What is the AI rating for NOW?

ServiceNow, Inc. (NOW) has an AI rating of STRONG BUY with 88% confidence, based on fundamental analysis of SEC EDGAR filings.

What are the key strengths of NOW?

Outstanding revenue growth of 20.9% YoY with net income growing 22.7% YoY demonstrates profitable expansion and operational leverage. Exceptional gross margin of 77.5% indicates strong pricing power and software business model durability. Exceptional free cash flow generation of 4.6B with 34.5% FCF margin shows high-quality earnings and capital efficiency

What are the risks of investing in NOW?

Current ratio of 1.00x indicates tight working capital management with minimal liquidity cushion above current liabilities. Operating margin of 13.7% is relatively modest for a pure-play software company, suggesting cost structure challenges or high operating expenses. High insider trading activity with 46 Form 4 filings in 90 days may warrant monitoring for potential insider concerns

NOW Stock Analysis - ServiceNow, Inc. AI Rating & Fundamentals

Name: ServiceNow, Inc. (NOW) Stock
Brand: ServiceNow, Inc.
Rating: 5 (1 reviews)

Investment Thesis

ServiceNow demonstrates exceptional financial fundamentals with 20.9% revenue growth, strong profitability metrics (77.5% gross margin, 13.2% net margin), and robust cash generation (4.6B free cash flow). The company maintains a fortress balance sheet with minimal leverage (0.11x debt/equity), excellent interest coverage (67.6x), and substantial free cash flow conversion at 34.5% of revenue, indicating high-quality earnings and sustainable growth.

NOW Strengths

+ Outstanding revenue growth of 20.9% YoY with net income growing 22.7% YoY demonstrates profitable expansion and operational leverage
+ Exceptional gross margin of 77.5% indicates strong pricing power and software business model durability
+ Exceptional free cash flow generation of 4.6B with 34.5% FCF margin shows high-quality earnings and capital efficiency
+ Fortress balance sheet with minimal debt (0.11x debt/equity ratio) and 67.6x interest coverage provides strategic flexibility
+ Strong liquidity position with 3.7B cash against 13.1B total liabilities and positive operating cash flow of 5.4B

NOW Risks

! Current ratio of 1.00x indicates tight working capital management with minimal liquidity cushion above current liabilities
! Operating margin of 13.7% is relatively modest for a pure-play software company, suggesting cost structure challenges or high operating expenses
! High insider trading activity with 46 Form 4 filings in 90 days may warrant monitoring for potential insider concerns
! Continued execution required to sustain 20%+ revenue growth rates as the company scales from 13.3B revenue base

Key Metrics to Watch

* Subscription/recurring revenue retention and net dollar retention rates to validate growth quality
* Operating margin expansion trajectory and ability to achieve operating leverage from scale
* Free cash flow conversion sustainability as revenue scales
* Customer acquisition cost and lifetime value economics
* Debt levels and capital allocation decisions given strong FCF generation

NOW Financial Metrics

Revenue

$13.3B

Net Income

$1.7B

EPS (Diluted)

$1.67

Free Cash Flow

$4.6B

Total Assets

$26.0B

Cash Position

$3.7B

NOW Profitability Ratios

Gross Margin 77.5%

Operating Margin 13.7%

Net Margin 13.2%

ROE 13.5%

ROA 6.7%

FCF Margin 34.5%

NOW Balance Sheet & Liquidity

Current Ratio

1.00x

Quick Ratio

1.00x

Debt/Equity

0.11x

Debt/Assets

50.2%

Interest Coverage

67.56x

Long-term Debt

$1.5B

Disclaimer: This analysis is generated by Claude AI based on publicly available SEC EDGAR filings. It does not include stock price data and should not be considered financial advice. All fundamental data is sourced from SEC public domain filings. Always conduct your own research and consult with a qualified financial advisor before making investment decisions.

Data Source: SEC EDGAR | Analysis Date: Mar 18, 2026 | Data as of: 2025-12-31 | Powered by Claude AI