We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Can ServiceNow's Expanding Federal Footprint Push the Share Higher?
Read MoreHide Full Article
Key Takeaways
ServiceNow signed a OneGov deal with GSA to boost federal workflow efficiency by 30%.
NOW's Q2 subscription revenues rose 21.5% year over year to $3.113 billion.
NOW raised 2025 subscription revenue guidance between $12.775 million and $12.795 billion.
ServiceNow (NOW - Free Report) is expanding its federal footprint with the recently inked deal with the U.S. General Services Administration (GSA). Through the OneGov agreement, ServiceNow is expected to boost government workflow efficiencies by up to 30%. The agreement will allow federal agencies access to NOW’s Information Technology Service Management (ITSM) Pro and ITSM Pro Plus bundle at up to 70% discount off list prices. ITSM Pro upgrade (Standalone Option) is available at a 40% discount off the Pro Unrestricted User list price through September 2026.
Despite challenging trends in the U.S. public sector domain due to a tightened budget, NOW closed six new logos in the second quarter of 2025. The company’s innovative portfolio has been a key catalyst driving the federal user base. NOW launched the Government Transformation Suite to increase visibility, accelerate ROI, and drive efficiencies for United States federal agencies in February. ServiceNow’s expanded AI capabilities that include Workflow Data Fabric, AI Agents, and RaptorDB are expected to boost the federal user base in the long run.
However, ServiceNow shares have plunged 13.8% year to date (YTD), underperforming the Zacks Computer and Technology sector’s return of 15.4% reflecting macroeconomic challenges and stiff competition from the likes of Workday (WDAY - Free Report) , Oracle (ORCL - Free Report) and Pegasystems (PEGA - Free Report) . Shares of Oracle and Pegasystems returned 39.7% and 19.1% YTD, while Workday has dropped 10.4%.
NOW Stock’s YTD Performance
Image Source: Zacks Investment Research
Will expanding the federal footprint help the NOW stock recover in the rest of 2025? Let’s find out.
Can Rising Workflow Adoption Aid NOW’s Prospects?
NOW’s workflows are gaining traction. In the second quarter of 2025, technology workflows won 40 deals worth over $1 million, including four over $5 million. ITSM, ITOM, ITAM, security and risk were all in at least 15 of the top 20 deals. CRM and industry workflows were in 17 of NOW’s top 20 deals, with 17 of those deals over $1 million. Core business workflows were in 16 of the top 20 deals, with seven deals over $1 million.
NOW ended the reported quarter with 528 customers generating more than $5 million in ACV. The number of customers contributing $20 million or more increased by more than 30% year over year. ServiceNow closed 89 deals greater than $1 million in net new ACV in the reported quarter, including 11 deals over $5 million.
Growing workflow adoption has been driving subscription revenues. In second-quarter 2025, subscription revenues jumped 21.5% year over year to $3.113 billion. ServiceNow raised subscription revenue guidance for 2025, which is now expected between $12.775 billion and $12.795 billion, suggesting 19.5-20% on a non-GAAP constant currency (cc) basis. For third-quarter 2025, subscription revenues are projected between $3.26 billion and $3.265 billion, suggesting year-over-year growth of 19.5% at cc.
The Zacks Zacks Consensus Estimate for third-quarter 2025 subscription revenues is pegged at $3.26 billion, indicating 20% growth from the year-ago quarter. The Zacks Consensus Estimate for third-quarter 2025 earnings is pegged at $4.22 per share, unchanged over the past 30 days and indicating 13.4% growth from the year-ago quarter's reported figure.
Rich Partner Base Aids ServiceNow’s Growth Trajectory
ServiceNow is benefiting from a rich partner base that includes the likes of NVIDIA, Cisco Systems, Amazon, Aptiv, Vodafone Business, UKG, Zoom and others.
The NVIDIA-NOW collaboration is redefining employee support as the semiconductor giant is using ServiceNow AI to resolve issues, deliver personalized help and provide answers in a short span of time. The long-term partners have collaborated to develop the Apriel Nemotron 15B model that evaluates relationships, applies rules, and weighs goals to reach conclusions or make decisions. ServiceNow and NVIDIA plan to bring accelerated data processing to ServiceNow Workflow Data Fabric with the integration of select NVIDIA NeMo microservices.
ServiceNow’s collaboration with Amazon Web Services helped in bi-directional data integration solutions to eliminate enterprise silos. ServiceNow and Cisco have collaborated to bring together the latter’s AI Defense with ServiceNow SecOps to provide more holistic AI risk management and governance. The integration of ServiceNow CRM capabilities with Aptiv’s platforms and technology from Wind River will offer greater automation and efficiency for telecommunication and enterprise customers.
NOW Stock Overvalued
ServiceNow stock has a Value Score of F, which suggests a stretched valuation at this moment.
The stock is trading at a premium, with a forward 12-month price/sales of 12.86X compared with the broader sector’s 6.73X.
NOW Valuation
Image Source: Zacks Investment Research
Here’s Why NOW Stock is a Hold
NOW’s expanding portfolio and rich partner base are expected to improve its top-line growth. However, its near-term prospects are dull due to challenging macroeconomic uncertainties and stiff competition. Stretched valuation is a concern.
Image: Bigstock
Can ServiceNow's Expanding Federal Footprint Push the Share Higher?
Key Takeaways
ServiceNow (NOW - Free Report) is expanding its federal footprint with the recently inked deal with the U.S. General Services Administration (GSA). Through the OneGov agreement, ServiceNow is expected to boost government workflow efficiencies by up to 30%. The agreement will allow federal agencies access to NOW’s Information Technology Service Management (ITSM) Pro and ITSM Pro Plus bundle at up to 70% discount off list prices. ITSM Pro upgrade (Standalone Option) is available at a 40% discount off the Pro Unrestricted User list price through September 2026.
Despite challenging trends in the U.S. public sector domain due to a tightened budget, NOW closed six new logos in the second quarter of 2025. The company’s innovative portfolio has been a key catalyst driving the federal user base. NOW launched the Government Transformation Suite to increase visibility, accelerate ROI, and drive efficiencies for United States federal agencies in February. ServiceNow’s expanded AI capabilities that include Workflow Data Fabric, AI Agents, and RaptorDB are expected to boost the federal user base in the long run.
However, ServiceNow shares have plunged 13.8% year to date (YTD), underperforming the Zacks Computer and Technology sector’s return of 15.4% reflecting macroeconomic challenges and stiff competition from the likes of Workday (WDAY - Free Report) , Oracle (ORCL - Free Report) and Pegasystems (PEGA - Free Report) . Shares of Oracle and Pegasystems returned 39.7% and 19.1% YTD, while Workday has dropped 10.4%.
NOW Stock’s YTD Performance
Image Source: Zacks Investment Research
Will expanding the federal footprint help the NOW stock recover in the rest of 2025? Let’s find out.
Can Rising Workflow Adoption Aid NOW’s Prospects?
NOW’s workflows are gaining traction. In the second quarter of 2025, technology workflows won 40 deals worth over $1 million, including four over $5 million. ITSM, ITOM, ITAM, security and risk were all in at least 15 of the top 20 deals. CRM and industry workflows were in 17 of NOW’s top 20 deals, with 17 of those deals over $1 million. Core business workflows were in 16 of the top 20 deals, with seven deals over $1 million.
NOW ended the reported quarter with 528 customers generating more than $5 million in ACV. The number of customers contributing $20 million or more increased by more than 30% year over year. ServiceNow closed 89 deals greater than $1 million in net new ACV in the reported quarter, including 11 deals over $5 million.
Growing workflow adoption has been driving subscription revenues. In second-quarter 2025, subscription revenues jumped 21.5% year over year to $3.113 billion. ServiceNow raised subscription revenue guidance for 2025, which is now expected between $12.775 billion and $12.795 billion, suggesting 19.5-20% on a non-GAAP constant currency (cc) basis. For third-quarter 2025, subscription revenues are projected between $3.26 billion and $3.265 billion, suggesting year-over-year growth of 19.5% at cc.
The Zacks Zacks Consensus Estimate for third-quarter 2025 subscription revenues is pegged at $3.26 billion, indicating 20% growth from the year-ago quarter. The Zacks Consensus Estimate for third-quarter 2025 earnings is pegged at $4.22 per share, unchanged over the past 30 days and indicating 13.4% growth from the year-ago quarter's reported figure.
ServiceNow, Inc. Price and Consensus
ServiceNow, Inc. price-consensus-chart | ServiceNow, Inc. Quote
Rich Partner Base Aids ServiceNow’s Growth Trajectory
ServiceNow is benefiting from a rich partner base that includes the likes of NVIDIA, Cisco Systems, Amazon, Aptiv, Vodafone Business, UKG, Zoom and others.
The NVIDIA-NOW collaboration is redefining employee support as the semiconductor giant is using ServiceNow AI to resolve issues, deliver personalized help and provide answers in a short span of time. The long-term partners have collaborated to develop the Apriel Nemotron 15B model that evaluates relationships, applies rules, and weighs goals to reach conclusions or make decisions. ServiceNow and NVIDIA plan to bring accelerated data processing to ServiceNow Workflow Data Fabric with the integration of select NVIDIA NeMo microservices.
ServiceNow’s collaboration with Amazon Web Services helped in bi-directional data integration solutions to eliminate enterprise silos. ServiceNow and Cisco have collaborated to bring together the latter’s AI Defense with ServiceNow SecOps to provide more holistic AI risk management and governance. The integration of ServiceNow CRM capabilities with Aptiv’s platforms and technology from Wind River will offer greater automation and efficiency for telecommunication and enterprise customers.
NOW Stock Overvalued
ServiceNow stock has a Value Score of F, which suggests a stretched valuation at this moment.
The stock is trading at a premium, with a forward 12-month price/sales of 12.86X compared with the broader sector’s 6.73X.
NOW Valuation
Image Source: Zacks Investment Research
Here’s Why NOW Stock is a Hold
NOW’s expanding portfolio and rich partner base are expected to improve its top-line growth. However, its near-term prospects are dull due to challenging macroeconomic uncertainties and stiff competition. Stretched valuation is a concern.
ServiceNow currently has a Zacks Rank #3 (Hold), suggesting that it may be wise for investors to wait for a more favorable entry point to accumulate the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.