SaaSpocalypse Stock Watch: Service Now

The recent bloodbath in software-related stocks has been nothing short of astonishing. As someone holding a few positions in this sector, I felt it was time to cut through the noise of the so-called “SaaSpocalypse” and take a closer look at one of my holdings: ServiceNow (NYSE: NOW).

What ServiceNow Does

ServiceNow is a leading cloud-based software company offering a broad suite of workflow automation solutions across IT, customer service, HR, security, and finance. Its mission is to streamline digital experiences, reduce organizational silos, and enable businesses to respond quickly to changing needs. Examples include linking IT incidents to HR processes or connecting customer support with finance workflows.

Key Offerings

• IT Service & Operations Management (ITSM/ITOM): Incident resolution, change management, and infrastructure monitoring.
• Customer Service Management (CSM): Ticket handling, inquiries, and self-service portals.
• HR Service Delivery: Employee onboarding, performance management, and HR workflows.
• Security Operations: Risk assessment, vulnerability management, and incident response.
• Finance & Supply Chain Workflows: Procurement, vendor management, and financial planning.
• App Engine & Integration Hub: Low-code/no-code tools for custom apps and integrations with platforms like Salesforce or SAP.
• AI & Automation Features: Generative AI (Now Assist), predictive analytics, and machine learning for proactive issue resolution.

Recent Results

On January 27, 2026, ServiceNow reported Q4 2025 earnings:

• Subscription revenue: $3.466 billion, up 21% YoY.
• Total revenue: $3.568 billion, up 20.5%.
• AI suite adoption: Net new ACV more than doubled, with 244 deals over $1M ACV (+40% YoY) and 603 customers exceeding $5M ACV.
• FY 2026 subscription revenue outlook: $15.53–$15.57 billion (20–21% growth), ahead of analyst expectations.

Despite these stellar numbers, NOW’s share price has fallen nearly 50% from its peak. I opened a small position, believing the market had overreacted to AI disruption fears. But deeper research suggests those fears may be justified.

The AI Threat

ServiceNow’s core business is workflow automation—the very layer where agentic AI excels. If businesses can deploy AI agents that “vibe-code” workflows at a fraction of the cost, why pay millions for ServiceNow licenses?

The SaaS subscription model compounds the risk:

• Pricing is per-seat, accounting for ~95% of revenue.
• If AI agents replace human users, license demand collapses.
• Productivity gains slow seat expansion.
• ROI shifts from “empower workers” to “replace workers.”

Consider a company with 1,000 ServiceNow users at $100/user/month = $1.2M annually. If AI reduces that to 300 users, revenue drops 70%. That’s a nightmare scenario for a per-seat SaaS model.

Can ServiceNow Pivot?

To its credit, ServiceNow is investing heavily in AI through Now Assist, and its systems remain embedded in mission-critical operations at large enterprises. Rip-and-replace costs are high, which buys some time. But the pace of agentic AI development is relentless, and the company must rethink its monetization model quickly.

With brutal honesty, I may have jumped into the stock too hastily. If ServiceNow fails to pivot, this investment could prove costly. The moat is real, but time is short.