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ServiceNow (NOW) Expands Portfolio With New Acquisition

ServiceNow NOW recently announced that it has signed an agreement to acquire observability and log management solutions provider, Era Software.

In the era of the fourth industrial revolution, organizations are digitally transforming their businesses by operating in multi-clouds. One of the most important aspects of digital transformation is the observability solution that provides developers with necessary data regarding the performance of their important applications required for their transformation of data into cloud.

However, many enterprises’ observability solution remains siloed and is a costly affair for the company. Customers are gradually making significant investments to use software, which provides holistic solutions to help in digital transformation faster and at a reduced cost.

In order to meet current market demand, ServiceNow decided to acquire Era Software to add its unified observability solutions to the existing features of Lighstep, which drives its cloud solutions business.

ServiceNow, Inc. Price and Consensus

ServiceNow, Inc. Price and Consensus
ServiceNow, Inc. Price and Consensus

ServiceNow, Inc. price-consensus-chart | ServiceNow, Inc. Quote

ServiceNow Acquisition Strategy to Drive Share Price

The Russia-Ukraine war has created significant turmoil in the global economy, which has aggravated certain macroeconomic issues. Due to the rising macroeconomic turmoil, ServiceNow is grappling with inflation and unfavorable forex woes. Stiff competition remains a headwind and is expected to hurt near-term prospects. This has impacted the share price movement negatively.

ServiceNow shares have tumbled 35.6% in the year-to-date period compared with the Zacks Computers - IT Services industry’s and Zacks Computer and Technology sector’s decline of 34% and 32.7%, respectively.

However, the challenges stemming from the war have given rise to a demand for cloud-based platform services, specifically in cyber security.

Per Gartner, 81% of organizations have a multi-cloud strategy. Organizations are utilizing cloud services for everything from hosting data centers to enterprise applications. As such, the challenges have underscored the urgency of investment in digital businesses, and the company expects a 23% year-over-year increase in the global public cloud market for 2022.

ServiceNow, which currently carries a Zacks Rank #3 (Hold), is expanding its market share in the global cloud market through its investments in building its partner ecosystem. The company’s collaboration with Wipro Limited WIT is expected to help ServiceNow drive long-term growth. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Wipro has delivered hundreds of client projects across ServiceNow IT, Employee and Customer workflows, which will help ServiceNow expand into non-ITSM markets like human resource and security solutions by launching new products and services.

The collaboration with Barclays BCS is a noteworthy one as well. Barclays is helping ServiceNow expand operations in the countries under the European Union.

Barclays is working with ServiceNow to automate cross-agency management while being compliant with EU data privacy requirements.

ServiceNow is also benefitting from its long-term collaboration with Adobe ADBE to provide customer service management workflow products to enhance customer experience as businesses are taking their operations in digital-only platforms.

ServiceNow and Adobe have also expanded their partnership by providing the former’s services to the latter’s employees to drive 30% faster customer care solutions.

Acquisitions have played an important part in ServiceNow’s growth trajectory over the years. ServiceNow acquired Lightstep in 2021 to strengthen the company’s expertise in cloud-native apps for developers and site reliability engineers. Prior to its recent announcement to buy Era Software, ServiceNow acquired Hitch Works, DotWalk, Mapwize and GekkoBrain to provide complete cloud solutions to customers.

ServiceNow expects to complete its most recent acquisition of Era Software by the end of 2025, anticipating it to provide positive ROI for the company in the long run. ServiceNow estimates the observability market to reach $9.08 billion by 2025, and with its recent acquisition, the company is looking to win significant market share which will drive its top-line growth.

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