TLDR
- ServiceNow posted Q4 revenue of $3.57 billion, up 20.5% year over year, beating analyst estimates
- Three major firms maintained positive ratings: Bernstein at $219, Cantor Fitzgerald at $200, and Stifel at $180
- AI product Now Assist reached $600 million in annual contract value with a target of $1 billion by year-end 2026
- Company projects Q1 subscription revenue growth of 21.5% and full-year revenue of $15.53-$15.57 billion
- Stock trades at 6 times revenue and 16 times free cash flow despite recent selloff
ServiceNow delivered a solid fourth-quarter performance that exceeded Wall Street expectations. But the market reaction told a different story.
Revenue climbed 20.5% to $3.57 billion while adjusted earnings per share rose 26% to $0.92. Both figures beat consensus estimates. Subscription revenue jumped 21% to $3.47 billion.
The stock dropped in after-hours trading following the January 29 report. This disconnect between performance and price action reflects broader concerns about the SaaS sector.
Analyst Community Stands Firm
Wall Street analysts maintained their bullish stance despite the selloff. Cantor Fitzgerald kept its Overweight rating with a $200 price target on January 29.
Stifel lowered its target from $200 to $180 but held onto its Buy rating. The firm called ServiceNow “an interesting value” at 6 times revenue and 16 times free cash flow. Analyst Brad Reback noted the quarter “played out largely as expected.”
Bernstein jumped in on January 30 with an Outperform rating and $219 price target. The firm labeled ServiceNow a “discount large cap growth” opportunity after the market selloff.
Bernstein highlighted that ServiceNow looks cheap compared to other software companies above $50 billion in market cap. The typical premium for growth stocks has “collapsed further,” making the valuation gap even wider.
AI Products Gain Traction
ServiceNow’s AI suite Now Assist hit $600 million in annual contract value. The company aims to push this past $1 billion by the end of 2026.
The acquisitions of Armis and Veza will combine security and AI capabilities. ServiceNow’s AI Control Tower platform positions the company as an orchestration hub for agentic AI.
Remaining performance obligations grew 26.5% to $28.2 billion. Current RPO increased 25% to $12.85 billion. These metrics signal healthy future revenue potential.
Forward Guidance Remains Upbeat
ServiceNow forecast Q1 subscription revenue growth of 21.5% to a range of $3.650-$3.655 billion. Current RPO is expected to rise 22.5%.
Full-year subscription revenue projections sit between $15.53 billion and $15.57 billion. This represents growth of 20.5% to 21%.
The CEO addressed AI concerns on the earnings call. He stated that AI won’t “replace enterprise orchestration” and called it a major opportunity. The company’s unified data system and structured workflows create an ideal environment for AI agents.
Professional services revenue rose 13% to $102 million in Q4. The stock currently trades at $117.56 with a market cap of $123 billion. Its 52-week range spans from $113.13 to $211.48.
ServiceNow’s Now Assist product line continues expanding while the company builds out its position in the enterprise AI space through strategic acquisitions and platform development.
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