The rise of artificial intelligence (AI) is transforming enterprise software into a crucial element of contemporary business success, enhancing automation, analytics, and overall efficiency. ServiceNow, based in California, has notably capitalized on this trend, positioning itself as a leader in redefining digital operations through its innovative cloud workflow solutions.
Recently, ServiceNow reported impressive third-quarter earnings that exceeded Wall Street predictions, underscoring its growing prominence in enterprise automation. The company’s robust performance was coupled with the announcement of its first-ever 5-for-1 stock split, pending shareholder approval in December. This strategic move aims to make the high-value stock more accessible to a wider range of investors, often enhancing liquidity and signaling management’s confidence in future growth.
Despite the company’s strong growth trajectory and renewed enthusiasm from analysts, the stock has faced challenges this year, leading some to speculate whether current conditions present a unique buying opportunity for investors.
Founded in 2004, ServiceNow has become a transformative force for businesses globally. Its Now Platform offers end-to-end intelligent workflow automation, leveraging AI and machine learning to enhance IT services, operations, and risk management across various sectors including finance, healthcare, and technology. With a market capitalization of approximately $182.96 billion, ServiceNow remains a significant player in the global enterprise digital transformation landscape.
The integration of AI into ServiceNow’s offerings allows it to serve as a “control tower” for modern enterprises, harmonizing with leading cloud providers and enterprise data sources. Its unique pricing model combines subscription and consumption-based elements, enhancing revenue while providing flexibility. Internally, ServiceNow utilizes AI to streamline its own operations, reflecting the efficiencies it promotes to its clients.
Over the past decade, shares of ServiceNow have soared over 920%, with a nearly 115% increase in the last three years, highlighting the company’s dominance in enterprise software. However, 2025 has been challenging, with the stock down 19% year-to-date amid broader pressures in the software sector.
ServiceNow’s third-quarter results were a testament to its significant role in enterprise AI transformation. On October 29, it reported revenue growth of 22% year-over-year, totaling $3.4 billion, while earnings per share (EPS) rose by 29.6% to $4.82, surpassing expectations. Subscription revenue also enjoyed a 21.5% annual increase, reinforcing its strong customer loyalty and recurring revenue model.
Key growth areas for ServiceNow were evident in sectors such as U.S. Federal, with major enterprises increasing their investment in digital transformation. Notably, the company recorded 103 deals exceeding $1 million in new annual contract value.
Looking ahead, management expects Q4 subscription revenue to fall between $3.42 billion and $3.43 billion, indicative of a 19.5% uptick. Despite some anticipated slight headwinds from on-premises renewals, the forecast remains optimistic, with a projected full-year subscription revenue of between $12.835 billion and $12.845 billion—a growth of 20.5%.
Analysts remain optimistic about the long-term outlook for ServiceNow stock, with a consensus “Strong Buy” rating. Among the 41 analysts covering the stock, 34 recommend a “Strong Buy.” The average target price sits at $1,159.94, suggesting a 35% upside, while some analysts predict even higher potential gains.
The upcoming stock split, while primarily cosmetic, symbolizes ServiceNow’s substantial achievements in the AI-driven enterprise software domain. It may facilitate greater interest from potential investors and enhance market liquidity, reinforcing the company’s foundation of strong growth and innovation. ServiceNow’s commitment to relentless improvement in AI capabilities and digital solutions continues to be the cornerstone of its success, as it confidently navigates the evolving landscape of enterprise technology.