Palantir Puts Bullseye on ServiceNow re AI Platform Supremacy

Ultra-highflyer Palantir is taking direct aim at ServiceNow and its position as “the AI platform for business transformation” while also claiming that Palantir rather than ServiceNow will earn the title of “defining enterprise software company of the 21st century.”

For enterprise customers, this rapidly escalating competition carries enormous significance because AI platforms, while largely unknown until just two or three years ago, are rapidly becoming the foundation on which the entire global AI Economy is being built.

And since those customers — particularly the CEOs who in many cases are seizing leadership roles for AI-centered business transformation — will benefit greatly from the intensifying competition between these two highly disruptive and innovative companies, I’d like to offer some head-to-head comparisons around customer demand, strategic vision, and market positioning. (Oh yes — and also for their respective claims about being that “defining company” thing.)

1. AI Platform Strategy

• ServiceNow: “Here’s why ServiceNow is winning,” CEO Bill McDermott said on the company’s recent Q3 earnings call. “Our platform sits at the core of the enterprise technology estate. ServiceNow is championed by the very leaders who are designing the AI reference architectures of the future. Beginning with autonomous IT, we’re helping those leaders solve enterprise-grade AI challenges. Governance is one of those mission-critical areas…. ServiceNow’s configuration-management leadership gives us and our customers a clean single pane of glass to govern all artificial intelligence…. Every single enterprise in every industry wants this real-time AI control tower. Another challenge is getting beyond the hype to fast business value. The root cause of nearly every failed deployment of enterprise technology in history is a lack of integration. And even the ones that worked took years to get to positive ROI. To change this paradigm, AI has to run east to west across the enterprise and north to south up and down the entire tech stack. ServiceNow’s AI platform can do this like no other. For every process that transcends departments and systems, ServiceNow’s workflow engine is creating the roadmap that AI agents follow to get work done.”
• Palantir: The world’s fastest-growing major cloud and AI vendor used its recent Q3 earnings call to dramatically pump up the volume around its AI Platform (AIP) and the strategically central role it is playing for customers’ business transformations and in Palantir’s 63% revenue growth in the quarter. (For more detail on what AIP is doing for customers, please see my recent interview with Palantir architect Chad Wahlquist.) Here’s CRO Ryan Taylor from the Q3 earnings call: “Organizations are embracing an undeniable truth: Real enterprise AI at scale requires Palantir Technologies Inc. We’re seeing that AIP again and again is the only platform delivering transformational impact in this market. And critically, AIP is the only AI platform that has an actual plan for compounding your enterprise’s AI leverage, not just the model maker’s leverage over you. Sharing this leverage with our customers is our highest priority. Our whole company is singularly focused around value creation for our customers…. The trajectory is clear: customers are converting to larger enterprise agreements in shorter timeframes, reflecting both the expanding scope of their AI ambitions and the immediate impact our software delivers.”

2. Customer Demand

Quick note before the numbers: while each company talked about the number of big new deals closed in Q3, Palantir offered numbers for TCV (total contract value) while ServiceNow’s were in ACV (annual contract value). That distinction aside, the numbers show that while ServiceNow’s performance was outstanding, Palantir’s was even better.

• Palantir: “We closed our highest TCV quarter ever at $2.8 billion,” Taylor said on the call. “Underlying this performance, we closed a staggering 204 deals worth $1 million or more, of which 91 deals were worth $5 million or more, and 53 deals were worth $10 million or more. In our US commercial business, which now accounts for 34% of our overall revenue, we closed $1.3 billion in TCV, a milestone achievement for the fastest-growing area of our business, with a more than 6x year-over-year growth rate on a dollar-weighted duration basis.”
• ServiceNow: McDermott said that in Q3, the company closed 103 deals with net-new ACV greater than $1 million, with six topping $10 million and three exceeding $20 million.

3. Crushing the ‘Rule of 40’

Again, we see that while ServiceNow outperformed, Palantir exceeded that outperformance by a substantial degree in this categorization that combines growth rates for revenue and profitability.

ServiceNow: McDermott leaned into his company’s tenure in this high-growth category. “This is the only enterprise software company in the world that for the last 10 years has operated above the ‘Rule of 50 plus’ between the 20%-plus growth for both revenue and free cash flow. The only one in the enterprise! So you have every reason to believe the next 10 are going to be even more exciting because of the AI Revolution.”

Palantir: “Our Rule of 40 score soared to an unprecedented 114, up 46 points year over year and a full 20 points since last quarter alone,” Taylor said on the Q3 call.

4. So Which One is Defining the Software Industry?

Shortly after taking over as ServiceNow CEO in 2019, McDermott began using the descriptor “the defining enterprise software company of the 21st century.” In the Q3 call, he leaned into it again, but with an AI twist as you’ll see in a moment. Meanwhile, it is my opinion that Palantir laid out unambiguously its competitive intentions by employing almost exactly the same phrase McDermott has repeated dozens of times over the past several years.

Palantir: Check out the back half of this comment (in italics) from CRO Taylor who, by the way, is also Palantir’s chief legal officer: “Our Rule of 40 score soared to an unprecedented 114, up 46 points year over year and a full 20 points since last quarter alone, reinforcing our position as the defining enterprise software company of our generation.

ServiceNow: Here’s McDermott’s updated version now incorporating the AI accent: “This is a once-in-a-generation opportunity. It’s like minting a new currency that underpins a limitless new economy. The more we keep getting this right, the more we’ll reach our full potential as the AI-defining enterprise software company of the twenty-first century.“

5. Some Impressive Numbers to Chew On

Final Thought

In the Cloud Wars, free-market and customer-obsessed competition has driven levels of innovation and growth and disruption that are unparalleled in human history, and the biggest beneficiaries are the customers who get to leverage all that remarkable value.

And while “AI platforms” might not yet be the stuff of cocktail-party chatter, just give it a few months — because I think the competition between these two outstanding companies is going to grab big levels of interest from lots of people in a very short time.