ServiceNow, Inc. (NOW) Business Profile

What it does

ServiceNow sells cloud-based software that helps organizations coordinate work across departments and computer systems. Its customers include private enterprises and public-sector organizations. The company was founded in 2004 and is headquartered in Santa Clara. William R. McDermott is chairman and chief executive officer.

The ServiceNow AI Platform connects people, processes and data. Its applications help customers manage IT services and security, handle customer requests, support employees and build their own workflows. For example, a customer can use the platform to coordinate employee onboarding across IT provisioning, payroll, compliance and facilities. The platform can connect to outside data sources without moving or copying the underlying data.

ServiceNow also sells AI tools that can help customers perform tasks and manage their use of AI. Now Assist provides tools that can operate with human oversight and predefined guardrails. Customers can use ServiceNow language models, third-party models or their own models, and can deploy or build AI agents to carry out work. Its AI governance products help organizations monitor usage and performance.

The company groups its applications into Technology, Customer Relationship Management and Industry, Core Business, and Creator and Other. It also provides support, implementation and adoption services. ServiceNow has introduced Flow, a self-service conversational service desk, and AI Passport, which gives agents an attested record based on platform context.

How it makes money

ServiceNow primarily sells its software through subscription agreements. Customers generally pay in advance, and subscription arrangements typically last three years. The company generally recognizes subscription revenue over the subscription term, rather than recording the whole contract value when a customer signs.

In FY2025, license and service revenue was $12.9 billion; in Q3 2026, subscription revenue was $3.988 billion. These are different revenue measures. License and service revenue represented 97.0% of FY2025 revenue, while professional services and other revenue was $395.0 million.

Customers can subscribe to products across the platform. Technology products cover areas such as IT service management, operations, assets, security and risk. Customer Relationship Management and Industry products connect customer service, field service, sales and order processes. Core Business products support functions including HR, legal and purchasing, while Creator products let customers build and customize workflows.

Certain AI and data offerings also have a consumption-based component when usage exceeds the fixed service credits in a subscription. The model combines seat-based pricing with consumption, and work requested through its ChatGPT interface uses metered assists. It also sells ServiceNow Impact on a subscription basis, combining software tools, guided plans, recommendations and access to support.

Professional services include design, implementation, architecture and optimization, delivered directly and through partners. For select large AI deals, ServiceNow is including deployment expertise with platform solutions; the company says the value of those deployments is recorded as professional services rather than subscription revenue, and returns to subscription revenue when those contracts renew.

Customers and how it sells

ServiceNow primarily sells to enterprise customers for deployments across their organizations. As of December 31, 2025, it had approximately 8,700 customers across a range of industries. Its offerings serve sectors including financial services, healthcare, manufacturing, retail, technology, telecommunications and government. A growing portion of revenue comes from government customers.

One customer accounted for 11.0% of FY2025 revenue. ServiceNow says it ended Q3 2026 with 680 customers generating more than $5 million in annual contract value. In that quarter, 19 of its top 20 deals included six or more products.

The company sells through a global direct sales organization as well as managed service providers and resale partners. Its partner network also provides implementation services, industry expertise and complementary technology. Professional services can be delivered by ServiceNow or its partners.

North America generated $8.3 billion of FY2025 revenue, or 62.9% of the total. EMEA generated $3.4 billion, and Asia Pacific and other generated $1.5 billion. ServiceNow operates data centers in North America, South America, Europe, Asia and Australia, and also uses public cloud infrastructure.

Suppliers and costs

ServiceNow delivers its software through its own private cloud and public cloud providers. Its infrastructure uses servers, storage, databases and networking. The company names AWS, Google and Microsoft among technology partners with which it has expanded relationships. It also relies on implementation partners and systems integrators to help customers deploy its products.

The principal operating cash outflows are workforce salaries, bonuses, commissions and benefits; licenses and services, including cloud services; and data center and facility arrangements. ServiceNow employed 29,187 people as of December 31, 2025. It invests in research and development to build and improve its platform, applications and AI capabilities.

Capital requirements include expanding data center capacity and paying non-contract workforce costs. The company also acquires technology and businesses to expand its offerings. Increased AI use and greater use of public cloud partners put short-term pressure on gross margin. For select large AI deals, it is adding deployment teams to help customers put products into use.

Competitive position

ServiceNow competes in enterprise application software with Microsoft, Oracle, SAP, Salesforce and Workday. Its products address IT operations, customer service, employee processes and other functions, so the competitive overlap varies by product. It also faces AI-focused entrants, specialized point solutions, in-house software, consulting firms, systems integrators and software resellers.

The market has low barriers to entry, changing customer needs and frequent product introductions. ServiceNow says it must keep pace with technological developments, integrate with customers’ existing systems and deliver implementation services to compete effectively. Some technology providers are both partners and competitors: ServiceNow names Microsoft among its enterprise software competitors and also works with it on cloud and AI interoperability.

Our reading: Workflow integration is a meaningful potential advantage because the platform connects existing systems and coordinates processes across departments, although competing platforms and in-house solutions offer alternatives.

Our reading: Customer relationships and deployment experience provide another potential advantage; organizations can use multiple products on one platform, but ServiceNow must continue to demonstrate value and deliver implementations successfully. The company recorded a 98% renewal rate in FY2025, measured by annual contract value rather than customer count.

Our reading: The partner ecosystem can extend ServiceNow’s reach and implementation capacity, but it is not exclusive protection from competition because the company also competes with consulting firms and systems integrators.

Growth opportunities

ServiceNow is investing in more applications, AI, automation and its platform’s data capabilities. It expects to expand its industry-specific offerings and continues to invest in direct and indirect sales, customer support and partnerships. It also uses acquisitions and investments to add technology, expertise and sales capabilities.

The company is seeking to expand within existing customers as well as reach new ones. Its platform connects workflows across IT, customer service, HR and other departments, while its low-code tools let customers build their own applications. ServiceNow typically releases two major platform upgrades each year.

AI is another area of investment. Q3 2026 AI net new annual contract value grew 65% year over year and year-to-date consumption of agentic AI in production rose more than 13x year over year. It raised its AI annual contract value target to $1.7 billion by the end of 2026. The company has expanded its OpenAI partnership, starting with a ServiceNow plug-in for ChatGPT, and its partnership between Google Gemini Enterprise and Action Fabric.

For 2026, ServiceNow expects a free cash flow margin of 36%. The company also says it is adding deployment expertise for select large deals to help customers put AI products into use.

Structural risks

• Competition and technological change: ServiceNow must identify and develop the right technologies, respond to changing customer needs and adapt its pricing. Failure to compete successfully could reduce sales and margins or prevent products from gaining acceptance.

• Security and data rules: Actual or perceived cybersecurity events affecting ServiceNow or its service providers could lead to lost customers or liabilities. Laws and customer expectations governing data use, storage and movement could restrict platform operations or increase compliance requirements.

• Product delivery: Delayed releases or actual or perceived product defects could slow adoption, reduce customer satisfaction and hurt future sales. Customers also depend on ServiceNow and its partners for implementation and architecture services.

• Partners and acquisitions: An increasing portion of revenue relies on partners; partner underperformance could harm the business. Acquisitions can present integration difficulties, unknown liabilities and the risk that expected benefits do not materialize.

• Contract and demand visibility: Because subscription revenue is generally recognized over the contract term, a decline in new subscriptions or renewals may not immediately appear in operating results. Public-sector customers may also have rights to terminate contracts for convenience or default.

Bottom line

Our reading

Our reading: ServiceNow is primarily a recurring-revenue software business built around coordinating work across enterprise systems, with AI governance and consumption-based services adding to that model. Its customer relationships and integrations support expansion across departments, while competition, implementation demands and security risks make continued product delivery and customer adoption important.