ServiceNow

Investment Thesis

ServiceNow’s enterprise workflow platform is seeing renewed demand acceleration as Now Assist AI features drive meaningful upsell activity. We maintain a Buy rating with a price target of $1,080.

What Changed

The quarter’s standout data point was the expansion in net new annual contract value from existing customers. Now Assist is not a feature upsell — it is being priced as a separate SKU commanding 15–20% premium pricing on renewal. This changes our revenue per seat model upward.

Enterprise customers are also extending contract lengths. Multi-year deals now represent a higher share of new business than at any point in the past three years, which reduces near-term revenue variability.

Platform Dynamics

The competitive moat continues to deepen. ServiceNow sits at the intersection of IT, HR, and Finance workflow automation — a position that creates switching costs no single competitor can fully replicate. Once an enterprise runs critical cross-departmental workflows on the platform, migration risk is extremely low.

Risks

Valuation is the primary risk. NOW trades at a significant premium to its SaaS peer group. Any deceleration in ACV growth or deterioration in net revenue retention would compress the multiple sharply.

Macro sensitivity is another consideration — enterprise software budgets are scrutinized during downturns, and ServiceNow’s premium pricing makes it a target for belt-tightening conversations.