As Agentic AI Takes the Lead, ServiceNow Doubles Down on Value Creation

SANTA CLARA, Calif. July 28, 2025 — Agentic AI is leaving a wider footprint, and its advancement is making the go-to-market strategy for SaaS companies complex. It is widely believed that relying on old operating models is an obsolete strategy.

In enterprise software, ServiceNow is pioneering AI-driven productivity transformation. The company made several announcements at “Knowledge 2025,” creating a strong opinion that boundaries have been redrawn when it comes to customer relationship management. There is also an obvious sign of a paradigm shift in how SaaS companies create value in the AI era.

In the process of evaluating the implications for enterprise software and SaaS valuations, it is evident that ServiceNow is pioneering a new model of AI integration that could reshape the industry for years to come.

In terms of earnings, ServiceNow's Q1 2025 results highlight the robust story of AI-driven growth. Subscription revenue reached $3,005 million, reflecting 19 percent year-over-year growth and 20 percent growth in constant currency.

Total revenues stood at $3,088 million, representing 18.5 percent year-over-year growth. These figures are not just impressive in isolation, they represent a company that's successfully monetizing its AI innovations. The current remaining performance obligations (cRPO) of $10.31 billion and total RPO of $22.1 billion, both showing 22–25 percent year-over-year growth, indicate strong customer commitment to ServiceNow's AI-powered platform.

AI across Platforms

Notably, ServiceNow has operationalized AI across its platform. The role of the company's CRM AI Agents is not just limited to automating tasks but also involves orchestrating complex workflows across departments with contextual awareness.

These agents have the ability to dynamically chalk out the best course of action, resolve inquiries under a tight deadline, and manage workflows with human intervention only when necessary.

This in itself is a quantum jump from traditional automation to what ServiceNow terms agentic AI, a system where AI agents work collaboratively to solve business problems.

The larger SaaS industry is undergoing a similar transformation. A detailed analysis of private SaaS companies shows that AI adoption has become pervasive, with over 76 percent using AI in their products and 69 percent deploying it in daily operations.

AI Adoption Impacts Financial Performance

The most intriguing aspect is how this adoption has a major impact on financial performance. Companies using AI in operations are 12 percent more likely to be profitable, with equity-backed companies showing even more pronounced benefits. This data is in sync with ServiceNow's experience, where AI adoption has enabled the company to maintain a 31 percent non-GAAP operating margin while growing at a 19 percent rate.

The digital transformation witnessed after the COVID-19 pandemic has fast-tracked AI integration across SaaS platforms. From 2020 to 2025, the industry has witnessed a dramatic transformation.

In 2020, AI-powered SaaS solutions grew 25 percent faster than traditional SaaS. By 2022, AI integration became a strategic imperative for 65 percent of SaaS companies. In 2023, vertical SaaS solutions outperformed horizontal platforms by 3.1x.

SaaS Embracing AI

By 2025, 92 percent of SaaS companies had embedded AI into their core products. ServiceNow has adopted an innovative approach to AI. Apart from just adding AI features to its existing platform, the company is rebuilding its entire value proposition around AI orchestration.

One such example is the recent Yokohama platform release, which introduced self-service commerce portals and turnkey CCaaS integrations, all powered by ServiceNow's AI agents. This marks a paradigm shift from SaaS as a system of record to SaaS as a system of intelligent action.

The way forward is expected to see the AI-driven enterprise software landscape continue to evolve. Companies that can show the calibre to curate AI's ability to drive productivity, reduce costs, and enhance customer experiences will witness a boom in business. ServiceNow's approach of building AI into the core of its platform, rather than just adding features, positions it well for this future. As the AI SaaS market continues to grow at a 28 percent CAGR, ServiceNow's comprehensive AI platform and strategic partnerships could help it maintain its leadership position.

The analysis of private SaaS companies shows that AI adoption has become pervasive, with over 76% using AI in their products and 69 % deploying it in daily operations.

Inputs from Saqib Malik

Editing by David Ryder