the sector average of 6.62X, indicating potential overvaluation [14]