The Zhitong Finance App learned that ServiceNow (NOW.US) on Tuesday denied reports that it intends to acquire conversational artificial intelligence (AI) startup Decagon. Amit Zavery, President, Chief Product Officer and Chief Operating Officer of ServiceNow, said in a statement: “We have noticed misinformation about our acquisition strategy in the market today. To be clear, ServiceNow has no interest or intention to acquire Decagon.”
Earlier, it was reported that Decagon, which focuses on using AI to automate customer service, has conducted preliminary negotiations with ServiceNow and other potential buyers on the acquisition. ServiceNow's stock price initially showed a negative reaction after related reports came out.
In response, Jefferies analyst Samad Samana said that in view of ServiceNow's recent frequent mergers and acquisitions, investors are concerned about large-scale takeovers, so it was not surprising that the stock price initially had a negative reaction. However, the analyst also pointed out that Decagon is expected to enhance ServiceNow's customer service management product capabilities, and this business is one of the key engines driving the company's growth. Jefferies reiterated its “buy” rating for ServiceNow shares and maintained a target price of $140.
Buy buy everywhere! Investors are skeptical about ServiceNow acquisition strategy
It is reported that since 2025, ServiceNow has announced a number of multi-billion dollar acquisitions to expand its AI, customer relationship management (CRM), and cybersecurity business capabilities. In early 2025, ServiceNow acquired MoveWorks, an AI assistant and enterprise search company, for approximately US$2.85 billion. In December 2025, the company agreed to buy cybersecurity company Armis for $7.75 billion in cash. The deal was completed in April 2026 and is expected to expand ServiceNow's security and risk management business. Also in December 2025, ServiceNow also agreed to acquire identity security company VeZA for about $1.25 billion. The deal was completed in March 2026. Additionally, ServiceNow also acquired AI-driven sales software vendor Logik.io for $506 million.
After completing transactions totaling more than $11 billion, investors are still uncertain about ServiceNow's acquisition strategy. Investors have expressed doubts about whether these acquisitions are accelerating established strategies or whether they reflect the company's need to rely on mergers and acquisitions to find new growth points. Investors are also worried about whether the company can actually generate sufficient returns by investing huge sums of money in mergers and acquisitions in a short period of time, and whether these transactions will increase financial burden and drag down profitability.
The completion of the acquisition does not mean that the synergy can be realized immediately. ServiceNow requires the acquisition company's technology, employees, products, and sales teams to be integrated into the existing platform, which may incur additional integration costs. For example, some market analysis indicates that the acquisition of ARMIS is expected to put some pressure on ServiceNow's profit margins and free cash flow margins in 2026. The company needs to bear the associated costs before gradually achieving revenue synergy and operational efficiency improvements. If customers adopt the new product more slowly than expected, or if cross-selling between different businesses falls short of expectations, the benefits from the acquisition may be delayed.
At the same time, investors are worried that ServiceNow will deviate from a “endogenous growth-centered” strategy. ServiceNow's core competencies were enterprise software platforms, subscription revenue, and workflow automation. Continued large-scale acquisitions may cause the market to worry that the company will increasingly rely on external mergers and acquisitions to expand its business rather than mainly relying on its own product innovation and customer growth. Fortunately, in response to rumors of the acquisition of Decagon on Tuesday, ServiceNow also made it clear that the company is still a company that puts endogenous growth first, adding that there is currently no major strategic gap that needs to be filled through major acquisitions.
Furthermore, rapid changes in the AI industry have made acquisition prices and technology values uncertain. ServiceNow actively acquires AI, cybersecurity, and enterprise software companies to strengthen platform capabilities and cope with the impact of AI technology on the traditional software industry. However, technology in the AI field is rapidly iterating, and the competitive landscape is constantly changing. Even if the target of the acquisition currently has strong technology or customer resources, its products may face problems such as increased competition, changes in technology routes, or shifts in customer demand in the future.
For investors, after ServiceNow has completed multiple acquisitions, the next indicators to watch include whether subscription revenue growth can be maintained, whether profit margins and free cash flow can withstand integration costs, and whether the newly acquired technology can actually lead to customer growth and cross-selling. ServiceNow's third-quarter results, which are scheduled to be announced on October 28, may provide investors with clues to answer these questions. According to Koyfin's data, the market expects the company's third-quarter revenue to increase 20% year over year to reach US$4.09 billion; adjusted earnings per share are expected to increase 6% year over year to reach $1.02.