One-glance verdict
Undervalued
$212.24 our estimate vs market $141.26
Wall Street consensus: $141.84 (-33.2% lower than our fair-value estimate)
33% below our estimate, below the bear case
Fundamentals snapshot
ServiceNow, Inc.
NOW · NYQ · Technology · Software - Application
Current price
$141.26
52-week range
$81.24 - $194.73
Market cap
$146.04B
Balance sheet
Healthy
79.30x Strong cushion
Net debt $3.79B. Interest coverage shows how many times profit covers the interest bill.
What stands out
3 Rewards
2 Risks
3 rewards · 2 risks
- Reward Revenue grew 11.0% last year.
- Reward Returns 14.2% on equity, ahead of 50% of its peers.
- Risk Insider ownership is only 0.2% (peer median: 2.2%).
- Risk Operating margin compressed from 4.9% to 4.1% over 3 years.
What this company does
ServiceNow, Inc.
ServiceNow provides a software platform that helps large companies automate and manage their internal operations, like IT help desks, human resources, and customer service. The company makes most of its money from subscriptions, which creates recurring revenue (income that's predictable because customers pay regularly, like a Netflix subscription). This is important because a steady, subscription-based income stream is often more stable and easier to grow than relying on one-time sales.
How the company got here
ServiceNow was started in 2003 by Fred Luddy, who wanted to create a simple, cloud-based platform to manage IT services more efficiently than the complex software that was common at the time. Initially focused on replacing help desk ticket systems, the company found success by making software that was easy to use and adapt. A key turning point was when customers realized the platform could manage workflows beyond just IT, leading ServiceNow to expand into areas like Human Resources and Customer Service. This evolution transformed it from a niche IT tool into a broad platform for automating all kinds of business processes across a large company.
What it actually does
ServiceNow provides a cloud-based platform that helps large companies manage and automate their internal processes and workflows. Think of it as a digital command center that connects different departments—like IT, HR, and customer service—on a single system. For example, instead of using emails and spreadsheets to handle an employee's request for a new laptop, a company can use ServiceNow to create an automated process that tracks the request from approval to delivery. This helps businesses run more smoothly by replacing manual, often clunky, procedures with streamlined digital workflows.
Subscription
This is ServiceNow's main way of making money, accounting for the vast majority of its revenue. Companies pay a recurring fee, usually yearly, to access and use the ServiceNow platform and its various applications. This is a software-as-a-service (SaaS) model, similar to how a person might pay for a Netflix subscription to watch movies. The fee depends on how many employees are using the system and which specific applications the company needs, such as tools for IT support, human resources, or customer service management.
Professional Services and Other
This is a much smaller part of ServiceNow's business. It includes fees for services that help customers set up, implement, and get the most out of the ServiceNow platform. For example, a new customer might pay for expert help to customize the software for their specific business needs or to train their employees on how to use it effectively. While it doesn't bring in as much money as subscriptions, it's an important part of ensuring customers are successful with the main product.
What management is betting on now
ServiceNow's main focus is on expanding its platform's capabilities by deeply integrating artificial intelligence (AI). The company is embedding AI tools, like its 'Now Assist' feature, directly into its workflows to help automate tasks, predict issues before they happen, and provide intelligent recommendations. The strategy is to sell these AI features as premium add-ons, encouraging existing customers to spend more to make their business processes even smarter and more efficient. This positions ServiceNow not just as a tool for organizing work, but as an intelligent platform that actively improves how work gets done.
Price history
How the share price has moved
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Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
FY2024 Q3
$469.00M
FY2024 Q4
$1.38B
FY2025 Q1
$1.47B
FY2025 Q2
$526.00M
FY2025 Q3
$578.00M
FY2025 Q4
$2.00B
FY2026 Q1
$1.53B
FY2026 Q2
$473.00M
Revenue
$3.99B
Net income
$298.00M
Diluted EPS
0.29
Operating cash flow
$587.00M
Free cash flow
$473.00M
Fetching…
Sources
Revenue
$3.77B
Net income
$469.00M
Diluted EPS
0.45
Operating cash flow
$1.67B
Free cash flow
$1.53B
Fetching…
Sources
Revenue
$3.57B
Net income
$401.00M
Diluted EPS
-4.77
Operating cash flow
$2.24B
Free cash flow
$2.00B
Fetching…
Sources
Revenue
$3.41B
Net income
$502.00M
Diluted EPS
2.40
Operating cash flow
$813.00M
Free cash flow
$578.00M
Fetching…
Sources
Revenue
$3.21B
Net income
$385.00M
Diluted EPS
1.84
Operating cash flow
$716.00M
Free cash flow
$526.00M
Fetching…
Sources
Revenue
$3.09B
Net income
$460.00M
Diluted EPS
2.20
Operating cash flow
$1.68B
Free cash flow
$1.47B
Fetching…
Sources
Revenue
$2.96B
Net income
$384.00M
Diluted EPS
1.84
Operating cash flow
$1.64B
Free cash flow
$1.38B
Fetching…
Sources
Revenue
$2.80B
Net income
$432.00M
Diluted EPS
2.07
Operating cash flow
$671.00M
Free cash flow
$469.00M
Fetching…
Sources
Is it cheap or expensive?
Fair value $212.24 vs current price $141.26
Wall Street consensus is the average analyst price target: $141.84 (-33.2% lower than our fair-value estimate).
Our most-likely fair value is $212.24 a share — about 50.2% above today's price of $141.26, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Healthy
Net debt $3.8B. Interest coverage 79.3x.
Net debt
$3.79B
Interest coverage
79.30x
ServiceNow, Inc.'s profit covers its interest bill about 79.3 times over. which is stronger than every peer shown here and 3 peers sit below 1x, which is the danger zone where profit does not fully cover the interest bill.
Healthy
Worse cushion
Baseline
Better cushion
NOW
BASELINE
ServiceNow, Inc.
Total debt $8.45B Interest coverage 79.30x This is the baseline the peer rows are being compared against.
Total debt $2.76B Interest coverage -172.95x -100% vs NOW This peer has almost no interest-payment cushion compared with NOW.
Total debt $1.28B Interest coverage -4.01x -100% vs NOW This peer has almost no interest-payment cushion compared with NOW.
Total debt $1.23B Interest coverage 0.21x -100% vs NOW Carries about 378.7x less debt cushion than NOW.
Total debt $3.77B Interest coverage 8.98x -89% vs NOW Carries about 8.8x less debt cushion than NOW.
What you should know
The case for and against NOW
3 Rewards
2 Risks
Rewards
-
Revenue grew 11.0% last year.
-
Returns 14.2% on equity, ahead of 50% of its peers.
-
Free cash flow was positive in 10/10 years.
Risks
-
Insider ownership is only 0.2% (peer median: 2.2%).
-
Operating margin compressed from 4.9% to 4.1% over 3 years.
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
88.29x
Forward P/E
28.22x
P/B
11.67x
P/S
9.91x
EV/EBITDA
51.72x
PEG ratio
1.02x
Profitability
How much profit each dollar creates
Gross margin
74.8%
Operating margin
4.1%
Net margin
11.3%
ROE
14.2%
ROA
4.2%
Health
Liquidity and balance-sheet strength
Debt / equity
0.68x
Current ratio
0.70x
Quick ratio
0.56x
Total debt
$8.45B
Total cash
$4.66B
Growth
How the business has been compounding
Revenue TTM
$14.73B
Revenue 5Y CAGR
22.5%
EPS TTM
1.60
EPS 5Y CAGR
73.5%
Cash flow
How much cash the business throws off
Operating CF TTM
$5.31B
Free CF TTM
$4.58B
FCF margin
31.1%
Dividend
Shareholder payout
Yield
—
Payout ratio
0.0%
Last ex-div date
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