2 Reasons To Buy ServiceNow Stock After Its $2.9 Billion Moveworks Deal

6. Multiplex Summary of ServiceNow’s Fiscal Performance and Anticipation for 2025

ServiceNow’s stock experienced amarked decline in its market performance during the week ending March 12, 2025, as it saw a drop in total stock value of 8.3% in the interval. However, the company’s stock rebounded by approximately 7.3% since its March 10 announcement of a $2.85 billion cash and stock acquisition of MoveworksDecision materials (500-employee company based in Mountain View, California) that used artificial intelligence to resolve employee disputes through chat development.

The company’s stock has shown resilience, rising about 7.3% since the acquisition. Several factors contributed to this positive trajectory, including:

1. Unexpected Revenue Growth: The rapid expansion of Moveworks’ AI services generated significant revenue, further boosting ServiceNow’s profits.
2. Stronger Dollar: A weaker U.S. dollar had the potential to reduce foreign exchange risks impacting Company revenue.

ServiceNow aims to meet its 2025 first quarter revenue forecast, which had initially been revised upward based on expected growth in Moveworks’ performance.

Moveworks is highlighted in the company’s 2024 annual report, which revealed that its $100 million annual recurring revenue (ARR) is among the highest in the industry. Despite losing 39% in ARR compared to the previous year, a significant portion of ServiceNow’s revenue is coming from Moveworks, though thisnier a growing revenue chunk.

Moveworks’ "elegant agentic AI front-end and search capability" has made it an integral part of ServiceNow’s ProPlus service, which is designed to use generative AI to streamline repetitive tasks and improve customer service. The acquisition is expected to result in "significant productivity improvements for ServiceNow, enabling it to respond better to customer needs." For example, a 20% increase in customer service capacity, enabling the company to handle three million additional investigations and reduce the number of delinquent customers by 80%.

However, the acquisition presents challenges, including authentication and compliance concerns with security, governance, and compliance standards. Additionally, ServiceNow must ensure that Moveworks’ AI enhances workflows rather than disrupt or confuse them.

The potential future success of the acquisition hinges on ServiceNow’s ability to attract more customers adopting Moveworks. Additionally, the economic uncertainty from recent U.S. trade tensions and government job cuts could strengthen the dollar, albeit through weaker spending.

In the fourth quarter of 2024, ServiceNow reported revenue of $13.5 billion and earnings per share of $0.35. The company is anticipating a 6% year-over-year increase in earnings for the fiscal year ending December 31, 2025.

Overall, therous but historically significant timing of ServiceNow’s stock performance reflects its resilience and growth potential, both from its recent acquisition and its broader capabilities in leveraging AI-driven services. Analysts remain divided about the deal’s outcome, with some predicting a stronger price-to-earnings ratio and others expressing a skepticism due to potential implementation challenges.