The software sector, as a whole, appears to be having a frightful time of it. Quite tiresome, really. And ServiceNow, that perfectly serviceable little company, has found itself swept along in the general gloom. A bit of a tumble on the market, despite results that, shall we say, weren’t entirely dreadful. One does wish investors would apply a modicum of common sense.
A Spot of AI, If You Please
ServiceNow, it seems, is attempting to be frightfully modern with all this ‘artificial intelligence’. Their ‘Now Assist’ suite is apparently doing rather well – a rather vulgar $600 million in annual contract value. They envision it becoming even more substantial, exceeding a billion by 2026. They’re also acquiring cybersecurity firms – Armis and Veza, if you’re keeping score. All rather technical, of course, but the idea is to orchestrate this ‘agentic AI’. One hopes it doesn’t become too bossy.
The fourth quarter results? Perfectly adequate. Revenue up 20.5% to $3.57 billion. Earnings per share jumped 26% to $0.92. The analysts, predictably, were expecting $0.88 on revenue of $3.53 billion. Subscription revenue climbed a respectable 21% to $3.47 billion, with professional services adding a modest 13% to reach $102 million. One suspects the accountants are quite pleased.
Remaining performance obligations – a rather clumsy phrase, don’t you think? – increased by 26.5% to $28.2 billion, with current RPO rising 25% to $12.85 billion. It’s all about future revenue, you see. A rather dull topic, but undeniably important.
Looking ahead, they anticipate Q1 subscription revenue to grow 21.5% to between $3.650 and $3.655 billion. Current RPO should increase by 22.5%. For the full year, they’re projecting between $15.53 and $15.57 billion, representing growth of 20.5% to 21%. Not a bad showing, all things considered.
A Buying Opportunity, Perhaps?
ServiceNow demonstrates no signs of being negatively impacted by this AI craze. In fact, their CEO, a sensible fellow, stated that AI won’t ‘replace enterprise orchestration’ – a reassuring thought. Their unified data system and structured workflows, apparently, make them ideally suited for this new technology. The business is performing well, though the stock isn’t. A temporary inconvenience, one hopes.
Following the recent dip, the stock trades at a forward price-to-sales multiple of 7.5 (based on 2026 estimates) and a forward price-to-earnings ratio of just above 28. Given its growth and prospects, that’s a rather attractive valuation. One might even consider acquiring a few shares on this dip. A small flutter, naturally. One wouldn’t want to be greedy.
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2026-02-03 12:22