NOW
ServiceNow, Inc.NYSEValuation snapshot
Above bull casePrice is above even the bull case.
Price as of Aug 17, 2026 · Valuation Aug 16, 2026
What drives NOW's base case?
base-case thesisServiceNow's latest sales growth and signed-contract growth show that demand remains broad, even as the company becomes much larger. AI, security, and operations products provide additional ways to expand within existing customers, and nearly all subscription revenue is recurring. Growth slows gradually, while sales efficiency and internal automation allow more revenue to become profit.
What shapes the assumptions
Contracted revenue backlog
$13.2 billion of cRPO growing 0.21
Raises revenue growth
Large-customer expansion
658 customers above $5 million of annual contract value, growing approximately 0.23
Raises revenue growth
Sales and administrative efficiency
Sales expense fell to 0.33 of revenue and administrative expense fell to 0.08 in 2025
Raises operating margin
Infrastructure expansion
$868 million of 2025 property and equipment purchases
Raises reinvestment
Each driver links a business metric to the forecast assumption it shapes — the basis for this case, not investment advice.
Why the gap?
The market is pricing this as if revenue grows 36.1% a year. Over the last 5 years it grew 23.3% a year — so the price assumes more than it has delivered.
What else could explain it?›
- Or, holding growth steady
- the price is also consistent with a 51.7% operating margin, against the 27.0% assumed here.
- How confident is this estimate?
- Robustness 48.0/10 (Moderate) — some of any gap is our own uncertainty rather than disagreement.
- What would change the answer?
- Which assumption this valuation swings on, and by how much.
Many combinations of assumptions reproduce the same price. These are ways to read what the market might be expecting, not the market's actual view. How this is worked out
Research & assumptions
Inspect the valuation thesis, cases, risks, evidence, and model inputs.
View details
Research & assumptions
Inspect the valuation thesis, cases, risks, evidence, and model inputs.
Three independently researched cases generated automatically from published financials. Every assumption is justified and cited; the discount rate is computed from researched market inputs.
Base inputs from financials
source period →Base revenue (TTM)
$14.7B
Diluted shares
1,034,334,000
Net cash
$1.5B
Bear
low confidence$35.38
IV / share
-71.5% vs $124.04
- Explicit cash flows
- $7.70
- Terminal value
- $26.26
- Net cash
- $1.42
- Intrinsic value / share
- $35.38
74.2% of the value rests on the terminal value — high dependency. A small change to terminal growth moves the valuation a lot — see terminal growth below.
Revenue growth18.0% → 16.0% → 13.0% → 10.0% → 8.0%medium
How derived: Q2 2026 revenue grew 0.24, but cRPO grew 0.21 and Q3 subscription guidance slowed to 0.205, so this case assumes weaker renewals, limited AI expansion, and continued deceleration.
Why this confidence: Near-term company guidance ↑, Uncertain five-year AI adoption ↓
Evidence for
- Q3 2026 subscription-revenue guidance was 0.205 growth and Q3 cRPO guidance was 0.195, below Q2 reported growth.[Q2 2026 results]· primary
Evidence against
- Q2 total revenue grew 0.24, AI annual contract value exceeded $1 billion, and large-customer count grew approximately 0.23.[Q2 2026 results]· primary
Operating margin22.0%low
How derived: Recent reported quarterly profitability has been volatile and the 2025 filing identified rising cloud, infrastructure, and acquisition costs, so this case allows improvement but assumes those costs prevent full conversion of current non-GAAP leverage.
Why this confidence: Current cost disclosures ↑, GAAP and non-GAAP reconciliation uncertainty ↓
Evidence for
- ServiceNow expected subscription gross profitability to decline slightly in 2026 because of greater third-party cloud usage and acquired-intangible amortization.[2025 Form 10-K]· primary
Evidence against
- Management guided to a 0.315 non-GAAP income-from-operations margin for 2026 and expects acquisition-related margin expansion to normalize in 2027.[Q2 2026 results]· primary
Tax rate24.0%medium
How derived: The 2025 effective tax rate was 0.23, so this case moves it to 0.24 to reflect less favorable geographic profit mix and possible global minimum-tax exposure.
Why this confidence: Reported effective tax rate ↑, Changing international tax rules ↓
Evidence for
- ServiceNow reported a 0.23 effective tax rate for 2025 and warned that global minimum-tax rules and jurisdictional implementation could increase future obligations.[2025 Form 10-K]· primary
Evidence against
- ServiceNow had $578 million of federal loss carryforwards and $341 million of federal tax-credit carryforwards at year-end 2025.[2025 Form 10-K]· primary
Reinvestment rate45.0%low
How derived: ServiceNow spent $868 million on property and equipment in 2025 and disclosed $6.7 billion of cloud and data-center commitments, so this case assumes 0.45 of after-tax operating profit must be retained as growth becomes less capital-efficient.
Why this confidence: Contracted infrastructure commitments ↑, Acquisition timing and working-capital volatility ↓
Evidence for
- The company disclosed $4.8 billion of cloud-service commitments through 2030 and $1.9 billion of data-center equipment commitments through 2028.[2025 Form 10-K]· primary
Evidence against
- ServiceNow generated $4.636 billion of non-GAAP free cash flow in 2025, indicating that its subscription model can fund investment while producing substantial cash.[2025 Form 10-K]· primary
Terminal growth2.5%low
How derived: The Federal Reserve projects 0.02 long-run real growth and 0.02 inflation, but this case uses only 0.025 because competitive pressure is assumed to reduce ServiceNow's growth premium substantially.
Why this confidence: Macroeconomic long-run anchor ↑, Very long forecast horizon ↓
Evidence for
- Federal Reserve participants projected 0.02 long-run real growth and 0.02 long-run inflation.[June 2026 economic projections]· estimate
Evidence against
- ServiceNow reported 0.21 RPO growth and a 0.98 renewal rate in each of 2023 through 2025, supporting the possibility of a durable growth premium.[Q2 2026 results]· primary
Base
low confidence$65.47
IV / share
-47.2% vs $124.04
- Explicit cash flows
- $12.54
- Terminal value
- $51.51
- Net cash
- $1.42
- Intrinsic value / share
- $65.47
78.7% of the value rests on the terminal value — high dependency. A small change to terminal growth moves the valuation a lot — see terminal growth below.
base revenue growth (avg 18%) runs well above the trailing 1% trend
base operating margin (27%) sits well above the best recent margin (17%)
Revenue growth22.0% → 21.0% → 19.0% → 17.0% → 13.0%medium
How derived: Q2 revenue grew 0.24, cRPO grew 0.21, and management targets more than $30 billion of subscription revenue by 2030, so this path begins near current contracted demand and gradually decelerates with scale.
Why this confidence: Guidance and contracted backlog ↑, Execution required for 2030 objectives ↓
Evidence for
- Q2 revenue grew 0.24, cRPO grew 0.21, and management raised 2026 subscription-revenue guidance to 0.225 growth.[Q2 2026 results]· primary
- Management's 2030 objectives include more than $30 billion of subscription revenue and AI representing 0.30 of annual contract value.[Q2 2026 results]· primary
Evidence against
- Q3 subscription-revenue guidance slowed to 0.205 and management said federal demand pulled some on-premise revenue forward from Q3 into Q2.[Q2 2026 results]· primary
Operating margin27.0%medium
How derived: Management guides to a 0.315 non-GAAP margin in 2026 and reports improving sales and administrative efficiency, but this case settles at 0.27 to retain GAAP stock-compensation and amortization costs.
Why this confidence: Management margin guidance ↑, Future stock-compensation and acquisition charges ↓
Evidence for
- Management guided to a 0.315 non-GAAP income-from-operations margin for 2026 and expects sales, marketing, and administrative expenses to decline as shares of revenue.[Q2 2026 results]· primary
Evidence against
- The 2025 filing showed subscription gross profitability falling from 0.82 to 0.80 as infrastructure and cloud-service costs increased.[2025 Form 10-K]· primary
Tax rate22.0%medium
How derived: The 2025 effective tax rate was 0.23, so this case uses 0.22 as tax credits and international profit mix modestly offset global minimum taxes.
Why this confidence: Recent reported tax rate ↑, Jurisdictional profit-mix uncertainty ↓
Evidence for
- ServiceNow's 2025 effective tax rate was 0.23, while stock-compensation tax benefits reduced its provision.[2025 Form 10-K]· primary
Evidence against
- The company warned that differing implementations of global minimum-tax rules could increase its effective tax rate.[2025 Form 10-K]· primary
Reinvestment rate38.0%low
How derived: The company is committing heavily to cloud capacity, data centers, R&D, and acquisitions, but its recurring subscription cash flows support a moderate 0.38 reinvestment share rather than the bear case's lower efficiency.
Why this confidence: Reported investment and cash-flow data ↑, Reinvestment-rate definition requires normalization ↓
Evidence for
- ServiceNow spent $868 million on property and equipment and $1.084 billion on cash-funded business combinations in 2025.[2025 Form 10-K]· primary
Evidence against
- The company generated $5.444 billion of operating cash flow and $4.636 billion of non-GAAP free cash flow in 2025.[2025 Form 10-K]· primary
Terminal growth3.0%low
How derived: Long-run real growth and inflation are each projected at 0.02, so 0.03 assumes ServiceNow retains a modest structural advantage while remaining below the economy's approximate nominal growth.
Why this confidence: Recurring-contract history ↑, Perpetual competitive assumptions ↓
Evidence for
- ServiceNow reported a 0.98 renewal rate in each of 2023, 2024, and 2025, supporting durable recurring demand.[2025 Form 10-K]· primary
Evidence against
- Federal Reserve projections center on 0.02 long-run real growth and 0.02 inflation, limiting the sustainable growth rate of any mature firm.[June 2026 economic projections]· estimate
Bull
low confidence$103.62
IV / share
-16.5% vs $124.04
- Explicit cash flows
- $17.82
- Terminal value
- $84.37
- Net cash
- $1.42
- Intrinsic value / share
- $103.62
81.4% of the value rests on the terminal value — high dependency. A small change to terminal growth moves the valuation a lot — see terminal growth below.
bull revenue growth (avg 21%) runs well above the trailing 1% trend
bull operating margin (32%) sits well above the best recent margin (17%)
Revenue growth24.0% → 23.0% → 22.0% → 20.0% → 16.0%low
How derived: Q2 revenue grew 0.24, AI annual contract value exceeded $1 billion, and large-customer count grew approximately 0.23, so this case assumes AI, security, and cross-platform adoption sustain growth near the current rate.
Why this confidence: Measured AI and large-deal momentum ↑, Growth must remain unusually high at larger scale ↓
Evidence for
- AI annual contract value exceeded $1 billion, agentic deployments increased ninefold in nine months, and transactions above $1 million of net new annual contract value grew nearly 0.40.[Q2 2026 results]· primary
Evidence against
- Q3 subscription and cRPO guidance were only 0.205 and 0.195 respectively, and part of Q2 revenue was pulled forward by federal customers.[Q2 2026 results]· primary
Operating margin32.0%low
How derived: Current non-GAAP guidance is 0.315 and management targets a growth-plus-cash-generation score above 0.60 by 2030 while reducing stock compensation below 0.10 of revenue, so this case assumes automation and scale lift GAAP profitability to 0.32.
Why this confidence: Explicit efficiency and stock-compensation targets ↑, Ambitious GAAP conversion assumption ↓
Evidence for
- Management guided to a 0.315 non-GAAP margin for 2026, targets a growth-plus-free-cash-flow score above 0.60 by 2030, and committed to reduce stock compensation below 0.10 of revenue by 2029.[Q2 2026 results]· primary
Evidence against
- ServiceNow expects greater third-party cloud usage and acquisition amortization to pressure subscription gross profitability.[2025 Form 10-K]· primary
Tax rate20.0%low
How derived: The 2025 effective rate was 0.23, but this case assumes stronger use of federal credits, stock-compensation deductions, and favorable international profit mix reduce the normalized rate to 0.20.
Why this confidence: Available tax attributes ↑, Tax benefits depend on future income and equity awards ↓
Evidence for
- ServiceNow had substantial federal and state loss and tax-credit carryforwards, and excess stock-compensation tax benefits offset part of its 2025 provision.[2025 Form 10-K]· primary
Evidence against
- The reported effective tax rate increased from 0.18 in 2024 to 0.23 in 2025, while minimum-tax regimes could raise future obligations.[2025 Form 10-K]· primary
Reinvestment rate32.0%low
How derived: Although cloud and data-center commitments remain substantial, this case assumes subscription scale, partner-hosted capacity, and higher sales productivity let ServiceNow fund faster growth while reinvesting only 0.32 of after-tax operating profit.
Why this confidence: Strong recurring cash generation ↑, High-growth infrastructure requirements ↓
Evidence for
- Operating cash flow reached $5.444 billion in 2025, and management guided to a 0.35 non-GAAP free-cash-flow margin for 2026.[Q2 2026 results]· primary
Evidence against
- ServiceNow disclosed $6.7 billion of cloud and data-center commitments and continues to evaluate acquisitions and strategic investments.[2025 Form 10-K]· primary
Terminal growth3.5%low
How derived: Federal Reserve projections imply roughly 0.04 long-run nominal economic growth, so 0.035 assumes ServiceNow remains a leading workflow platform without eventually outgrowing the overall economy.
Why this confidence: AI-related productivity outlook ↑, Perpetual market-share uncertainty ↓
Evidence for
- CBO projects 0.018 average real GDP growth from 2027 through 2036 and identifies generative-AI adoption as a contributor to productivity.[CBO 2026–2036 outlook]· estimate
Evidence against
- Federal Reserve long-run projections center on 0.02 real growth and 0.02 inflation, leaving little room for a mature company to grow perpetually above 0.04.[June 2026 economic projections]· estimate
Valuation robustness
reliability of the estimate, not a stock rating48 / 100 · Moderate
Formula v1.0.0. Higher means a more reliable estimate — not a recommendation.
Quality checks
Automated model-risk flags — warnings, not recommendations.
- 79% of the intrinsic value rests on the terminal value — a small change to terminal growth moves the valuation a lot.→ terminal growth
- The reinvestment assumption is low-confidence.→ reinvestment
- The terminal growth assumption is low-confidence.→ terminal growth
Per-share economics
Business growth after changes in the diluted share count.
| Period | Revenue growth | FCF/share | FCF/share growth | Shares | Share growth |
|---|---|---|---|---|---|
| Q3 2024 | 22.2% | 2.25 | 165.1% | 208.55M | 1.1% |
| Q1 2025 | 18.6% | 1.41 | -75.8% | 1.05B | 404.1% |
| Q2 2025 | 22.4% | 0.5 | -70.8% | 1.05B | 403.7% |
| Q3 2025 | 21.8% | 2.76 | 22.7% | 209.51M | 0.5% |
| Q1 2026 | 22.1% | 1.47 | 4.6% | 1.04B | -0.7% |
| Q2 2026 | 24.0% | 0.46 | -9.0% | 1.03B | -1.2% |
Valuation history every run
History builds as the valuation is recalculated — this is the first recorded run.
Market inputs researched
The 10-year U.S. Treasury par yield was 0.0468 on August 14, 2026, the latest completed trading day before the valuation date.
A 0.96 five-year beta is used as the observed sensitivity of ServiceNow's split-adjusted monthly returns to the broad U.S. equity market.
The July 1, 2026 trailing-payout implied U.S. equity risk premium was 0.0418, estimated directly from index prices, cash distributions, expected growth, and the Treasury rate.
ServiceNow's investor-relations stock page reported a split-adjusted closing price of $91.94 on July 23, 2026, the latest company-hosted quote available from the cited page.
Generated 8/16/2026, 8:16:47 AM · pipeline v1.1.0