Can Rising Workflow Adoption Push ServiceNow Shares Higher?

ServiceNow’s NOW workflows are gaining traction. In the second quarter of 2025, technology workflows won 40 deals worth over $1 million, including 4 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.

ServiceNow is gaining a footprint among enterprises with Workflow Data Fabric included in 17 of the company’s top 20 largest deals. Through Workflow Data Fabric, ServiceNow offers a combination of data, analytics and AI that, along with agentic AI, helps enterprises get faster and smarter outcomes. CRM workflow offers a massive growth opportunity for ServiceNow, driven by sales and order management solutions and acquisitions of Logik.ai, which helped NOW close 9 CPQ deals in June alone.

Growing workflow traction has been driving subscription revenues. In second-quarter 2025, subscription revenues jumped 21.5% year over year to $3.113 billion. 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.

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.

Tough Competition Hurts NOW’s Prospects

NOW faces stiff competition in the workflow automation space from the likes of Pegasystems PEGA and Salesforce CRM. 

Pegasystems is benefiting from strong demand for its GenAI Blueprint solution, an agent that utilizes AI to combine the company’s best practices, as well as knowledge from clients and partners, to design enterprise workflow applications. ACV growth is expected to remain robust, thanks to ongoing digital transformation, strong adoption of the Pega GenAI Blueprint and case-based pricing approach. Expanding portfolio with new set-to-be-launched solutions, including Pega Agentic Process Fabric and Infinity, are key catalysts.

Salesforce continues to see broad adoption of its platform as enterprises connect sales, service, marketing and analytics workflows under one system. CRM’s Customer 360 architecture integrates core applications with real-time data and AI, helping enterprises unify engagement and scale digital operations. Salesforce has extended its ecosystem through integrations with Snowflake, Databricks, Google BigQuery, and Amazon Redshift to support zero-copy data access and streamline AI workflows.

NOW’s Share Price Performance, Valuation & Estimates

NOW shares have dropped 12.4% year to date, outperforming the broader Zacks Computer and Technology sector’s return of 13.4%.

NOW Stock’s Performance

ServiceNow stock is overvalued, with a forward 12-month price/sales of 13.12X compared with the broader sector’s 6.7X. NOW has a Value Score of F.

NOW Valuation

The Zacks Consensus Estimate for third-quarter 2025 earnings is pegged at $4.22 per share, unchanged over the past 30 days, suggesting 13.4% year-over-year growth.
 

ServiceNow, Inc. Price and Consensus

ServiceNow, Inc. price-consensus-chart | ServiceNow, Inc. Quote

ServiceNow currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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