NOW: Moderately Bullish Setup Amidst Downtrend - AI Options Outlook

ServiceNow offers the 'Now Platform', a cloud-based solution for digitizing workflows across enterprises. Their applications are categorized into Technology, Customer and Industry, Employee, and Creator workflows. Technology Workflows empower IT departments, while Customer and Industry Workflows focus on customer experience. Employee Workflows simplify employee access to services, and Creator Workflows enable custom workflow creation. A key differentiator is the integration of AI, particularly Generative AI, through 'Now Assist', enhancing user productivity and efficiency. ServiceNow targets a broad range of organizations, including over 85% of the Fortune 500, providing solutions tailored to specific industries like financial services, healthcare, manufacturing, and the public sector. The company's strategy revolves around providing a unified platform with a single data model to automate processes and improve experiences for both employees and customers.

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NOW's technical outlook appears mildly bearish. The stock has experienced a notable downtrend over the past 90 days, falling from approximately $1028 at the end of June to $886 as of November 4th. The price is currently below its 50-day SMA (921.75) and well below its 200-day SMA (938.18), confirming the downtrend. Momentum indicators suggest continued weakness; the RSI is at 47.40, showing neither overbought nor oversold conditions, but trending downwards. The MACD is at 1.26, and MACDh is negative, indicating decreasing bullish momentum. The Stochastic Oscillator shows STOCHk at 45.61, with STOCHd at 50.39, reflecting neutral momentum. The ADX is at 13.51, suggesting a weak trend. Recent price action reveals a significant drop, with the price failing to sustain levels above the 21-day EMA. The OBV is also consistently negative, indicating selling pressure. Given these factors, the short-term outlook suggests a likely continuation of the downtrend or, at best, consolidation at lower levels.

ServiceNow's MD&A presents a generally positive, albeit nuanced, picture. Total revenues increased by 22% to $3,407 million for the three months ended September 30, 2025, compared to $2,797 million for the same period in 2024, driven primarily by a $584 million increase in 'subscription revenues'. The gross profit percentage decreased slightly from 79% to 77%, with subscription gross profit margin declining from 82% to 80%. This contraction is attributed to increased headcount and costs to support subscription growth, including costs to support customers in regulated markets. From a cashflow perspective, 'net cash provided by operating activities' increased to $3,206 million for the nine months ended September 30, 2025, compared to $2,632 million for the same period in 2024. The company anticipates that cash flows generated from operations, along with existing cash, cash equivalents, and marketable securities totaling $9.7 billion, will be sufficient to meet liquidity needs for at least the next 12 months. The company expects sales and marketing expenses for the year ending December 31, 2025 to increase in absolute dollars but to decrease as a percentage of revenue compared to the year ended December 31, 2024, as they continue to see leverage from increased sales productivity and marketing efficiencies. Management expects subscription revenues for the year ending December 31, 2025 to increase in absolute dollars and remain relatively flat as a percentage of revenue.

ServiceNow's Q2 2025 earnings call projects a strongly bullish outlook, driven by exceptional performance and robust AI adoption. CEO Bill McDermott emphasized that Q2 results were 'outstanding,' highlighting subscription revenue growth of 21.5% in constant currency, exceeding guidance by 200 basis points. The company is experiencing significant traction with its Now Assist AI products, with key AI Pro Plus deal count up over 50% quarter-over-quarter and the largest Now Assist deal exceeding $20 million. CFO Gina Mastantuono raised the full-year subscription revenue guidance by $125 million at the midpoint, now projecting $12.775 billion to $12.795 billion. The company's AI Control Tower is already surpassing initial full-year net new ACV expectations. Management also noted strong performance in CRM, driven by the Logik.ai acquisition, and highlighted the company's focus on 'winning the right new logos,' with average new logo ACV growing over 100% year-over-year. The tone was very confident, with management repeatedly emphasizing ServiceNow's leadership in enterprise AI and its ability to deliver tangible value to customers.

NOW Inc.'s financial performance reveals a positive trajectory over the last several quarters. Revenue has steadily increased from $2,603,000,000 in Q1 2024 to $3,407,000,000 in Q3 2025, indicating strong top-line growth. The gross profit ratio, while fluctuating, has remained relatively stable, ranging from 0.7728 to 0.8002, suggesting consistent profitability in core operations. Operating cash flow has been robust, with the latest quarter reporting $813,000,000. The total debt has increased modestly from $2,273,000,000 in Q1 2024 to $911,000,000 in Q3 2025; however, the company maintains a net debt of -$1,814,000,000, indicating a strong cash position relative to its debt. Overall, NOW Inc. demonstrates healthy growth, solid profitability, and strong cash generation capabilities, positioning it favorably for the next 6-12 months.

The company demonstrates a moderately bullish profile, characterized by solid revenue growth and improving profitability. Revenue has consistently increased, indicating strong market demand. The gross margin exhibits stability, suggesting effective cost management. Return on Equity (ROE) has improved, showcasing efficient capital allocation. While the Price-to-Earnings (P/E) ratio is elevated, it is potentially justified by the company's growth prospects. The Debt-to-Equity ratio has decreased, reflecting a healthier balance sheet and reduced financial risk. The current ratio is at a healthy level, implying sufficient liquidity to meet short-term obligations. Overall, the company presents a favorable combination of growth, profitability, and balance sheet strength, supporting a positive outlook for the next 12 months, although the high P/E ratio warrants close monitoring.