ServiceNow Targets Back-Office AI Growth as EmployeeWorks Hits $100 Million

Key Points

• EmployeeWorks is gaining traction: ServiceNow says the product reached $100 million in its first three quarters, with customer count up 60% and 10 third-quarter deals exceeding $1 million. Its Core Business Suite recorded 24 deals above $1 million in the quarter.
• Back-office AI is a key growth opportunity: ServiceNow is developing autonomous workers for tasks such as service-desk requests and finance operations. Potential benefits include detecting duplicate or fraudulent invoices, speeding payments, and improving collections.
• ServiceNow is adapting its sales model amid competition: Agentic use rose 13-fold year over year, and more than half of third-quarter revenue was non-seat-based. The company is exploring consumption-oriented incentives and differentiating itself with enterprise governance and workflow capabilities as smaller software competitors multiply.

ServiceNow NYSE: NOW is looking to employee productivity tools and artificial intelligence-powered back-office automation to drive growth, while facing increasing competition from smaller software companies, an executive said.

Josh Kahn, senior vice president and general manager of Core Business Workflows, said the company is targeting finance, procurement, legal and facilities departments with applications built on its platform. He identified EmployeeWorks, which helps employees find information and complete tasks, and the Core Business Suite as key growth opportunities.

EmployeeWorks reached $100 million in its first three quarters, Kahn said. In the third quarter, it had 10 deals worth more than $1 million, and its customer count grew 60%. The Core Business Suite, which packages back-office automation products, had 24 deals over $1 million in the quarter, he said.

AI and the back office

Kahn said ServiceNow is building autonomous workers to resolve service-desk requests and handle finance tasks. Potential applications include pursuing unpaid invoices that previously were too small to justify a person’s time, replacing some work currently performed by employees and helping workers prioritize tasks.

Asked where customers could see the greatest value from autonomous work in 2027, Kahn pointed to improvements beyond labor savings. In accounts payable, he cited identifying duplicate invoices and fraud, as well as faster processing that could help companies make decisions about payment timing and discounts. In accounts receivable, he highlighted the potential to improve collections and reduce days sales outstanding.

Kahn said the employee engagement offering can attract new customers, while autonomous finance products also have potential to win new accounts. For now, he said, adoption of some finance capabilities is primarily coming from customers already using related ServiceNow products.

Seats, consumption and pricing

Addressing investor concerns about seat-based software sales, Kahn said ServiceNow’s seats were up year over year and that the growth rate was accelerating. He said seats in his business line would grow next year.

Agentic use was up 13 times year over year, Kahn said, and more than half of the company’s third-quarter revenue was non-seat-based. He said autonomous workers could help ServiceNow compete for spending that companies have traditionally directed toward services and business-process outsourcing.

ServiceNow is also considering how to encourage sales teams to drive continued product consumption after an initial deal. Kahn said financial incentives would be needed, but characterized the shift from seat-based to consumption-oriented selling as an evolution rather than a revolution.

Customers increasingly want evidence of value for their AI spending, he said. While pricing discussions are evolving toward outcomes, Kahn said he had not seen a broad shift to outcome-based models. He cited invoice-based pricing in accounts payable as a proxy for the value created by processing invoices.

Competition and deployment

Kahn said smaller competitors can now produce substantial amounts of software with relatively few engineers, increasing the number of options customers hear about. ServiceNow seeks to differentiate itself through capabilities including governance, enterprise workflows and data, he said.

He described the company’s Control Tower as a way to manage ServiceNow and third-party agents, including the ability to turn them off. He said Control Tower was up sixfold year over year, without specifying a customer adoption rate.

Some AI tools are relatively easy for existing customers to deploy, while more complex use cases may require ServiceNow’s FDE resources, Kahn said. Asked what share of revenue might involve those resources, he estimated 10% to 20% in his Core Business organization, while cautioning that the figure should not be applied to ServiceNow as a whole.

About ServiceNow (NYSE:NOW)

ServiceNow, Inc. provides cloud-based software that helps organizations manage digital workflows and automate business processes. Founded in 2004 by Fred Luddy, the company began with a focus on IT service management and has expanded its platform to support a range of enterprise operations. Its products include tools for IT service and operations management, customer service, human resources, security, and application development. ServiceNow also offers artificial intelligence capabilities, including tools designed to help organizations automate tasks and find information across workflows.

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