NOW - ServiceNow: One Of Our Top Picks For The Coming Decade
2024-04-13 07:32:56 ET
Summary
- NOW’s revenue has grown at a magnificent rate (10Y CAGR: +36%), while its current trajectory implies a ~20% level is achievable despite revenue being 21x higher than FY13 levels.
- NOW has shown an incredible ability to upsell and cross-sell its customers, while minimizing churn. Its service offering is unrivaled in the market and continues to grow through innovation.
- Alongside maintaining growth, we expect incremental margin improvement as operational leverage continues to dilute costs. This is whilst market opportunities such as AI drive the top-line.
- NOW is part of the exclusive “Rule of 50” cohort. With such FCF generation compounding, we expect distributions to grow impressively alongside opportunistic M&A.
- When compared to its Software peers, NOW stands out financially. Although its valuation is eye-watering, we believe this mirrors the quality of its operations.
Introduction and thesis
ServiceNow ( NOW ) is a cloud-based platform that helps companies manage digital workflows for enterprise operations. Think of it as a digital control center that streamlines and automates routine tasks across various departments, from IT to HR to customer service.
NOW has one of the most impressive commercial profiles of any business. The company’s service offering is broad yet of the highest quality, while its TAM remains high. The company’s ability to gain market share to the extent it has puts it in a unique position to win in the coming years. We expect product launches to continue, the industry to grow, and NOW to maintain its near-perfect execution....
ServiceNow: One Of Our Top Picks For The Coming Decade