Research Report ServiceNowTaylor HoffmanJanuary 9, 2019
Fair Value Estimate: $212 vs. Current Price: $169.11 (as of 1/9/2019)
Industry: Software – Application
Thesis: ServiceNow operates in a winner takes all market. Both Gartner and Forrester research place the company’s IT Systems Management (ITSM) product as the undisputed leader in the industry. As a result, 69% of U.S.-based Global 2000 customers use ServiceNow. The company can leverage its leading ITSM product to upsell existing customers on emerging product lines that expand the addressable market to over $77B. In our view, ServiceNow has a durable business that will continue to benefit from the network effect. The upgrade cycle from on-premise legacy solutions to cloud-based enterprise software puts ServiceNow at an advantage relative to competitors that lack cloud capabilities.