ServiceNow, Inc. (NOW): A Bull Case Theory 

We came across a bullish thesis on ServiceNow, Inc. on Compounding Your Wealth’s Substack by Sergey. In this article, we will summarize the bulls’ thesis on NOW. ServiceNow, Inc.’s share was trading at $933.37 as of September 24th. NOW’s trailing and forward P/E were 117.41 and 46.30 respectively according to Yahoo Finance.

ServiceNow (NOW) continues to demonstrate strong momentum as it balances high growth with margin pressures tied to AI and data center investments. The company delivered +22.4% YoY revenue growth in Q2, with RPO up +28.5% and cRPO up +24.4%, both outpacing headline growth. Subscription revenue, which accounts for 96.8% of sales, accelerated to +22.5% YoY, highlighting the durability of its business model. While gross margins slipped from 82.6% to 81.0%, operating margin expanded to 29.7% and free cash flow margin to 16.6%, demonstrating efficiency gains and disciplined cost management.

ServiceNow’s valuation at a forward EV/Sales multiple of 13.3 and P/E of 51.1 remains elevated versus peers, yet supported by sustained 20%+ revenue growth and a renewal rate of 98%. The company has built a wide moat through high switching costs, deep integrations across IT, HR, and customer workflows, strong brand equity, and expanding economies of scale. Customer stickiness is reinforced by a growing base of large clients—528 paying more than $5 million ACV and over 30% YoY growth in customers above $20 million ACV.

Notable wins include ExxonMobil, Standard Chartered, Merck, Starbucks, NVIDIA, and multiple U.S. public sector agencies, all leaning on ServiceNow’s AI Control Tower and agentic automation fabric. Recognition as a Leader in Gartner’s 2025 Magic Quadrants across ITSM, low-code, and AI-enabled applications, along with Forrester and IDC leadership designations, further solidifies its position. With strong cash reserves of $6.1B against $2.3B in debt and controlled dilution, ServiceNow enters the next phase of growth well-capitalized, making current challenges manageable and long-term prospects compelling.

Previously we covered a bullish thesis on ServiceNow, Inc. (NOW) by Compounding Your Wealth in April 2024, which highlighted its leadership in workflow automation, deep integration, and strong growth supported by AI-driven innovation. The stock has appreciated ~18.8% since our coverage as the thesis played out. The thesis still stands. Sergey shares a similar view but emphasizes balancing growth with AI and data center margin pressures.

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Disclosure: None.