Photo Credit: Donny Gonzo / Flickr.com

ServiceNow (NYSE: NOW) continues to invest in its portfolio through large scale acquisitions. Earlier this month, it announced the acquisition of identity security platform Veza for an estimated $1 billion.

ServiceNow’s Financials

ServiceNow’s third quarter revenues grew 22% to $3.41 billion, ahead of the market’s forecast of $3.35 billion. EPS of $4.82 was also ahead of the market’s estimates of $4.27 per share.

By segment, subscription revenues rose 22% to $3.3 billion, ahead of the consensus estimate of $3.26 billion. Professional and Other Services revenues grew 31% to $108 million.

ServiceNow raised its full-year guidance and now expects to end the year with $12.84-$12.85 billion, compared with an earlier estimate of $12.78-$12.80 billion. It expects to end the current quarter with $3.42-$3.43 billion in subscription revenues.

ServiceNow’s Veza Acquisition

Earlier this month, ServiceNow announced plans to acquire Veza, an identity security platform, for more than $1 billion. The acquisition is expected to enhance ServiceNow’s Security and Risk portfolios with additional capabilities within the Identity Security segment.

ServiceNow realizes that as businesses leverage autonomous capabilities through agentic AI, they need a security capability that manages end-to-end identity security while following the principles of least privilege. Today threat actors are also adopting agentic AI to orchestrate sophisticated attacks, thus resulting in a need for enterprises to have stronger identity, access controls and governance that can ensure permissions are tightly aligned with evolving roles.

Los Gatos-based Veza was founded in 2020 by Tarun Thakur, Maohua Lu, and Rob Whitcher. The three of them saw that as more data was moving onto the cloud, CTOs and CISOs of the companies were worried about managing access to their most sensitive data. They set up Veza with a vision to build a platform that was powered by authorization metadata to address these emerging data security challenges.

Today, Veza’s unified, AI-native approach is powered by its patented Access Graph that maps and analyzes access relationships across human, machine, and AI identities. It provides the organization with an end-to-end access visibility and risk control platform for all types of identity.  Its scalable platform supports next-generation capabilities, including access reviews, access requests, and an access hub, along with permission updates and end-to-end visibility.

ServiceNow plans to integrate these capabilities with its strength in workflows, knowledge graphs, and AI, to enhance its AI Control Tower to govern what AI agents can access and do across enterprises. Veza will also add critical identity context to existing ServiceNow Security and Risk products, thus giving customers a clearer view of who and what is associated with an exposure, incident, or risk event.

The acquisition will strengthen ServiceNow’s identity security services with deep cross-platform visibility and enable consistent and auditable access governance across connected applications. Veza will also complement existing identity features on the ServiceNow AI Platform, like Machine Identity Console, by offering better visibility and simpler management as businesses scale with AI.

According to a recent study the market for AI agents is expected to grow from $5.1 billion in 2024 to $47.1 billion by 2030. The study revealed that 58% of IT leaders expect agentic AI to drive at least half of all cyberattacks in the coming year. Traditional identity and access management systems were built for human users and static workflows, and they cannot deal with modern threats posed by API keys, robotic process automation credentials AI agents making autonomous decisions across distributed systems. Veza’s technology will be instrumental in bridging this gap for ServiceNow.

Prior to the acquisition, Veza was privately held and did not disclose its financials. It had raised over $235 million in funding from investors including New Enterprise Associates, Atlassian, TSG, Capital One Ventures, ServiceNow, Accel, and Bain Capital. A $108 million round held earlier this year had valued the company at $808 million. Its customer list includes names like Blackstone, Wynn Resorts, and Expedia.

The market is also abuzz with rumors that ServiceNow is in talks to acquire Armis, a private U.S.-Israeli cybersecurity company for internet-connected devices, for an estimated $7 billion. Armis is privately held and does not disclose financials, but reports suggest that it had an annualized run rate of over $300 million as of August this year.

The acquisition, if it were to go through, would be a very expensive one, valuing Armis at nearly a 23x multiple. Analysts are concerned about the price that ServiceNow is looking to pay for the deal. Analysts are also concerned about how the growth of agentic AI could disrupt Service now’s business model.

Meanwhile, ServiceNow’s stock is trading at $765.20 with a market capitalization of $162.6 billion. It touched a 52-week high of $1,198.09 in January this year and has recovered from the 52-week low of $678.66 that it had fallen to in April.

More By This Author: