Core Insights - ServiceNow (NYSE: NOW) has announced a five-for-one stock split following strong business performance driven by AI, indicating positive momentum in AI-assisted workflows [1][7] - The company reported a 22% year-over-year increase in total revenue to $3.4 billion, with subscription revenue rising by 21.5% to $3.3 billion, highlighting robust demand [4] - ServiceNow signed over one hundred new transactions exceeding $1 million in annual contract value, contributing to a 24% year-over-year increase in remaining performance obligations (RPOs) to $24.3 billion [5] Financial Performance - The third quarter performance exceeded the company's own guidance, showcasing the effectiveness of its AI platform for business transformation [6] - AI-related products are growing significantly faster than the overall business, with predictions that annual contract value (ACV) for AI products will exceed $1 billion next year, up from over $0.5 billion this year [10] - The AI Control Tower deal volume quadrupled sequentially in Q3, and AI Agent Assist consumption increased 55 times since the end of May, indicating strong growth potential [10] Market Outlook - Despite a recent stock price pullback, shares are considered expensive, suggesting cautious investor sentiment [9] - The company noted potential near-term uncertainties related to U.S. federal budgets amid a government shutdown, although federal business remains a strong area for AI-powered automation [6]

Core Insights - ISG has initiated a research study to evaluate providers within the ServiceNow ecosystem that assist enterprises in streamlining workflows across various industries [1][15] - The study will culminate in a series of ISG Provider Lens reports, focusing on AI-powered workflow transformation and the latest developments among ServiceNow partners, set to be published in April 2026 [2][5] ServiceNow Ecosystem and AI Integration - Enterprises are increasingly adopting AI agents, with ServiceNow positioned as a central control tower for these agents, as companies seek specialized, outcome-driven services for secure and scalable AI deployment [2][5] - ServiceNow's cloud-native platform is evolving rapidly, featuring recent releases like Yokohama and Zurich, which facilitate the transition to autonomous, multi-agent systems [4][5] Research Methodology and Quadrants - The research will involve surveys distributed to over 120 providers, leading to the creation of three quadrants that represent typical enterprise purchases related to ServiceNow [5] - The three quadrants include: 1. **ServiceNow Consulting and Implementation Services**: Evaluating providers that design and implement outcomes on the Now Platform [5] 2. **ServiceNow Managed Services**: Assessing providers that manage and optimize the Now Platform through various operational frameworks [5] 3. **Innovation on ServiceNow**: Covering providers that operationalize innovations using the ServiceNow AI Platform [5] Geographic Focus and Authors - The reports will analyze the global ServiceNow ecosystem market, with a focus on products and services available in regions such as the U.S., Brazil, Europe, and Asia Pacific [6] - Lead authors for the reports include ISG analysts specializing in different geographic regions [6] Customer Experience Data - The 2026 ISG Provider Lens evaluations will incorporate expanded customer experience data, reflecting actual enterprise experiences with specific provider services [8]

Financial Data and Key Metrics Changes - Subscription revenue for Q3 2025 was $3.299 billion, growing 20.5% year over year in constant currency, exceeding guidance by 100 basis points [20] - Remaining performance obligations (RPO) ended at approximately $24.3 billion, representing 23% year over year constant currency growth [20] - Current RPO was $11.35 billion, reflecting 20.5% year over year constant currency growth, beating guidance by 250 basis points [20] - Non-GAAP operating margin was 33.5%, 300 basis points above guidance, driven by top-line outperformance and operational efficiencies [23] - Free cash flow margin was 17.5%, up 50 basis points year over year [23] Business Line Data and Key Metrics Changes - Now Assist had 12 deals over $1 million in net new ACV, including one over $10 million, indicating strong performance [22] - IT Service Management (ITSM) and HR Plus net new ACV doubled quarter over quarter, while IT Operations Management (ITOM) Plus net new ACV surged more than 5x quarter over quarter [22] - Customer Service Management (CSM) Plus deal volume tripled year over year [22] Market Data and Key Metrics Changes - The transportation and logistics sector led growth with over 90% year over year increase in net new ACV, followed by retail, hospitality, and education sectors, both growing over 50% [21] - The U.S. Federal business grew net new ACV over 30% year over year, showcasing strong demand in the government sector [21] Company Strategy and Development Direction - The company is focusing on AI business transformation, with a target of exceeding $1 billion in AI products ACV by 2026 [7][22] - ServiceNow is positioning itself as a leader in enterprise AI, integrating various technologies to provide comprehensive solutions [10][19] - The company is raising guidance for Q4 and full-year 2025, reflecting confidence in its growth trajectory and market opportunities [7][24] Management's Comments on Operating Environment and Future Outlook - Management expressed strong confidence in the future, highlighting the significant market opportunity for the platform and the ongoing demand for AI solutions [6][7] - The company acknowledged potential impacts from the ongoing government shutdown on deal timing in the U.S. Federal business for Q4 [26] Other Important Information - The Board of Directors approved a five-for-one stock split to make shares more accessible to a broader base of investors [24] - The company ended Q3 with $9.7 billion in cash and investments, indicating a robust balance sheet [23] Q&A Session Summary Question: Integration and Implementation of Agentic Technology - Bill McDermott discussed the importance of integration expertise and the role of external partners in successfully implementing agentic technology [30][31] Question: Broader Sales Organization and AI Solutions - Amit Zavery confirmed that the sales organization is becoming more adept at selling AI solutions, with a growing number of customers live on the platform [41] Question: Federal Government Shutdown Impact - Gina Mastantuono explained that while demand remains strong, the government shutdown has led to a more prudent approach in guidance [45][46] Question: Demand Trends and AI Consumption - Bill McDermott highlighted strong demand trends and the significant growth in AI consumption, particularly in the context of customer engagement [50][51] Question: MoveWorks Acquisition Update - Gina Mastantuono provided an update on the expected closing of the MoveWorks deal, emphasizing that current successes are independent of this acquisition [75] Question: AI Control Tower Demand - Amit Zavery noted that the AI Control Tower is gaining significant interest from customers concerned about managing AI security and compliance [80]

Financial Data and Key Metrics Changes - Subscription revenue for Q3 2025 was $3.299 billion, growing 20.5% year over year in constant currency, exceeding guidance by 100 basis points [20] - Remaining Performance Obligations (RPO) ended at approximately $24.3 billion, representing 23% year over year constant currency growth [20] - Current RPO was $11.35 billion, reflecting 20.5% year over year constant currency growth, beating guidance by 250 basis points [20] - Non-GAAP operating margin was 33.5%, 300 basis points above guidance, driven by top-line outperformance and operational efficiencies [23] - Free cash flow margin was 17.5%, up 50 basis points year over year [23] Business Line Data and Key Metrics Changes - Now Assist had 12 deals over $1 million in net new ACV, including one over $10 million, indicating strong performance [22] - IT Service Management (ITSM) and HR Plus net new ACV doubled quarter over quarter, while IT Operations Management (ITOM) Plus net new ACV surged more than 5x quarter over quarter [22] - Customer Service Management (CSM) Plus deal volume tripled year over year [22] Market Data and Key Metrics Changes - The transportation and logistics sector led growth with over 90% year over year increase in net new ACV, followed by retail, hospitality, and education sectors, both growing over 50% [21] - The U.S. Federal business grew net new ACV over 30% year over year, demonstrating strong demand [21] Company Strategy and Development Direction - The company is focused on AI business transformation, with a target of exceeding $1 billion in AI products ACV by 2026 [7][22] - ServiceNow aims to integrate AI into enterprise workflows, emphasizing the importance of governance and management of AI technologies [8][10] - The company is raising guidance for Q4 and full-year 2025, reflecting confidence in market opportunities and operational execution [7][24] Management's Comments on Operating Environment and Future Outlook - Management expressed strong confidence in the future, highlighting the significant market opportunity for the ServiceNow platform [6][7] - The ongoing government shutdown may impact deal timing in the U.S. federal business, but demand remains strong [26][45] - The company is optimistic about the trajectory of its business, with a robust pipeline heading into Q4 [53] Other Important Information - The Board of Directors approved a five-for-one stock split to make shares more accessible to a broader base of investors [24] - The company ended Q3 with $9.7 billion in cash and investments, indicating a strong balance sheet [23] Q&A Session Summary Question: Integration and Implementation of Agentic Technology - Bill McDermott discussed the importance of integration expertise and the role of external partners in implementing agentic technology [30][31] Question: Broader Sales Organization and AI Solutions - Amit Zavery confirmed that the sales organization is becoming more adept at selling AI solutions, with a growing number of customers live on the platform [41] Question: Federal Government Impact on Guidance - Gina Mastantuono explained that the company has factored in prudence regarding the federal government shutdown, affecting deal timing [45][46] Question: Demand Trends and AI Consumption - Bill McDermott noted that demand is stronger than ever, with significant growth in AI consumption and utilization [50][51] Question: MoveWorks Acquisition Update - Gina Mastantuono indicated that the MoveWorks deal is expected to close towards the end of Q4, enhancing ServiceNow's AI capabilities [75] Question: AI Control Tower Demand - Amit Zavery highlighted the strong interest in the AI Control Tower, which addresses customer concerns about managing AI technologies [80]

Core Insights - AI is fundamentally reshaping the global economy, impacting both consumers and companies, as stated by Bill McDermott, CEO of ServiceNow [1][2] - The current AI spending boom is significant, with trillions being invested in AI infrastructure, although many digital transformation projects are failing to deliver returns [10] Company Developments - ServiceNow is experiencing a surge in demand for its AI-powered offerings, leading to a strong third-quarter performance with subscription revenue of $3.3 billion, a 22% year-over-year increase [15] - The company has raised its full-year guidance for subscription revenue, operating margin, and free cash flow, reflecting confidence in its AI capabilities [15][16] - ServiceNow is actively hiring in areas such as sales, technology architecture, and engineering to support its AI initiatives and is also focusing on re-skilling existing employees [4][5] Market Trends - The rise of generative AI poses a potential threat to the software industry, with concerns that companies may develop their own software instead of purchasing from vendors like ServiceNow [11] - Despite these concerns, McDermott asserts that ServiceNow's long-established platform cannot be easily replicated by customers [12][14] Product Innovations - ServiceNow's AI products, including Now Assist and Workflow Data Fabric, have shown strong uptake among both new and existing customers, with 103 deals exceeding $1 million in net new annual contract value [16] - The company is also investing in AI innovations and partnerships, enhancing its integration of AI into enterprise workflows [17]

Core Insights - ServiceNow (NOW) and Figma (FIG) utilize SaaS and PaaS technologies to assist enterprises in business transformation, with ServiceNow focusing on AI-powered workflow solutions and Figma on collaborative design-prototyping [1] Group 1: ServiceNow (NOW) Overview - ServiceNow's Workflow Data Fabric is gaining traction, included in 17 of the top 20 largest deals, combining data, analytics, and AI for improved enterprise outcomes [2] - The Zurich platform enhances AI adoption with multi-agentic AI, enterprise-grade security, and autonomous workflows, featuring tools like Build Agent and Developer Sandbox for application development [3] - ServiceNow's partnerships with companies like NVIDIA and Amazon Web Services are enhancing its AI capabilities and data integration solutions [4] - For Q3 2025, ServiceNow anticipates subscription revenues between $3.26 billion and $3.265 billion, reflecting a year-over-year growth of 19.5% at constant currency [5] Group 2: Figma (FIG) Overview - Figma launched four new products at its annual conference, expanding its portfolio and enhancing developer workflows with the Dev Mode MCP server [6] - New features have been introduced to improve user engagement, including integration with ChatGPT for AI-generated diagrams [7] - Figma expects Q3 2025 revenues between $263 million and $265 million, indicating a 33% year-over-year growth, but slower than the 41% growth in Q2 2025 [9] Group 3: Performance and Valuation Comparison - In the last three months, NOW shares decreased by 4.7%, while FIG shares fell by 56.4% [10] - Both NOW and FIG shares are currently considered overvalued, with a Value Score of F [13] - The Zacks Consensus Estimate for NOW's 2025 earnings is $16.82 per share, indicating a 20.8% rise year-over-year, while FIG's estimate is 30 cents per share, reflecting a 108% increase year-over-year [14][15] Group 4: Competitive Landscape - ServiceNow's strong AI portfolio and partner ecosystem are expected to drive its growth, while Figma faces competition from established players like Adobe and Microsoft, which have more advanced AI initiatives [16][17]

Group 1 - ServiceNow, Inc. (NYSE:NOW) is recognized as one of the most promising AI stocks, with a "Buy" rating and a price target of $1,200.00 from TD Cowen analyst Derrick Wood [1][2] - The company is expected to report strong Q3 2025 results, driven by robust US federal bookings and a positive outlook on AI adoption, which may mitigate concerns over government spending uncertainties [1] - ServiceNow has shown strength in the enterprise segment, with increased demand for AI-related workloads and larger average deal sizes due to product bundling and successful upgrades [2] Group 2 - Innovations such as Workflow Data Fabric and AI Experience, along with strategic acquisitions, position ServiceNow well for future opportunities in CRM and AI monetization [2] - ClearBridge Investments highlighted ServiceNow as a leader in the monetization of generative AI, targeting $1 billion in annual contract value from AI-related products by 2026 [3] - While ServiceNow is acknowledged for its potential, some analysts believe other AI stocks may offer greater upside potential with less downside risk [3]

Core Insights - ServiceNow (NOW) is experiencing significant growth with its AI Platform, securing 21 deals with five or more Now Assist products in Q2 2025, and over 50% sequential growth in deals including AI Pro Plus across ITSM, CSM, and HR [1][10] Group 1: Enterprise Adoption and Product Offerings - Major enterprises such as Adobe, Aptiv, Visa, EY, ExxonMobil, and Standard Chartered are utilizing ServiceNow AI to enhance sales cycles, service delivery, and operational efficiency [2] - The Workflow Data Fabric is included in 17 of ServiceNow's top 20 deals, combining data, analytics, and AI to deliver faster outcomes for enterprises [3][10] - The new Zurich platform and AI Experience are expected to drive rapid AI adoption through multi-agentic AI development and autonomous workflows [4][10] Group 2: Competitive Landscape - ServiceNow faces intense competition from Atlassian, Salesforce, and Oracle, with Atlassian seeing a 20 times year-over-year increase in AI interactions [6] - Salesforce is expanding its platform adoption by integrating various workflows, while Oracle leverages a strong partner ecosystem to enhance its offerings [7][8] Group 3: Financial Performance and Valuation - ServiceNow shares have declined by 14.8% year-to-date, underperforming the broader Zacks Computer and Technology sector's return of 21.6% [9] - The stock is considered overvalued with a forward price/sales ratio of 12.49X compared to the sector's 6.83X, and it carries a Value Score of F [12] - The Zacks Consensus Estimate for Q3 2025 earnings is $4.21 per share, indicating a 13.2% year-over-year growth, while Q4 2025 earnings are estimated at $4.40 per share, suggesting a 19.9% year-over-year improvement [14]

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's workflows are gaining traction, with technology workflows winning 40 deals worth over $1 million in Q2 2025, including 4 deals over $5 million [1] - The company is expanding its footprint among enterprises through Workflow Data Fabric, which is included in 17 of its top 20 largest deals [2] - Subscription revenues increased by 21.5% year over year to $3.113 billion in Q2 2025, with a significant rise in high-value customers [3][10] - ServiceNow raised its subscription revenue guidance for 2025 to between $12.775 billion and $12.795 billion, indicating a growth of 19.5-20% on a non-GAAP constant currency basis [4] Subscription Revenue and Customer Growth - Subscription revenues for Q2 2025 reached $3.113 billion, marking a 21.5% increase year over year [3][10] - The number of customers generating over $5 million in annual contract value (ACV) reached 528, with those contributing $20 million or more increasing by over 30% year over year [3] - ServiceNow closed 89 deals greater than $1 million in net new ACV during the reported quarter, including 11 deals over $5 million [3] Competitive Landscape - ServiceNow faces strong competition in the workflow automation space from Pegasystems and Salesforce [5] - Pegasystems is experiencing robust demand for its GenAI Blueprint solution, which is expected to drive ACV growth [6] - Salesforce is seeing broad adoption of its platform, integrating various workflows and enhancing its ecosystem through partnerships with major data platforms [7] Valuation and Stock Performance - ServiceNow shares have declined by 12.4% year to date, underperforming the broader Zacks Computer and Technology sector, which returned 13.4% [8] - The company's stock is considered overvalued, with a forward 12-month price/sales ratio of 13.12X compared to the sector's 6.7X [13] - The Zacks Consensus Estimate for Q3 2025 earnings is $4.22 per share, indicating a year-over-year growth of 13.4% [14]