ServiceNow's Revenue Growth Is Accelerating: Is the Stock a Buy Now?

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ServiceNow is benefiting from AI request

ServiceNow has described itself arsenic the "AI Control Tower" for the enterprise. AI agents necessitate governance and security, which could thrust important request for ServiceNow's offerings implicit the agelong term. The institution reported a 24% year-over-year summation successful gross successful the 2nd quarter, up from 22% maturation successful Q1 and 20.5% successful Q4 2025.

The fearfulness connected Wall Street is that productivity gains from utilizing agentic AI volition trim the request for the customers of software-as-a-service (SaaS) companies to adhd seats oregon licensed users to their contracts, which could unit revenues. But ServiceNow absorption revealed that 50% of its nett caller concern is non-seat-based, suggesting these concerns mightiness beryllium overblown.

ServiceNow is transitioning its concern exemplary distant from per-seat pricing and toward a depletion exemplary nether which customers wage based connected however overmuch they usage the software. On that score, the institution appears to beryllium succeeding, arsenic the fig of customers with agentic AI successful accumulation grew 9x implicit the past 9 months -- pointing to increasing depletion successful the coming years.

A cardinal competitory vantage for ServiceNow is its treasure trove of data. Its level processes implicit 100 cardinal workflows and trillions of transactions each year. This allows ServiceNow to present much close outcomes for customers than alternatives, which successful crook tin enactment its semipermanent growth.

Growth and instrumentality expectations

Given the beardown top-line maturation truthful acold successful 2026, absorption raised its full-year guidance. Subscription gross is expected to onshore successful a scope betwixt $15.755 cardinal and $15.77 billion, representing a astir 21% year-over-year maturation complaint connected a constant-currency basis. It besides expects a steadfast gross borderline of 81% and a escaped currency travel borderline of 35%.

Management is targeting $32 cardinal successful gross by 2030 -- astir treble the expected 2026 revenue. That should construe to proportional net and free-cash-flow growth. Yet the banal is trading astatine a guardant price-to-earnings aggregate of 23. This is simply a large discount to the higher multiples it has received historically owed to the predictable quality of its subscription-based concern model.