Servicenow Moveworks Antitrust – What Investors Must Know

Executive summary

• ServiceNow announced the acquisition of Moveworks for $2.85 billion; regulators have opened an in-depth antitrust review described as a “second-request” style probe that could delay or condition the deal.
• Q2 2025 results: ServiceNow reported total revenue $3.215B, subscription revenue $3.113B (22.5% YoY), non-GAAP EPS $4.09 – the core software business remains strong.
• Key risks: regulatory delay or divestiture, integration execution, and potential customer pushback on pricing; upside: cross-sell of Moveworks AI into ServiceNow’s enterprise workflow platform.
• One-sentence verdict: servicenow moveworks antitrust review raises near-term execution risk for NOW but does not materially change ServiceNow’s larger AI-driven growth thesis if regulators allow a conditioned closing or the companies demonstrate procompetitive benefits.

Summary fundamentals

• Latest quarter total revenue: $3,215 million (Q2 2025).
• Latest quarter YoY revenue %: +22.5% year-over-year.
• Latest quarter EPS (non-GAAP): $4.09 per share.
• YoY EPS %: non-GAAP EPS increased materially versus prior year (company reported EPS growth; see earning release).
• Gross margin (trailing / reported): total gross margin ~77.5% in Q2 2025; subscription gross profit margin ~80% (subscription-focused mix).
• Debt-to-equity: low leverage; total debt/equity around 0.14–0.22 depending on measure and quarter.
• Market cap: approximately $189 billion (rounded, real-time value varies).

Detailed fundamental analysis

Revenue trends

ServiceNow’s subscription revenue growth remains the core story. The company reported subscription revenue of $3.113B in Q2 2025, a 22.5% increase year-over-year, reflecting large-enterprise adoption of AI-enabled workflow tools and expansion outside traditional ITSM use cases. Customer expansion metrics showed continued growth in high-ACV accounts.

Moveworks, a private AI platform focused on automated employee support and conversational AI, was pitched as a complementary asset to accelerate ServiceNow’s Now Platform AI capabilities and drive incremental deal sizes. Public details on Moveworks revenue are limited because it is private; reporting suggests robust ARR growth but no standardized public GAAP figures. Investors should treat Moveworks revenue and margins as non-public and therefore model conservatively for any contribution until post-close disclosures.

Margin drivers

ServiceNow’s subscription gross margin is a material competitive advantage (non-GAAP subscription gross margin roughly 80% in recent quarters). Margins reflect software economics, efficient cloud operations, and high switching costs for enterprise customers. AI investments raise near-term cost base (higher cloud/compute and R&D spend) but can expand long-term operating leverage if priced as value capture (e.g., platform premium for AI agents). Watch for the company’s guidance and disclosures on non-GAAP operating margin and incremental costs tied to Moveworks integration.

Balance-sheet strength

ServiceNow reported cash and short-term investments in the multi-billion dollar range and modest total debt relative to equity, leaving flexibility to fund acquisitions and repurchases. The announced $2.85B purchase of Moveworks was structured as an all-cash transaction, increasing near-term cash outflow and prompting scrutiny on funding and integration payback. Model scenarios should reflect the cash consideration, potential bridge financing or drawing on cash balances, and the company’s historical free cash-flow generation.

Valuation multiples

ServiceNow trades at premium SaaS multiples reflecting persistent growth and high gross margins. Forward multiples compress or expand with guidance and macro conditions. Key valuation measures for investors: forward P/E, EV/Revenue, and enterprise value versus subscription revenue (SaaS rule of thumb). Given ServiceNow’s scale (~$189B market cap) and above-industry margins, assume a premium multiple versus smaller enterprise software peers until durable evidence of margin erosion.

Momentum & technical snapshot

• RSI(14): 47.6 (neutral range).
• MACD status: MACD reading negative relative to signal, indicating limited short-term upside momentum.
• 50-day SMA: ~931.7; 200-day SMA: ~920.6 – current price is oscillating near these SMAs, indicating consolidation after the earnings move.
• 1-month return vs Nasdaq Composite: ServiceNow 1-month performance ~+1.5% versus Nasdaq Composite ~+5.0% over the same period (relative underperformance).
• Average daily dollar volume: average volume ~1.64M shares; with price near $910, average daily dollar volume approximates $1.5B (avg vol × price) – indicates high liquidity for institutional trading.

Peer comparison

Selected public peers: Salesforce (CRM) and Microsoft (MSFT). These peers provide context on growth, margin, capital structure, and valuation in enterprise software/cloud.

• Salesforce (CRM): recent quarterly revenue ~$10.2B (Q2 fiscal 2026), YoY growth ~10%, non-GAAP operating margin ~34.3%; debt/equity and forward P/E vary by quarter. Salesforce competes on CRM and workflow automation and is a large potential partner/adversary in AI for customer workflows.
• Microsoft (MSFT): Azure & cloud revenue scale (~$75B annualized for Azure in FY2025) with cloud growth in the 30–40% range; deep pockets and vertical integration of AI services provide both competition and ecosystem tailwinds for ServiceNow’s enterprise customers. Microsoft’s scale compresses cloud unit economics for competitors but also expands the addressable market for enterprise AI services.

Compare key axes: ServiceNow offers higher subscription gross margins (≈80%) versus broad cloud platforms that have lower gross margins but much larger scale. Salesforce’s operating margins are healthy but SaaS multiples vary; Microsoft trades as a diversified cloud/Azure leader with lower pure-SaaS margins but much higher cash flow and balance-sheet capacity. Use peers to stress-test valuation assumptions and potential regulatory framing (large cloud providers attract separate regulatory scrutiny).

Latest earnings highlights & management guidance

• “Subscription revenues of $3.113 billion, representing 22.5% year-over-year growth.”
• “Total revenues of $3.215 billion in Q2 2025, representing 22.5% year-over-year growth.”
• “Non-GAAP subscription gross margin guidance for FY2025 ~83.5%.”
• Management commentary emphasized AI as a revenue accelerator and reiterated full-year subscription revenue targets raised after the quarter.

Strategic moves, catalysts & risks (from filings and news)

Strategic moves / catalysts

• Acquisition announcement: ServiceNow agreed to acquire Moveworks for $2.85B to integrate conversational AI and automated employee support into Now Platform. The deal is intended to accelerate AI agent adoption across HR, IT, and customer service workflows.
• Product positioning: ServiceNow is packaging AI features (Now Assist and other GenAI capabilities) for cross-sell into existing enterprise accounts; Moveworks is positioned to boost Now Platform’s agent capabilities and speed time-to-value in user support workflows.

Regulatory & integration risks

• Antitrust review: U.S. antitrust authorities opened an in-depth review described as a “second-request” style inquiry into the acquisition, citing concerns about potential vertical integration and foreclosure effects in enterprise support AI. The Department of Justice and/or FTC commonly issue second requests when they require more information to assess competitive impacts; this raises a tangible risk of delay, divestiture requirements, or even enforcement action.
• Timing and conditioning: A prolonged review could push the close beyond initial expectations, increasing integration uncertainty and short-term investor sentiment risk. Remedies could include behavioral commitments or divestitures that would dilute strategic value.
• Customer concentration and pushback: Large enterprise customers evaluate supplier consolidation carefully. They may demand contractual protections or seek alternative vendors if they view the combined entity as less neutral. This could affect near-term renewal dynamics for ServiceNow’s customers that also purchase third-party support tooling.

Valuation & scenario analysis

Valuation scenarios assume differing outcomes to the servicenow moveworks antitrust process and integration success. Base inputs: current market cap ≈ $189B, Q2 ARR run-rate implied subscription revenue, and high gross margins.

Conservative scenario – regulatory delay or heavy remedies

Assumptions:

• Acquisition delayed >9–12 months or closed with significant divestiture reducing expected synergies by 60%.
• Short-term multiple compression 10–20% due to deal uncertainty and higher near-term investment in integration.
  Implied price target range: −15% to −25% relative to current price (one-year horizon), reflecting earnings headwind and valuation multiple contraction.

Base scenario – deal closes with minimal conditions

Assumptions:

• DOJ/FTC permits the deal with limited behavioral conditions; Moveworks adds incremental annualized revenue growth of 2–4 percentage points to ServiceNow’s addressable market over three years.
• Synergies recoup acquisition cost over 4–6 years; margins return to guidance path.
  Implied price target range: flat to +20% over one year, driven by multiple re-rating if cross-sell accelerates ARR growth and FCF expansion.

Optimistic scenario – deal accelerates growth and margin expansion

Assumptions:

• Moveworks integration unlocks faster adoption of AI agents, increasing enterprise deal sizes substantially; company sustains >25% subscription revenue growth for multiple quarters.
• Market re-rates ServiceNow to a higher premium multiple given durable AI monetization.
  Implied price target: +25% to +50% over 12–24 months, contingent on materially stronger guidance and execution metrics.

Model notes: each scenario requires explicit modeling of acquisition dilution, cash outflow, potential earn-outs, and one-time integration costs disclosed in filings. Investors must stress-test margins under higher R&D and cloud compute cost assumptions for AI.

Trading checklist & signals

For momentum/short-term traders

• Entry rule: buy on a confirmed close above the 50-day SMA with RSI crossing above 55 and MACD crossover (signal line). Confirm with above-average volume.
• Stop: initial stop at 6–8% below entry; trail at 5% if trade moves in favor.
• Exit rule: reduce position on rejection at prior earnings high or RSI>75 without MACD confirmation; tighten stops if regulatory headlines widen.

For longer-term investors

• Checklist before adding to core position:
  1. Confirm DOJ/FTC outcome (approval, conditional approval, or failed transaction) and any required remedies.
  2. Verify integration milestones and early cross-sell ARR contributions in quarterly results.
  3. Ensure FCF conversion remains intact despite acquisition and incremental AI compute spending.
  4. Maintain position sizing so that acquisition risk and regulatory uncertainty represent a manageable portion of portfolio risk.
• Stop sizing: core positions 3–6% of portfolio; add only if guidance and integration metrics align with the base scenario.

Tickers mentioned

1. ServiceNow, Inc. (ServiceNow) (NOW)
2. Moveworks (private – no ticker)
3. Salesforce, Inc. (CRM)
4. Microsoft Corporation (MSFT)