Strong Gross Profit Margin
Low Debt Levels
Strong Return on Equity
Healthy Net Profit Margin
Strong Interest Coverage
Good Liquidity Ratios
💰 Strong Financial Fundamentals
🔗 Market Leadership in AI
📈 High Customer Retention
🚀 Innovative Product Development
🌍 Expanding Market Potential
High Valuation Ratios
High Price-to-Sales Ratio
Moderate Operating Profit Margin
High Price to Free Cash Flow Ratio
Low Cash Ratio
⚠️ Dependency on AI Adoption
⏳ Transition to Hybrid Model
Overall, ServiceNow showcases strong business fundamentals, a significant focus on AI innovation, and high customer retention. However, its future growth may be challenged by the need for customer adoption of new AI offerings and the transition to a hybrid pricing model.
Analysis Date: January 29, 2025
Last Updated: March 12, 2025
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
Benjamin Graham's value investing approach focuses on finding stocks with a significant margin of safety between their intrinsic value and market price.
Intrinsic Value
Estimated fair value based on Graham's formula
$266.32
Current Market Price: $725.85
IV/P Ratio: 0.37x (>1.0 indicates undervalued)
Margin of Safety
Gap between intrinsic value and market price
-173.0%
Graham recommended a minimum of 20-30% margin of safety
Higher values indicate a greater potential discount to fair value
Graham Criteria Checklist
Benjamin Graham's value investing checklist for NOW
Positive earnings (5+ years)
Dividend history (5+ years)
P/E ratio ≤ 20 (104.32)
P/B ratio ≤ 1.5 (13.11)
Current ratio ≥ 2.0 (1.10x)
Long-term debt < Net current assets (0.83x)
Margin of safety (-173.0%)
NOW does not meet all Graham criteria
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
The return on equity (ROE) stands at 15.24%, indicating effective use of equity to generate profits.
A net profit margin of 12.97% reflects strong profitability after all expenses are accounted for.
The operating profit margin is 12.42%, which, while positive, may indicate room for improvement compared to peers.
The price to free cash flow (P/FCF) ratio of 55.14 suggests that the stock may be expensive relative to its free cash flow generation.
Profitability metrics measure a company's ability to generate earnings relative to its revenue, operating costs, and other relevant metrics. Higher values generally indicate better performance.
Return on Equity (ROE)
Measures how efficiently a company uses its equity to generate profits
15.98%
Higher values indicate better returns for shareholders
TTM (as of 2025-04-16)
Return on Assets (ROA)
Measures how efficiently a company uses its assets to generate profits
1.88%
Higher values indicate better asset utilization
TTM (as of 2025-04-16)
Gross Profit Margin
Percentage of revenue retained after accounting for cost of goods sold
79.18%
Higher values indicate better efficiency in production
TTM (as of 2025-04-16)
Net Profit Margin
Percentage of revenue retained after accounting for all expenses
12.97%
Higher values indicate better overall profitability
TTM (as of 2025-04-16)
An interest coverage ratio of 59.30 indicates that the company can comfortably meet its interest obligations.
Both the current ratio and quick ratio are above 1, indicating sufficient short-term assets to cover liabilities.
The cash ratio of 0.28 indicates that while the company is liquid, it may not have enough cash to cover short-term liabilities if needed.
Financial health metrics assess a company's ability to meet its financial obligations and its overall financial stability.
Debt to Equity Ratio
Total debt divided by total equity
0.07x
Lower values indicate less financial leverage and risk
Less than 1.0 is conservative, 1.0-2.0 is moderate, >2.0 indicates high risk
Q4 2024
Current Ratio
Current assets divided by current liabilities
1.10x
Higher values indicate better short-term liquidity
Less than 1.0 is concerning, 1.0-2.0 is adequate, greater than 2.0 is good
Q4 2024
ServiceNow demonstrated robust financial performance with subscription revenue growth of 21% year-over-year and a total remaining performance obligation (RPO) of nearly $23 billion. Their operating margin was 29.5%, indicating strong profitability.
ServiceNow is positioning itself at the forefront of the generative AI revolution, with a 150% quarter-over-quarter deal growth in their Pro Plus AI offerings. This positions them uniquely in an increasingly AI-driven enterprise software landscape.
With a renewal rate of 98%, ServiceNow exhibits strong customer trust and loyalty, indicating satisfaction with their platform and services.
While ServiceNow's AI capabilities are promising, the dependency on customer adoption of these AI solutions presents a risk if uptake does not meet expectations.
The company is integrating AI capabilities into its existing offerings, with new features like Now Assist expected to drive significant value and customer engagement, potentially leading to increased consumption and revenue.
ServiceNow is exploring new partnerships and expanding its offerings to a broader market, including public sector opportunities, creating substantial growth avenues.
The shift towards a hybrid subscription and consumption model may initially slow growth as customers adapt to new pricing structures, potentially impacting short-term revenue.