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NOW Rides on Strong Workflow Demand: Can It Outpace CRM & MSFT?
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Key Takeaways
ServiceNow saw broad Q2 workflow demand, with ITSM, ITOM, security and CRM featuring in top deals.
Cross-selling strengthened as 18 of ServiceNow's top 20 deals included at least eight products.
Salesforce and Microsoft are expanding enterprise workflows, intensifying competition for ServiceNow.
ServiceNow (NOW - Free Report) is benefiting from broad-based demand across its workflow portfolio, strengthening its competitive position against the likes of Salesforce (CRM - Free Report) and Microsoft (MSFT - Free Report) in the enterprise software domain. In the second quarter of 2026, Technology Workflows recorded 50 deals worth more than $1 million, including nine exceeding $5 million. Information Technology Service Management appeared in 15 of NOW’s top 20 deals, while Information Technology Operations Management featured in 18, including 14 deals above $1 million. Security and Risk solutions were present in 16 of the top 20 deals and generated 24 transactions exceeding $1 million, indicating strong demand across ServiceNow’s core technology portfolio.
Demand is expanding beyond IT workflows. CRM and Industry Workflows appeared in 16 of the top 20 deals, with 15 exceeding $1 million, supported by momentum in CPQ and sales and order management. Core Business Workflows generated 24 deals above $1 million, driven by EmployeeWorks, while Creator Workflows featured in 18 of the top 20 transactions. Industry demand was also diversified, with Net New Annual Contract Value (ACV) from business and consumer services rising more than sixfold year over year. Education growth exceeded 125%, while telecom and media grew nearly 40%.
Cross-selling across the platform is strengthening NOW’s ability to capture a greater share of enterprise spending. The company saw strong platform adoption, with 18 of its top 20 deals involving at least eight products. It maintained a 98% renewal rate and ended the quarter with 658 customers generating more than $5 million in ACV. EmployeeWorks deal volume jumped more than 150% sequentially. Robust AI attach rates are benefiting the data portfolio, with RaptorDB Pro deal volume rising 80% year over year and Workflow Data Fabric appearing in 17 of the top 20 deals.
ServiceNow is further widening its ecosystem through strategic partnerships. The company extended AI Control Tower governance across Microsoft Agent 365, surpassed $1 billion in AWS Marketplace transactions and expanded its Accenture relationship to help enterprises scale AI from pilots to production. These initiatives could broaden adoption across security, IT, employee and AI-governance workflows. This momentum is supporting subscription revenue growth. Second-quarter 2026 subscription revenues reached $3.88 billion, up 24.5% year over year. Net new ACV outperformance prompted NOW to raise its 2026 subscription revenue midpoint to $15.77 billion, representing 21% constant-currency growth.
NOW Faces Tough Competition
Salesforce is broadening beyond CRM into workflows that increasingly overlap with ServiceNow. Agentforce IT Service already has more than 450 customers, including conversions from ServiceNow. CRM is extending its platform across sales, service, marketing, commerce, analytics and IT service, while Agentforce Ops is helping customers automate back-office and supply-chain workflows.
Microsoft is intensifying competition through Dynamics 365, Copilot and Agent 365. Dynamics 365 exposes more than 650,000 actions across sales, finance, supply chain, HR and customer service. Agent 365 had nearly 40 million registered agents, while Microsoft 365 Copilot exceeded 30 million paid seats. Microsoft is connecting CRM, ERP, IT operations, SecOps and FinOps into enterprise-wide workflows, increasing competition for the consolidation opportunities that are helping drive NOW’s growth prospects.
Shares of ServiceNow have declined 11.5% year to date against the broader Zacks Computer and Technology sector’s 19.9% growth.
NOW’s YTD Stock Price Performance
Image Source: Zacks Investment Research
NOW stock is trading at a premium, with a forward 12-month price/earnings ratio of 28.68 compared with the broader sector’s 20.85. ServiceNow has a Value Score of D.
NOW’s Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for NOW’s earnings is currently pegged at $1.03 per share, unchanged over the past 30 days, suggesting 7.29% year-over-year growth.
View the Zacks #1 Rank List
Image: Bigstock
NOW Rides on Strong Workflow Demand: Can It Outpace CRM & MSFT?
Key Takeaways
ServiceNow (NOW - Free Report) is benefiting from broad-based demand across its workflow portfolio, strengthening its competitive position against the likes of Salesforce (CRM - Free Report) and Microsoft (MSFT - Free Report) in the enterprise software domain. In the second quarter of 2026, Technology Workflows recorded 50 deals worth more than $1 million, including nine exceeding $5 million. Information Technology Service Management appeared in 15 of NOW’s top 20 deals, while Information Technology Operations Management featured in 18, including 14 deals above $1 million. Security and Risk solutions were present in 16 of the top 20 deals and generated 24 transactions exceeding $1 million, indicating strong demand across ServiceNow’s core technology portfolio.
Demand is expanding beyond IT workflows. CRM and Industry Workflows appeared in 16 of the top 20 deals, with 15 exceeding $1 million, supported by momentum in CPQ and sales and order management. Core Business Workflows generated 24 deals above $1 million, driven by EmployeeWorks, while Creator Workflows featured in 18 of the top 20 transactions. Industry demand was also diversified, with Net New Annual Contract Value (ACV) from business and consumer services rising more than sixfold year over year. Education growth exceeded 125%, while telecom and media grew nearly 40%.
Cross-selling across the platform is strengthening NOW’s ability to capture a greater share of enterprise spending. The company saw strong platform adoption, with 18 of its top 20 deals involving at least eight products. It maintained a 98% renewal rate and ended the quarter with 658 customers generating more than $5 million in ACV. EmployeeWorks deal volume jumped more than 150% sequentially. Robust AI attach rates are benefiting the data portfolio, with RaptorDB Pro deal volume rising 80% year over year and Workflow Data Fabric appearing in 17 of the top 20 deals.
ServiceNow is further widening its ecosystem through strategic partnerships. The company extended AI Control Tower governance across Microsoft Agent 365, surpassed $1 billion in AWS Marketplace transactions and expanded its Accenture relationship to help enterprises scale AI from pilots to production. These initiatives could broaden adoption across security, IT, employee and AI-governance workflows. This momentum is supporting subscription revenue growth. Second-quarter 2026 subscription revenues reached $3.88 billion, up 24.5% year over year. Net new ACV outperformance prompted NOW to raise its 2026 subscription revenue midpoint to $15.77 billion, representing 21% constant-currency growth.
NOW Faces Tough Competition
Salesforce is broadening beyond CRM into workflows that increasingly overlap with ServiceNow. Agentforce IT Service already has more than 450 customers, including conversions from ServiceNow. CRM is extending its platform across sales, service, marketing, commerce, analytics and IT service, while Agentforce Ops is helping customers automate back-office and supply-chain workflows.
Microsoft is intensifying competition through Dynamics 365, Copilot and Agent 365. Dynamics 365 exposes more than 650,000 actions across sales, finance, supply chain, HR and customer service. Agent 365 had nearly 40 million registered agents, while Microsoft 365 Copilot exceeded 30 million paid seats. Microsoft is connecting CRM, ERP, IT operations, SecOps and FinOps into enterprise-wide workflows, increasing competition for the consolidation opportunities that are helping drive NOW’s growth prospects.
NOW’s Share Price Performance, Valuation & Estimates
Shares of ServiceNow have declined 11.5% year to date against the broader Zacks Computer and Technology sector’s 19.9% growth.
NOW’s YTD Stock Price Performance
Image Source: Zacks Investment Research
NOW stock is trading at a premium, with a forward 12-month price/earnings ratio of 28.68 compared with the broader sector’s 20.85. ServiceNow has a Value Score of D.
NOW’s Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for NOW’s earnings is currently pegged at $1.03 per share, unchanged over the past 30 days, suggesting 7.29% year-over-year growth.
ServiceNow, Inc. Price and Consensus
ServiceNow, Inc. price-consensus-chart | ServiceNow, Inc. Quote
ServiceNow currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.