ServiceNow NOW has strengthened its portfolio with the announcement to acquire Logik.ai, a leading provider of AI-powered Configure, Price, Quote (CPQ) solutions last Thursday. 

The move enhances NOW’s growing Customer Relationship Management capabilities, particularly in Sales and Order Management, by integrating Logik.ai’s advanced AI-driven sales tools to streamline complex sales processes. Through the combination of Logik.ai’s CPQ solution with NOW’s CRM Platform, the company is expected to accelerate deal closures, boost productivity, and improve efficiency, particularly in industries such as manufacturing, high-tech and medical devices.

Although the buyout is positive for the NOW’s long-term prospects, shares continued to fall amid a challenging macroeconomic condition. Shares have plunged 31.9% year to date compared with the Zacks Computer & Technology sector’s decline of 21.1%.

Acquisitions Drive ServiceNow Stock Prospects

ServiceNow’s latest move is in sync with the company’s goal to strengthen its CRM capabilities and boost sales efficiency through AI-driven solutions.

NOW has been actively pursuing acquisitions this year. The acquisition of Cuein and Moveworks is helping the company to expand its GEN AI and Agentic AI footprint. It also announced the acquisition of Quality 360 solution from Adavania in February to enhance AI-driven quality management in manufacturing, thereby minimizing costs and reputational risks.

In the fourth quarter of 2024, NOW acquired Mission Secure to enhance operational technology services, providing industrial market customers with greater visibility, context and improved decision-making to reduce downtime.

Strong Partner Base Aids NOW’s Business

ServiceNow’s advanced AI-powered portfolio is also helping the company rapidly expand its clientele. NOW ended the fourth quarter of 2024 with 2,109 total customers with more than $1 million in annual contract value (ACV), which represents 14% year-over-year growth in customers.

A strong partner base, which includes the likes of NVIDIA NVDA, Alphabet’s GOOGL cloud business, Google Cloud and Oracle ORCL, Amazon, Five9 and Microsoft, has been a key catalyst.

In March, NOW expanded its partnership with NVIDIA to enhance agentic AI by integrating NVIDIA Llama Nemotron reasoning models and AI agent evaluation tools into the ServiceNow Platform for optimized business transformation. 

In January, ServiceNow and Alphabet’s Google Cloud expanded their partnership, under which the former will bring its Now Platform and a full suite of workflows to customers on Google Cloud Marketplace. ServiceNow will also make its Customer Relationship Management, IT Service Management and Security Incident Response solutions available on Google Distributed Cloud.

NOW also announced an expanded collaboration with Oracle to enhance its Workflow Data Fabric capabilities, enabling smarter decision-making and greater agility through actionable insights from Oracle data sources.

What Should Investors Do With NOW Stock?

ServiceNow’s robust GenAI portfolio and strong partner base are expected to drive its clientele, boosting subscription revenues. However, unfavorable forex amid a challenging macroeconomic environment is a concern. 

For 2025, NOW expects subscription revenues to be in the range of $12.635-$12.675 billion, which suggests a rise of 18.5% to 19% from 2024 on a GAAP basis and 19.5% to 20% on a non-GAAP basis. 

An unfavorable forex impact of roughly $175 million and back-end loaded federal business are expected to hurt the growth rate. ServiceNow’s strategy to accelerate the adoption of its Agentic AI by foregoing immediate revenues is expected to affect the subscription revenue growth rate in 2025.

The Zacks Consensus Estimate for 2025 earnings is pegged at $3.78 per share, unchanged over the past 30 days. This indicates a 10.85% increase from 2024’s reported figure.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

The consensus mark for 2025 revenues is pegged at $3.08 billion, suggesting growth of 18.37% over 2024’s reported figure.

NOW currently carries a Zacks Rank #4 (Sell), which implies that investors should stay away from the stock for the time being. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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