By Adam Clark

Stock in ServiceNow fell after the automation-software company agreed to buy Moveworks, an artificial-intelligence start-up, for $2.85 billion, signaling that the race to build autonomous AI is demanding more investment.

The acquisition of Moveworks, which offers AI assistants for company employees, is ServiceNow's biggest ever. The cash-and-stock deal is expected to close in the second half of 2025.

Moveworks was valued at $2.1 billion in a fund-raising in June 2021. It said in September last year that it had topped $100 million in annual recurring revenue.

ServiceNow provides automation tools to big businesses and has been integrating AI into its own offerings. In particular, it is racing to deploy AI agents -- programs that have the ability to take simple directions and complete multistep tasks -- in competition with software companies such as Microsoft and Salesforce.

"With the acquisition of Moveworks, ServiceNow will take another giant leap forward in agentic AI-powered business transformation," Amit Zavery, chief operating officer of ServiceNow, said in a statement on Monday.

ServiceNow shares were down 5.5% in morning trading, while the Nasdaq Composite had fallen 3.4%. Investors could be concerned about a shift to a more acquisition-heavy strategy under CEO Bill McDermott; he previously headed German software company SAP, where he made a series of major deals.

ServiceNow Chief Financial Officer Gina Mastantuono told Barron's that while the company could have built similar technology to Moveworks on its own, the deal would help the company to make progress faster. It will give ServiceNow 500 employees with expertise in the technology.

"It's technology plus talent. Moveworks has...built a very powerful front-end AI system for employees and it's used by some of the world's largest organizations," Mastantuono said.

ServiceNow has said its own new AI products are the fastest-growing in its history. More than 1,000 companies paying for its generative AI suite, out of a base of more than 8,400 customers worldwide. ServiceNow and Moveworks have around 250 mutual customers.

Write to Adam Clark at adam.clark@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

March 10, 2025 11:34 ET (15:34 GMT)

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