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ServiceNow Inc NOW

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Morningstar’s Analysis

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Economic Moat




Business as Usual for ServiceNow, Including Solid Results and Guidance; Raising FVE to $420

Dan Romanoff, CPA Equity Analyst

Analyst Note

| Dan Romanoff, CPA |

Wide-moat ServiceNow delivered good results, including upside to headline numbers and modestly raised full-year guidance after accounting for upside in the quarter. Management was pleased with sales execution in the face of the ongoing coronavirus pandemic. We think digital transformation efforts are being pulled forward as firms’ IT infrastructures have often been exposed as insufficient in the current remote work environment. We believe results continue to support our thesis centering on the company’s land and expand strategy. ServiceNow continues to leverage its strength in workflow automation to penetrate existing customers more deeply in IT and more broadly with HR and customer service specific products. We maintain our wide moat and after filtering results and guidance through our model, we are raising our fair value estimate to $420, from $388, based on slightly better long-term profitability within our model. We see shares as about fairly valued.

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Company Profile

Business Description

ServiceNow Inc provides software solutions to structure and automate various business processes via a SaaS delivery model. The company primarily focuses on the IT function for enterprise customers. ServiceNow began with IT service management (ITSM), expanded within the IT function, and more recently directed its workflow automation logic to functional areas beyond IT, notably customer service, HR service delivery, and security operations. ServiceNow also offers an application development platform as a service (PaaS).

2225 Lawson Lane
Santa Clara, CA, 95054
T +1 408 501-8550
Sector Technology
Industry Software - Application
Most Recent Earnings Jun 30, 2020
Fiscal Year End Dec 31, 2020
Stock Type Speculative Growth
Employees 11,901