NOW changes
Pick any two versions below to diff them.
- Price
- $109.67 → $102.76(−6.3%)
- Discount category
- Well below intrinsic value → Close to intrinsic value
- Thesis
- Investors fear that AI agents will replace the paid work seats ServiceNow prices its software around. Software stocks broadly fell on this fear in September 2026, not only ServiceNow. The gap can close if ServiceNow keeps growing subscription revenue near its current pace while its AI products add revenue instead of replacing seats. The company's AI product line already passed one billion dollars in annual contract value. In July 2026, the CEO said that deployments of its AI agents grew nine times in nine months. In May 2026, ServiceNow combined Now Assist, Moveworks, and AI Experience into one AI product, Otto. This lets it sell AI work as new revenue rather than compete against its own seat revenue. removed: Several analysts raised their price targets in September and October 2026, a sign some investors already see the seat-replacement fear as overdone. The Q3 2026 report on October 28, 2026 passed the first test. Subscription revenue grew 21%. cRPO, current remaining performance obligations, a measure of contracted revenue not yet billed, grew 21% in constant currency, above guidance of 20%. ServiceNow also raised its 2026 target for AI annual contract value to $1.7 billion. But its Q4 2026 guidance calls for cRPO growth of only 18.5% in constant currency. The next test is the Q4 2026 report, expected in late January 2027, with its 2027 guidance. If growth stays near 20% through 2027, the seat-replacement fear should ease and the gap can close.
- Recent events
- Oct 28, 2026: ServiceNow reported Q3 2026 results. Subscription revenue was $3,988 million, up 21%, above its guidance. cRPO was $13.65 billion, up 20.5%, or 21% in constant currency, against guidance of 20%. RPO was $29.7 billion, up 22%. Free cash flow was $822 million, and GAAP operating margin was 9.5%. ServiceNow raised its 2026 subscription revenue guidance to $15.78 to $15.79 billion and its free cash flow margin target to 36%. It raised its 2026 target for AI annual contract value to $1.7 billion. On the same day, it announced a wider partnership with OpenAI. Oct 13, 2026: Business Insider reported that the AI customer service startup Decagon hired a bank to study a sale and held early talks with ServiceNow and other buyers. On the same day, ServiceNow's president and COO, Amit Zavery, said that ServiceNow "has no interest or intention of purchasing Decagon." Investors watch ServiceNow's purchases closely after it bought Moveworks, Veza and Armis. Oct 7, 2026: ServiceNow said it will report Q3 2026 results on October 28, 2026, after the market closes. Oct 1, 2026: ServiceNow launched Flow, an AI service desk that new customers can buy without the ServiceNow platform. ServiceNow says it can go live in one day, with no implementation project. Employees use it through Microsoft Teams, Slack, email and a web app. Flow started in early access, and ServiceNow expects general availability in Q4 2026. Sep 28, 2026: Meta launched an enterprise AI platform for business customers. ServiceNow stock fell about 3% that day as investors weighed a new rival in AI workflow software. removed: Sep 21, 2026: Cantor Fitzgerald raised its price target on ServiceNow to $174 from $141 and kept its Overweight rating. Sep 14, 2026: ServiceNow stock rose about 7% in one day. News reports linked the rise to price target increases from Needham, to $155 from $115, and from BTIG, to $170 from $150. Jul 22, 2026: ServiceNow reported Q2 2026 results. Subscription revenue was $3.877 billion, up 24.5% from last year. The company said its AI products crossed $1 billion in annual contract value during the quarter. It raised its 2026 subscription revenue guidance to $15.76 to $15.78 billion. Apr 20, 2026: ServiceNow completed its purchase of Armis, a security company, for about $7.6 billion in cash. It completed its purchase of Veza, an identity security company, on March 2, 2026. Dec 15, 2025: ServiceNow completed its acquisition of Moveworks, adding AI assistant and enterprise search technology to its AI product line. The announced price was $2.85 billion in cash and stock. The value at closing was about $2.4 billion.