ServiceNow's Strategic Security Expansion: How Portfolio Acquisitions Will Shape Market Leadership

ServiceNow has embarked on an aggressive acquisition spree throughout 2025, fundamentally reshaping its enterprise software capabilities. The company’s strategy centers on two critical drivers: expanding artificial intelligence capabilities through workflow automation acquisitions, and fortifying its security and risk management portfolio to address evolving enterprise demands.

Strengthening the Security Armor Through Strategic Acquisitions

The most significant move came with ServiceNow’s $7.75 billion acquisition of Armis, a cornerstone player in cyber exposure management. Armis brings expertise across IT, Operational Technology (OT), medical devices, IoT, and cloud environments—sectors increasingly vulnerable when an incident expands across interconnected systems. With annual recurring revenues exceeding $340 million and year-over-year growth surpassing 50%, Armis represents a powerhouse addition to NOW’s security workflows.

Complementing the Armis deal, ServiceNow acquired Veza to strengthen identity governance capabilities. Veza’s technology enables real-time access visibility, access reviews, and centralized access management—functionalities that legacy security tools consistently fail to deliver at scale. When integrated with ServiceNow’s AI Control Tower, Veza will govern what artificial intelligence agents can access and execute, adding critical identity context to existing risk management, incident response, and vulnerability frameworks.

These security acquisitions directly contributed to ServiceNow’s Security and Risk business crossing the $1 billion annual contract value threshold in Q3 2025, marking it as the company’s fifth business unit to achieve this milestone.

Building AI-Powered Enterprise Workflows

Beyond security, ServiceNow’s acquisition strategy targeted workflow intelligence and data capabilities. The Moveworks acquisition merged NOW’s agentic AI capabilities with Moveworks’ conversational AI assistant, enterprise search functionality, and reasoning engine. Earlier additions included Logik.io (Configure, Price, Quote automation) and data.world (enterprise data cataloging), creating an integrated ecosystem where AI agents operate within governed, intelligent workflows.

Financial Trajectory and Revenue Outlook

ServiceNow raised its 2025 subscription revenue guidance to $12.835-$12.845 billion, representing 20% constant-currency growth—solid performance, though moderating from 2024’s 23% subscription revenue growth rate. The company attributes Q4 guidance tightening partly to federal budget constraints affecting government segment sales. These numbers reflect the broader enterprise software headwinds impacting deployment timelines.

Competitive Landscape Intensifies

ServiceNow operates in an increasingly crowded marketplace. Atlassian continues capturing enterprise collaboration opportunities, boasting over 500 customers spending more than $1 million annually. Salesforce, conversely, pivots toward artificial intelligence dominance: its Agentforce and Data 360 products generated $1.4 billion in annual recurring revenues (up 114% year-over-year) in Q3 fiscal 2026, with 9,500+ paid Agentforce deals and 3.2 trillion tokens processed. Salesforce projects fiscal 2026 revenues between $41.45-$41.55 billion, indicating 9-10% annual growth.

Valuation Concerns Cloud the Picture

NOW stock has declined 27.4% over the past year, underperforming the broader Computer and Technology sector’s 26.2% return. More concerning, ServiceNow trades at a forward 12-month price/sales ratio of 12.01X versus the sector average of 7.31X—a significant valuation premium that demands accelerated growth to justify. The company carries a Zacks Value Score of F, signaling overvaluation concerns.

Consensus estimates peg Q4 2025 earnings at 87 cents per share (19.2% year-over-year growth), unchanged over recent weeks. ServiceNow currently holds a Zacks Rank of #3 (Hold), reflecting mixed sentiment among analysts weighing aggressive acquisition strategy against valuation headwinds and moderating growth rates.

The critical question facing investors: whether ServiceNow’s portfolio expansion—particularly the $7.75 billion Armis bet—generates sufficient synergies and cross-selling opportunities to reignite subscription revenue growth and justify elevated market multiples.