Service Now (NYSE: NOW) is a tech powerhouse serving more than 8,800 clients with workflow automation software. Its platform is growing fast, but its stock is down 30% this year.
Shares can sometimes see significant share price movement in response to earnings results as investors and markets digest the company’s latest updates. ServiceNow reports on July 22, and there could be a somewhat strong market reaction.
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Why the market is not happy with ServiceNow
ServiceNow is one of the biggest software-as-a-service (SaaS) companies that has been hit by the latest movement in the artificial intelligence (AI) revolution. With the growth of agent AI, the market is worried that many SaaS companies will become obsolete if AI agents can provide competing software services, rendering them ineffective.
To date, ServiceNow continues to report healthy results despite the rollout of agent AI. In addition, managers have taken a proactive approach to AI and have already released their own response in their Control Tower product. This platform brings together all of the company’s AI tools in one place, doing what ServiceNow does best: connecting all of the company’s workflow processes.
While the concerns are real, there is room to see how ServiceNow can come out on top. New AI features can transform the way a company operates, and ServiceNow is taking advantage of that by offering the first AI platform that delivers security and insights — AI for your AI.
There are several advantages for companies using AI. It can speed up processes and eliminate unnecessary operations. By integrating the ServiceNow platform, clients can pass on some of their cost savings, creating a win-win for the company and ServiceNow. That’s how ServiceNow emerges in the AI era.
Can ServiceNow turn the market in its favor?
On July 22, investors will hear about the company’s financials and outlook, and will also get updates on how management is thinking about the turnaround. In the first quarter, the company has been remarkably consistent in growth and profitability. Consider its revenue and operating margin growth over the past five quarters:
