ServiceNow's Subscription Revenue Growth to Exceed Over 20%, Analyst Predicts on the Back of AI-Powered Expansion

Needham & Co analyst Mike Cikos initiated coverage of ServiceNow Inc NOW at a Buy rating with a price target of $660.

The analyst sees the company's strong positioning with Chief Information Officers (CIOs) and portfolio suite as a strong driver to maintain subscription revenue growth of over 20% and expects FCF Margin to move higher from 30% today. 

The analyst said the company's extensible platform drives rapid innovation in solving new use cases for customers, evident in the projected 2025 total addressable market of $220 billion (up from $13.6 billion in 2012).

Also, ServiceNow's AI strategy has been on display over a multi-year period, as the company has increased AI-powered functionality in the Now Platform, the analyst writes. Some AI tech has been developed internally, and some via acquisitions.

The analyst estimates revenues and EPS of $8.83 billion and $9.61 in 2023 and $10.7 billion and $11.75 in 2024. 

Also Read: ServiceNow Unveils Generative AI Solution With Real-Time Conversational Experiences For Self-Service

Price Action: NOW shares are trading higher by 1.67% at $564.00 on the last check Wednesday.