ServiceNow Expands AI Portfolio with Logik.ai Acquisition

ServiceNow (NOW) has announced its plan to acquire Logik.ai, a notable provider of AI-driven Configure, Price, Quote (CPQ) solutions. The announcement was made last Thursday, further enhancing NOW’s growth in Customer Relationship Management (CRM), particularly in the realms of Sales and Order Management.

By integrating Logik.ai’s sophisticated sales tools, ServiceNow aims to streamline complex sales processes. The merger of Logik.ai’s CPQ solution with NOW’s existing CRM platform is expected to accelerate deal closures, improve overall productivity, and enhance efficiency across sectors such as manufacturing, high-tech, and medical devices.

While this acquisition is a positive long-term development for ServiceNow, its stock has faced headwinds, falling by 31.9% year to date. This is in contrast to the broader decline in the Zacks Computer & Technology sector, which is down 21.1%.

Acquisitions Boost ServiceNow’s Stock Potential

The acquisition of Logik.ai aligns with ServiceNow’s strategy to bolster its CRM capabilities through AI solutions that enhance sales efficiency.

ServiceNow, Inc. Stock Price and Consensus

ServiceNow, Inc. price-consensus-chart | ServiceNow, Inc. Quote

This year, ServiceNow has actively pursued various acquisitions. The company acquired Cuein and Moveworks to expand its GEN AI and Agentic AI capabilities. Additionally, in February, it announced the purchase of a Quality 360 solution from Adavania, aimed at enhancing AI-driven quality management in the manufacturing sector, which could help reduce costs and mitigate reputational risks.

In the fourth quarter of 2024, NOW also acquired Mission Secure to improve operational technology services that provide industrial customers with better visibility, context, and decision-making tools aimed at minimizing downtime.

Strategic Partnerships Strengthen ServiceNow’s Position

ServiceNow’s AI-enhanced portfolio is aiding in its rapid clientele expansion. By the end of fourth quarter 2024, the company reported 2,109 customers with over $1 million in annual contract value (ACV), marking a 14% year-over-year increase.

A robust partner network, including major players like NVIDIA (NVDA), Alphabet’s GOOGL cloud division, Google Cloud, Oracle (ORCL), Amazon, Five9, and Microsoft, has been instrumental to its growth strategy.

In March, ServiceNow expanded its collaboration with NVIDIA to enhance agentic AI by integrating advanced reasoning models and AI agent evaluation tools into its platform for improved business transformation.

Earlier this year, ServiceNow and Google’s Google Cloud expanded their partnership, allowing the deployment of the Now Platform along with a comprehensive suite of workflows on the Google Cloud Marketplace. The company also plans to make its CRM, IT Service Management, and Security Incident Response solutions available on Google Distributed Cloud.

Furthermore, ServiceNow announced an expanded collaboration with Oracle to improve its Workflow Data Fabric capabilities, enabling smarter decision-making through actionable insights derived from Oracle data sources.

Investment Outlook for ServiceNow Stock

ServiceNow’s strong GenAI portfolio and extensive partnerships are expected to drive revenue growth through increased subscriptions. However, an unfavorable foreign exchange impact within a challenging macroeconomic landscape remains a concern.

For 2025, ServiceNow anticipates subscription revenues to range between $12.635 billion and $12.675 billion. This projection represents an increase of 18.5% to 19% from 2024 on a GAAP basis, and 19.5% to 20% on a non-GAAP basis.

However, an adverse forex impact of approximately $175 million combined with a back-end loaded federal business could dilute the growth rate. Additionally, ServiceNow’s strategy to accelerate the adoption of its Agentic AI may delay immediate revenue, impacting the subscription revenue growth rate in 2025.

The Zacks Consensus Estimate for 2025 earnings remains at $3.78 per share, which has not changed over the past month, indicating a 10.85% increase from the previous year.

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

The consensus estimate for 2025 revenues is projected at $3.08 billion, which represents an 18.37% increase over the previous year’s results.

Currently, NOW holds a Zacks Rank #4 (Sell), suggesting that investors may want to refrain from purchasing the stock at this moment. For further insights, 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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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.