The verdict is in: SaaS is dead.
At least, that’s what the market seems to believe.
The rise of agentic AI — autonomous software agents capable of handling complex professional tasks — has sent SaaS stocks tumbling as investors question whether traditional software platforms can survive.
But don’t tell that to ServiceNow (NYSE: NOW).
The enterprise workflow giant’s 2025 fourth quarter (4Q2025) tells a very different story: revenue of US$3.57 billion (up nearly 21% year on year), free cash flow of US$2 billion (up close to 46%), and renewal rates at 98%.
These are not the numbers of a company facing an existential crisis.
Here are three things every investor should know about the so-called SaaSpocalypse.
1. AI needs workflows, not the other way around
Here’s the thing: there’s a difference between probabilistic and deterministic outputs.
Generative AI (GenAI) models excel at pattern recognition and creating variety.
Tasks such as composing marketing material, where diversity in output is welcomed, are a natural fit.
But “good enough” may not be good enough for enterprise operations.
ServiceNow CEO Bill McDermott made this point during the company’s latest earnings briefing, arguing that AI depends on enterprise orchestration, governance, and scale — not the other way around.
Think of it this way.
GenAI is like a brilliant intern who can draft a report in seconds.
But someone still needs to route that report through the right approval chains, ensure compliance, and track accountability.
That’s what workflow platforms do.
And the numbers back this up.
ServiceNow’s Now Assist, its suite of GenAI-powered tools, surpassed US$600 million in annual contract value (ACV) and is tracking towards a US$1 billion-plus target for 2026.
Now Assist’s net new ACV more than doubled year on year in 4Q2025, with 35 deals exceeding US$1 million in the quarter alone.
In other words, AI isn’t replacing ServiceNow. It’s making ServiceNow more valuable.
2. Code is cheap, but trust is not
SaaS firms have been dismissed as glorified databases — only capable of basic create, read, update, and delete (CRUD) operations that any coding agent could replicate.
But here’s the kicker: ServiceNow’s real advantage isn’t code.
It’s the company’s configuration management databases (CMDBs).
CMDBs are detailed blueprints of how each customer’s enterprise operates — who does what, which systems connect, and how tasks flow from start to finish.
These blueprints took years to build and are unique to each organisation.
When AI agents come along, they can’t just figure out how a company works on their own.
They need these connections and instructions.
ServiceNow already has them, allowing it to layer AI on top of what it already knows rather than starting from scratch.
Case in point: instead of competing with ServiceNow, Anthropic is partnering with the company to help customers build AI applications and accelerate deployment.
As far as we are concerned, technology can take you far — but trust takes time.
3. Seat compression is a theory, not a reality
If AI agents handle most of the work, companies will need fewer human users — and therefore, fewer software seats to pay for.
That’s the bear case in a nutshell.
McDermott addressed this head-on, noting that ServiceNow’s target market has an estimated 1.3 billion available seats and the company has barely scratched the surface.
But the company isn’t standing still.
McDermott added that ServiceNow is looking beyond seats with a hybrid business model spanning billions of devices, agents, and assists.
Here’s something everyone should remember: ServiceNow’s active user base is growing 25%.
Deal volume for its AI Control Tower nearly tripled quarter on quarter.
The number of workflows processed grew over 33%, from 60 billion to 80 billion.
And remaining performance obligations ended at around US$28.2 billion — representing two times its 2025 revenue.
Even more telling, both OpenAI and Anthropic themselves use seat-based pricing with consumption limits rather than pure consumption models.
If the AI leaders haven’t abandoned seat-based pricing, perhaps it’s too early to write its obituary.
Get Smart: Two things can be true at once
McDermott offered a telling rebuttal to the doom narrative, arguing that fast-growing new market participants and fast-growing enterprise platform leaders can coexist.
He makes a good point.
Too often, investors fall into the trap of thinking that for one side to be right, the other must be wrong — and that a decision must be made right now.
Nothing could be further from the truth.
The AI sector is still in its early days.
Rather than speculate on who wins and who loses, investors are better off observing how these companies actually perform — quarter by quarter, customer by customer.
After all, where the business goes, eventually the stock will follow.
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Disclosure: Chin Hui Leong owns shares of ServiceNow.
