ServiceNow’s $12 Billion Buying Spree Echoes CEO’s SAP-Era Playbook

After spending years largely avoiding large-scale mergers, ServiceNow Inc. has shifted into acquisition mode. In 2025 alone, the enterprise software company has committed at least $12 billion toward acquisitions and strategic investments, marking a notable change in its approach to growth.

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That sudden burst of deal-making has unsettled some investors, who are questioning whether ServiceNow is beginning to rely on acquisitions to sustain momentum. The concern is heightened by the track record of Chief Executive Officer Bill McDermott, who oversaw a string of high-profile and, at times, controversial mergers during his previous tenure as CEO of SAP SE.

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On Tuesday, ServiceNow announced its biggest acquisition to date: a $7.75 billion agreement to purchase cybersecurity startup Armis. The company specializes in detecting and monitoring security risks across connected corporate devices. Strategically, the deal aligns with ServiceNow’s core business, which focuses on helping enterprises manage and automate their information technology operations.

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The acquisition comes at a time when ServiceNow has been rolling out generative artificial intelligence features across its software platform. While AI has opened new opportunities, it has also raised concerns among investors about potential disruption across the application software landscape. Those worries have already weighed on the stock. ServiceNow shares were down 18% for the year before reports of the Armis deal surfaced on December 13 and have fallen an additional 12% since then.

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Some on Wall Street are skeptical about the timing and rationale behind the purchase. Matthew Hedberg, an analyst at RBC Capital Markets, wrote that investors are uneasy about the possibility that the Armis acquisition is intended to shore up decelerating revenue growth rather than enhance long-term product strength.

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The Armis transaction followed closely on the heels of other sizable moves. Just one week earlier, ServiceNow completed its $2.8 billion acquisition of Moveworks, and a few months before that, it made a $750 million investment in contact center software firm Genesys. In addition to these headline deals, the company struck six more agreements during the year, though financial terms were not disclosed.

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McDermott’s history adds another layer to investor unease. Before joining ServiceNow in 2019, he led SAP through its largest acquisitions, decisions that were not always well received by the market. In a notable example, McDermott said in mid-2018 that major deals were not imminent at SAP, only to announce an $8 billion acquisition of Qualtrics Inc. just months later.

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A ServiceNow spokesperson pushed back on comparisons between McDermott’s deal-making at SAP and his current strategy. According to the company, the two situations are fundamentally different.

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During the early 2010s, large software incumbents were racing to establish scale in cloud-based software-as-a-service, making aggressive M&A a practical necessity. That environment, the spokesperson said, explains why so many companies pursued large acquisitions at the time.

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Even so, when McDermott took the helm at ServiceNow, many investors expected a renewed focus on mergers and acquisitions. Instead, he spent much of his early tenure signaling the opposite. In early 2023, McDermott emphasized the company’s preference for organic expansion, saying that internally driven growth remained the priority. As recently as this month, executives reiterated that ServiceNow was concentrating on “tuck-in” acquisitions small, targeted deals that require minimal integration effort.

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The recent wave of large transactions has prompted some analysts to question whether that stance is changing. John DiFucci of Guggenheim described the situation as feeling like “déjà vu,” suggesting that the buying spree appears less like a disciplined product enhancement strategy and more like an attempt to revive slowing top-line growth through acquisitions.

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To be sure, ServiceNow has delivered strong revenue growth in recent years, even as many peers struggled with slowing demand. The company is expected to generate more than $13 billion in revenue this year, representing a 21% increase from the prior year. That pace would roughly match its growth in 2024.

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Looking ahead, however, Wall Street analysts project some deceleration. Excluding the impact of acquisitions, consensus estimates suggest revenue growth could slip below 20% in 2026, a shift that may help explain management’s willingness to pursue larger deals.

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ServiceNow maintains that its current position is far stronger than SAP’s was a decade ago. The company argues that it does not need acquisitions to buy growth or relevance, emphasizing that its underlying strategy remains intact. According to the spokesperson, ServiceNow’s long-term plan has not changed, even as it selectively uses M&A to complement its existing platform.

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For investors, the key question is whether this new deal-making phase represents strategic opportunism or the early signs of a company leaning more heavily on acquisitions to sustain growth in a rapidly evolving software market.

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