ServiceNow, Inc. (NYSE: NOW)

Sector: Technology Industry: Software - Application CIK: 0001373715
Market Cap 151.53 Bn
P/B 13.41
P/E 87.54
P/S 11.96
ROIC (Qtr) 9.39
Div Yield % 0.00
Rev 1y % (Qtr) 21.81
Total Debt (Qtr) 2.40 Bn
Debt/Equity (Qtr) 0.21

About

ServiceNow, Inc., recognized in the enterprise software industry by its ticker symbol NOW, specializes in delivering a suite of cloud-based products and services. These offerings help companies automate and streamline their workflows, enhancing productivity and customer experiences. With its headquarters in Santa Clara, California, ServiceNow has established a strong presence in various industries, including technology, healthcare, financial services, government, and more, spanning across numerous countries and regions. The company's primary business...

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Price action

Investment thesis

Bull case

  • Strong operating cash flow of 4.84B provides robust 2.02x coverage of total debt 2.40B, indicating excellent debt servicing capability and financial flexibility.
  • Healthy cash reserves of 2.73B provide 25.47x coverage of short-term debt 107M, demonstrating strong liquidity position and minimal refinancing risk.
  • Strong tangible asset base of 19.58B provides 8.15x coverage of total debt 2.40B, indicating robust asset backing and low credit risk.
  • Robust free cash flow of 3.96B exceeds capital expenditure of 883M by 4.48x, indicating strong organic growth funding capability.
  • Robust tangible asset base of 19.58B provides 39.39x coverage of working capital 497M, indicating strong operational backing.

Bear case

  • Operating cash flow of 4.84B barely covers its investment activities of (1.93B), with a coverage ratio of -2.51, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Investment activities of (1.93B) provide weak support for R&D spending of 2.85B, which is -0.68x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Cash reserves of 2.73B provide limited coverage of acquisition spending of (246M), which is -11.08x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Operating cash flow of 4.84B provides insufficient coverage of deferred revenue obligations of 6.46B, which is 0.75x, raising concerns about future service delivery capabilities.
  • The company's operating cash flow of 4.84B shows concerning coverage of stock compensation expenses of 1.92B, with a 2.53 ratio indicating potential earnings quality issues.

Geographical Breakdown of Revenue (2024)

Product and Service Breakdown of Revenue (2024)

Peer comparison

Companies in the Software - Application
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 SAP Sap Se 281.21 Bn 33.75 6.55 10.73 Bn
2 CRM Salesforce, Inc. 248.88 Bn 34.46 6.17 11.14 Bn
3 SHOP Shopify Inc. 217.18 Bn 121.94 20.30 1.12 Bn
4 UBER Uber Technologies, Inc 182.87 Bn 10.99 3.69 12.19 Bn
5 INTU Intuit Inc. 182.36 Bn 44.28 9.38 6.78 Bn
6 NOW ServiceNow, Inc. 151.53 Bn 87.54 11.96 2.40 Bn
7 ADBE Adobe Inc. 146.69 Bn 21.08 6.33 6.64 Bn
8 ADP Automatic Data Processing Inc 108.05 Bn 26.12 5.17 9.77 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 6.92 2.68
EV to Cash from Ops. EV/CFO 31.15 13.34
EV to Debt EV to Debt 62.79 57.60
EV to EBIT EV/EBIT 69.09 19.20
EV to EBITDA EV/EBITDA 61.94 15.11
EV to Free Cash Flow [EV/FCF] EV/FCF 38.10 14.78
EV to Market Cap EV to Market Cap 1.00 -93.16
EV to Revenue EV/Rev 11.91 4.63
Price to Book Value [P/B] P/B 13.41 4.29
Price to Earnings [P/E] P/E 87.54 -132.44
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 -3.95
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 4.25
Dividend per Basic Share Div per Share (Qtr) 0.00 0.15
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 2.52
Interest Coverage Int. cover (Qtr) 0.00 -52.32
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -2.67 -259.78
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 44.56 9,763.58
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 1.61
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 29.57 -263.15
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 33.50 56.46
EBIT Growth (1y) % EBIT 1y % (Qtr) 34.59 -225.15
EBT Growth (1y) % EBT 1y % (Qtr) 34.59 -86.10
EPS Growth (1y) % EPS 1y % (Qtr) 28.46 123.84
FCF Growth (1y) % FCF 1y % (Qtr) 17.20 -36.82
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 19.24 95.08
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.58 0.58
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.02
Cash Ratio Cash Ratio (Qtr) 0.35 3.75
Current Ratio Curr Ratio (Qtr) 1.06 8.16
Debt to Equity Ratio Debt/Equity (Qtr) 0.21 0.17
Interest Cover Ratio Int Coverage (Qtr) 0.00 -52.32
Times Interest Earned Times Interest Earned (Qtr) 0.00 -52.32
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 22.60 -100.06
EBIT Margin % EBIT Margin % (Qtr) 17.23 -164.24
EBT Margin % EBT Margin % (Qtr) 17.23 -116.94
Gross Margin % Gross Margin % (Qtr) 78.10 58.20
Net Profit Margin % Net Margin % (Qtr) 13.70 -121.65