ServiceNow (NYSE: NOW) has entered into a definitive agreement to acquire the cybersecurity firm Armis for $7.75 billion in cash. This represents the largest acquisition in the company’s history. While the deal expands ServiceNow’s capabilities in device security and creates a unified “security exposure and operations stack,” the announcement has weighed heavily on ServiceNow stock as investors react to the high price tag.
Why ServiceNow stock fell
The market response was immediate and negative. When reports of the deal first surfaced, ServiceNow stock dropped between 5% and 7% in pre-market trading. The finalized agreement values Armis at roughly 23 times its annual recurring revenue (ARR), which recently surpassed $340 million. This is a steep premium, even for the high-growth cybersecurity sector.
This volatility reflects investor concern over the company’s spending habits. ServiceNow recently acquired Moveworks for $2.85 billion, and this new, larger expenditure has raised questions about cash flow. Shareholders are wary that the company might be relying too heavily on expensive acquisitions rather than organic growth, despite Armis‘s impressive year-over-year ARR growth of over 50%.
Who is Armis?
Founded in 2015, Armis specializes in cyber exposure management and securing “unmanaged” devices. These are assets that cannot easily run traditional security software, such as medical equipment in hospitals, industrial control systems (OT) in factories, and smart office technology (IoT).
By purchasing Armis, ServiceNow fills a specific gap in its portfolio. It gains the ability to see and secure the millions of connected devices that interact with corporate networks but often remain invisible to standard IT tools. “AI is transforming the threat landscape faster than most organizations can adapt. Every connected asset has become a potential point of vulnerability,” said Yevgeny Dibrov, co-founder and CEO of Armis.
The strategy: Building the security platform of tomorrow
ServiceNow began in 2003 as a tool for IT service management but has evolved into the “AI control tower for business reinvention.” Under CEO Bill McDermott and President Amit Zavery, the goal is to provide a unified system that manages everything from employee workflows to security incidents.
Integrating Armis allows ServiceNow to offer a comprehensive view of a company’s digital assets. The plan is to feed the real-time device data from Armis directly into the ServiceNow AI Platform. This helps security teams identify risks and automate responses without needing to switch between different software tools.
“Together with Armis, we will deliver an industry-defining strategic cybersecurity shield for real-time, end-to-end proactive protection across all technology estates,” said Amit Zavery.
The deal is expected to close in the second half of 2026. Until then, the performance of ServiceNow stock will likely depend on how well the company explains the long-term value of this investment to skeptical shareholders.
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