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.