ServiceNow: Navigating High Valuations and Expectations in the Cloud-Based Workflow Market

ServiceNow is a leading provider of cloud-based solutions for digital workflows, offering services such as AI, IT service management, security operations, and customer service management. The company has high valuations and expectations due to its global presence and innovative solutions.

ServiceNow, a leading provider of cloud-based solutions for digital workflows, has secured a significant deal with the U.S. General Services Administration (GSA) under the OneGov initiative. The agreement, announced on September 09, 2025, positions ServiceNow as a key player in the federal government's AI-driven modernization efforts.

Under the OneGov deal, ServiceNow will offer its artificial intelligence-powered workflow tools to federal agencies at discounted prices. This includes up to 70% off the list price for upgrades to its Information Technology Service Management (ITSM) Pro and ITSM Plus bundles over the next three years, and a 40% discount on ITSM Pro standalone products for one year ServiceNow hopes to be ‘connective tissue’ across govtech through GSA deal^[1].

The deal underscores ServiceNow's role in bridging the gap between various technology tools and federal workers. Jonathan Alboum, ServiceNow's federal chief technology officer, emphasizes that the platform serves as a connective tissue across different tools and data sources, enabling seamless integration and operation ServiceNow hopes to be ‘connective tissue’ across govtech through GSA deal^[1].

The OneGov deal is a strategic move for ServiceNow, aligning with the Trump administration's push for increased AI use in federal agencies. Josh Gruenbaum, commissioner of the GSA's Federal Acquisition Service, noted that the agreement is a logical next step in the AI transformation of government, aiming to enhance efficiency and productivity ServiceNow hopes to be ‘connective tissue’ across govtech through GSA deal^[1].

ServiceNow's platform includes generative AI features, such as AI agents, which automate IT processes and streamline tech support, often eliminating the need for human intervention. These features are expected to drive efficiency and improve incident resolution times, real-time recommendations, and service level agreement compliance ServiceNow hopes to be ‘connective tissue’ across govtech through GSA deal^[1].

While ServiceNow's high valuations and expectations have been a subject of investor concern due to shrinking margins and a falling remaining performance obligation (RPO), the OneGov deal presents a significant growth catalyst. The agreement could drive more than 200 million government tasks annually, further expanding ServiceNow's customer base and revenue streams ServiceNow: High Valuations, High Expectations^[2].

ServiceNow's strong execution and consistent 98% renewal rate for subscriptions demonstrate its ability to retain customers and maintain a non-cyclical revenue model. The company's platform is used by over 8400 global customers, including over 85% of the Fortune 500, indicating its widespread adoption and indispensability in streamlining operations and reducing costs ServiceNow: High Valuations, High Expectations^[2].

However, investors remain cautious due to recent earnings concerns, particularly the slowing of RPO growth on a constant currency basis. Despite this, the company's nominal growth remains strong, with a 24.5% YoY growth in Q2. The OneGov deal and potential future deals could significantly boost ServiceNow's revenue, provided it can meet investor expectations for solid growth numbers ServiceNow: High Valuations, High Expectations^[2].

In conclusion, ServiceNow's OneGov deal represents a strategic move that aligns with the federal government's AI-driven modernization efforts. The deal presents a significant growth opportunity for ServiceNow, while also addressing investor concerns about its recent financial performance.

References:
ServiceNow hopes to be ‘connective tissue’ across govtech through GSA deal^[1] https://fedscoop.com/servicenow-gsa-general-services-administration-govtech-artificial-intelligence-agentic-ai/
ServiceNow: High Valuations, High Expectations^[2] https://seekingalpha.com/article/4821023-servicenow-high-valuations-high-expectations