Executive summary
- Revenue and growth: ServiceNow reported Q2 2025 revenue $3.215B, +22.5% YoY; Salesforce reported Q2 FY26 revenue $10.2B, +10% YoY. (ServiceNow press release, Jul 23, 2025; Salesforce press release, Sep 3, 2025). (ServiceNow)
- Profitability and margins: ServiceNow subscription gross margin ~80% and total gross margin ~77% (ServiceNow 10-Q Jun 30, 2025); Salesforce Q2 GAAP operating margin 22.8%, non-GAAP 34.3% (Salesforce press release Sep 3, 2025). (SEC)
- Balance sheet and leverage: ServiceNow cash & short-term investments $6.13B (cash $3.124B + ST investments $3.008B per 10-Q) and low debt profile; Salesforce holds ~$15.4B cash/marketable securities and ~$8.4B senior unsecured debt (10-Q Jul 31, 2025). (SEC)
- Technical & momentum: ServiceNow 14-day RSI ≈ mid-50s, MACD slightly negative, 50d ~ below/near price; Salesforce RSI near mid-40s, mixed MACD; 1-month returns: NOW +2.0%, CRM −5.0% (MarketWatch snapshots Sep 26, 2025). (Barchart.com)
- Verdict (one sentence): For growth-oriented investors chasing workflow automation exposure, ServiceNow shows faster revenue growth and high subscription gross margins; for income/profitability and scale plus AI-CRM monetization, Salesforce offers larger cash flow, margin expansion and buyback capacity — the choice depends on whether the investor prioritizes growth multiple compression risk (ServiceNow) or macro/execution sensitivity and M&A leverage (Salesforce). Use the focus keyphrase “is servicenow or salesforce a better buy 2025” when framing buy/sell decisions. (ServiceNow)
Summary fundamentals
- ServiceNow (NOW) — Q2 2025 total revenue: $3,215M (+22.5% YoY); subscription revenue: $3,113M (+22.5% YoY); non-GAAP diluted EPS (Q2): $4.09. Subscription gross profit % ≈ 80%; total gross profit % ≈ 77%; cash & short-term investments $6.13B (cash $3.124B + ST investments $3.008B); long-term investments $4.655B; market cap ≈ $188–$195B (Sept 2025 sources). (ServiceNow press release Jul 23, 2025; ServiceNow 10-Q Jun 30, 2025; Market cap sources Sep 2025). (ServiceNow)
- Salesforce (CRM) — Q2 FY26 revenue: $10.2B (+10% YoY); subscription & support: $9.7B (+11% YoY); GAAP diluted EPS Q2: $1.96; non-GAAP diluted EPS: $2.91; GAAP operating margin Q2: 22.8% (non-GAAP 34.3%); cash & marketable securities ≈ $15.4B; senior unsecured debt carrying value ≈ $8.4B; market cap ≈ $231B (Sept 2025). (Salesforce press release Sep 3, 2025; Salesforce 10-Q Jul 31, 2025; market data Sep 2025). (investor.salesforce.com)
Detailed fundamental analysis
Revenue trends and TAM
- ServiceNow: two broad drivers — enterprise workflow automation (ITSM → enterprise functions) and Now Assist/AI Agents; Q2 showed strong deal momentum (89 deals > $1M ACV; customers >$20M ACV grew >30% YoY), indicating strong enterprise pipeline and expansion economics. (ServiceNow press release Jul 23, 2025). (ServiceNow)
- Salesforce: growth driven by Data Cloud and Agentforce; Data Cloud + AI ARR > $1.2B and bookings show cross-sell expansion; Salesforce’s cRPO $29.4B suggests durable recurring backlog. (Salesforce press release Sep 3, 2025). (investor.salesforce.com)
Margin drivers and cash generation
- ServiceNow’s high subscription gross margins (~80%) reflect SaaS economics and leverage from subscription land/expand; increasing infrastructure and R&D costs weighed on cost of revenue but operating leverage remains. (ServiceNow 10-Q Jun 30, 2025). (SEC)
- Salesforce’s margin expansion (10 consecutive quarters of operating margin expansion) is driven by scale, product mix shift to higher-value Data Cloud/AI, and aggressive capital return (repurchases + dividends). (Salesforce press release Sep 3, 2025). (investor.salesforce.com)
Balance sheet strength
- ServiceNow: cash + investments ~$10.8B including long-term investments; debt minimal (available borrowing ABL $832.4M outstanding per 10-Q), producing low financial leverage. (ServiceNow 10-Q Jun 30, 2025). (SEC)
- Salesforce: large cash/marketable securities (~$15.4B) offset by substantial long-term debt (~$8.4B senior unsecured debt), plus significant repurchase program ($50B authorization after increase). (Salesforce 10-Q Jul 31, 2025; press release Sep 3, 2025). (SEC)
Valuation multiples (market snapshots)
- Multiples vary by data provider and intraday price; investors should reference live quotes. Recent consensus shows ServiceNow trading at premium growth multiple reflecting ~20%+ revenue growth; Salesforce trades lower on revenue multiple but higher on absolute cash generation and margin. (Market cap and multiples sources Sep 2025). (Trading Economics)
Momentum & technical snapshot
- ServiceNow (NOW): RSI(14) ~ mid-50s (neutral); MACD slightly negative vs signal (bearish to neutral); 50-day SMA near price (mixed momentum); 1-month return +2.0% vs Nasdaq (relative strength slightly positive); avg daily volume ~1.62M shares → average daily dollar volume ≈ $1.5B (using price ~$936). (Technical pages and MarketWatch Sep 2025). (Barchart.com)
- Salesforce (CRM): RSI(14) ~ upper-40s (slightly weak); MACD mixed (near signal line); 50-day below 200-day (look up current SMAs for timing); 1-month return −5.0% vs Nasdaq (underperformance); avg daily volume ~7.6M → average daily dollar volume ≈ $1.8B (price ~$243). (Technical pages and MarketWatch Sep 2025). (Barchart.com)
Peer comparison
Short peer table (growth, margin, D/E, forward P/E; latest public filings & market summaries):
| Company | Revenue growth (most recent) | Gross/Op margin | Debt-to-Equity | Forward P/E (approx) | Source |
|---|---|---|---|---|---|
| ServiceNow (NOW) | +22.5% YoY (Q2 2025) | Gross profit ~77% | Low (cash-rich; modest debt) | Premium SaaS multiple | (ServiceNow press release Jul 23, 2025; 10-Q). (ServiceNow) |
| Salesforce (CRM) | +10% YoY (Q2 FY26) | GAAP op margin 22.8% (non-GAAP 34.3%) | D/E moderate (senior debt ~$8.4B; cash ~$15.4B) | Mid-teens forward P/E | (Salesforce press release Sep 3, 2025; 10-Q). (investor.salesforce.com) |
| Atlassian (TEAM) | +22% YoY (Q4 FY25) | Non-GAAP op margin ~24% | D/E ~0.7–0.9 | Forward P/E ~37 | (Atlassian Q4 FY25 Aug 7, 2025; market data). (Business Wire) |
| Adobe (ADBE) | +10–11% YoY (Q3 FY25) | Non-GAAP op margin robust (~46% GAAP margin lower) | D/E ~0.5–0.6 | Forward P/E ~15–17 | (Adobe Q3 FY25 Sep 11, 2025; market data). (Adobe) |
Latest earnings highlights & management guidance
- ServiceNow Q2 2025: revenue $3.215B (+22.5%); “Now Assist … putting us firmly on track to hit our $1 billion ACV target by 2026” (CFO Gina Mastantuono). Guidance: beat-and-raise tone; cRPO $10.92B (+24.5% YoY). (ServiceNow press release Jul 23, 2025). (ServiceNow)
- Salesforce Q2 FY26: revenue $10.2B (+10%); raised low end of FY26 revenue guidance to $41.1–$41.3B; “We remain on track for fiscal 2026 to be a record year” — CEO Marc Benioff. (Salesforce press release Sep 3, 2025). (investor.salesforce.com)
Strategic moves, catalysts & risks (from filings/news)
- ServiceNow catalysts: Now Assist and AI Agent Fabric product launches, expanded CRM/CPQ capabilities, enterprise deal expansion (more >$20M ACV customers), M&A (Moveworks acquisition earlier in 2025) — driving ARR and upsell. (ServiceNow press release Jul 23, 2025). (ServiceNow)
- Salesforce catalysts: Data Cloud & Agentforce adoption, large enterprise deals (>60 deals >$1M with AI components), share repurchase increase ($20B added — total $50B) and pending Informatica acquisition (announced; deal subject to closing) that could expand data/ETL capabilities. (Salesforce press release Sep 3, 2025; 10-Q Jul 31, 2025). (investor.salesforce.com)
- Risks: macro sensitivity to enterprise IT spend; execution risk on AI monetization; multiple compression if growth slows; M&A integration (Salesforce + Informatica) and regulatory/competition risk (Microsoft, Oracle, AWS in adjacent stacks). (Company filings & market coverage Sep 2025). (SEC)
Valuation & scenario analysis (illustrative)
Assumptions use current consensus growth and margins; these are illustrative, not model outputs:
- ServiceNow
- Conservative: revenue growth slows to 12% next 12 months → multiple re-rating toward 10–12x EV/EBITDA → implied downside price range ~ −20% from current levels.
- Base: revenue growth 18% → premium SaaS multiple 16–18x EV/EBITDA → price roughly flat to +15%.
- Optimistic: acceleration via AI agents and large deals (20–25% growth) → multiple expansion 20x → +30–50% upside.
- Salesforce
- Conservative: margin contraction / slower Data Cloud adoption → multiple near 10–12x EBITDA → modest downside (−10%).
- Base: steady 8–9% revenue growth, margin expansion to guided non-GAAP ~34% → continued buybacks → +5–20% upside.
- Optimistic: successful Informatica close and stronger AI bookings → multiple re-rating → +25–40% upside.
Trading checklist & signals
- Momentum trader (short horizon):
- Entry: momentum confirmation (14-day RSI crossing >55 with MACD above signal and price >50-day SMA) on increasing volume. Cite intraday technical page before entry. (Barchart.com)
- Stop: 5–8% below entry for short swings; tighten if MACD crosses negative.
- Target: scale out at resistance (200-day SMA or recent swing high); trailing stop once >10% gain.
- Longer-term investor (fundamental checklist):
- Confirm (1) durable subscription ARR growth; (2) expanding gross margins or controlled cost of revenues; (3) healthy free cash flow and manageable leverage; (4) execution on AI product monetization; (5) reasonable valuation vs growth. Use SEC 10-Q/10-K and recent earnings slides as primary checks. (SEC)
