GSA signs deal with ServiceNow for AI modernization with up to 70% discounts

WASHINGTON - The U.S. General Services Administration (GSA) announced on Wednesday a OneGov agreement with ServiceNow, a prominent player in the software industry with a market capitalization of $186 billion, aimed at advancing AI-driven modernization across federal agencies. The deal includes discounts of up to 70% off list prices for eligible federal customers upgrading to new Information Technology Service Management (ITSM) bundles. According to InvestingPro data, ServiceNow maintains impressive gross profit margins of 78.5%, demonstrating strong operational efficiency in its enterprise software solutions.

According to the agreement, the ServiceNow AI Platform could potentially boost workflow efficiencies by up to 30% by streamlining various business processes. Federal agencies will have access to these products at pre-negotiated rates, with options available for both FedRAMP High and National Security Cloud environments. The company’s robust financial health, rated as GOOD by InvestingPro analysts, positions it well to deliver on these government commitments. ServiceNow has demonstrated strong growth with revenue increasing by 21% in the last twelve months.

"This partnership with ServiceNow will be instrumental in streamlining government technology, driving efficiency, and unlocking significant taxpayer savings," said GSA Acting Administrator Michael Rigas in the press release.

The agreement offers two main options: an ITSM Pro and Pro Plus bundle upgrade available at a 70% discount through September 2028, and a standalone ITSM Pro upgrade at a 40% discount through September 2026. Both options include AI capabilities designed to improve service management and automation within government operations.

Federal Acquisition Service Commissioner Josh Gruenbaum stated the agreement "is a logical next step in the AI transformation of government" that aligns with the administration’s efficiency goals.

The deal supports the White House’s America’s AI Action Plan and GSA’s OneGov Strategy, providing agencies with access to AI technology that currently drives more than 200 million government tasks annually, according to the announcement. For investors seeking deeper insights into ServiceNow’s market position and growth potential, InvestingPro offers comprehensive analysis with 14 additional exclusive ProTips and detailed financial metrics in its Pro Research Report, one of 1,400+ available for top US stocks.

ServiceNow’s platform includes agentic AI features intended to reduce duplicative work and improve incident resolution times across government services. The agreement is structured as a one-year term available through the duration of the contract period of performance.

In other recent news, ServiceNow’s financial outlook received a boost as Stifel reiterated its Buy rating with a $1,200 price target, pointing to an uptick in federal business performance during the current quarter. The firm’s analysis indicates a mid-single-digit increase in federal business, recovering from a likely double-digit decline in the previous quarter. Meanwhile, JMP Securities maintained its Market Outperform rating and a $1,300 price target after a visit to ServiceNow’s headquarters, where they reviewed the company’s AI initiatives.

In addition to financial updates, ServiceNow has been active in strategic partnerships and educational initiatives. The company announced a collaboration with SENAI-SP to launch a statewide AI skills training program in Brazil, focusing on AI, digital workflow automation, and low-code/no-code development. This initiative aims to equip Brazilians with essential technical skills through ServiceNow University. Furthermore, ServiceNow has partnered with the DFL Deutsche Fußball Liga as the Official Workflow Partner for Germany’s top football leagues, enhancing fan experience by improving business workflow automation and efficiency. These developments highlight ServiceNow’s ongoing efforts to expand its technological influence and educational outreach.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.