Intrinsic value of ServiceNow - NOW

Previous Close

$121.01

  Intrinsic Value

$2.79

stock screener

  Rating & Target

str. sell

-98%

Previous close

$121.01

 
Intrinsic value

$2.79

 
Up/down potential

-98%

 
Rating

str. sell

We calculate the intrinsic value of NOW stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 20.7

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  38.41
  38.40
  35.06
  32.05
  29.35
  26.91
  24.72
  22.75
  20.98
  19.38
  17.94
  16.65
  15.48
  14.43
  13.49
  12.64
  11.88
  11.19
  10.57
  10.01
  9.51
  9.06
  8.65
  8.29
  7.96
  7.66
  7.40
  7.16
  6.94
  6.75
  6.57
Revenue, $m
  1,391
  1,925
  2,600
  3,434
  4,441
  5,637
  7,030
  8,629
  10,439
  12,462
  14,698
  17,145
  19,799
  22,656
  25,713
  28,963
  32,403
  36,028
  39,837
  43,826
  47,994
  52,343
  56,873
  61,587
  66,490
  71,586
  76,881
  82,384
  88,104
  94,049
  100,231
Variable operating expenses, $m
 
  2,242
  3,025
  3,991
  5,160
  6,547
  8,163
  10,019
  12,118
  14,465
  17,058
  19,888
  22,967
  26,282
  29,828
  33,598
  37,588
  41,794
  46,212
  50,839
  55,675
  60,719
  65,974
  71,443
  77,130
  83,042
  89,185
  95,569
  102,203
  109,100
  116,271
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  1,813
  2,242
  3,025
  3,991
  5,160
  6,547
  8,163
  10,019
  12,118
  14,465
  17,058
  19,888
  22,967
  26,282
  29,828
  33,598
  37,588
  41,794
  46,212
  50,839
  55,675
  60,719
  65,974
  71,443
  77,130
  83,042
  89,185
  95,569
  102,203
  109,100
  116,271
Operating income, $m
  -423
  -316
  -424
  -558
  -719
  -910
  -1,133
  -1,389
  -1,679
  -2,003
  -2,360
  -2,744
  -3,168
  -3,626
  -4,115
  -4,635
  -5,186
  -5,766
  -6,375
  -7,014
  -7,681
  -8,377
  -9,102
  -9,856
  -10,641
  -11,456
  -12,304
  -13,184
  -14,100
  -15,051
  -16,040
EBITDA, $m
  -340
  -248
  -335
  -442
  -572
  -726
  -906
  -1,112
  -1,345
  -1,606
  -1,894
  -2,209
  -2,551
  -2,919
  -3,313
  -3,731
  -4,175
  -4,642
  -5,132
  -5,646
  -6,183
  -6,743
  -7,327
  -7,934
  -8,566
  -9,223
  -9,905
  -10,614
  -11,351
  -12,117
  -12,913
Interest expense (income), $m
  0
  18
  10
  27
  48
  74
  105
  141
  182
  228
  280
  338
  401
  469
  542
  621
  704
  793
  886
  984
  1,086
  1,193
  1,305
  1,421
  1,543
  1,668
  1,799
  1,935
  2,077
  2,224
  2,377
Earnings before tax, $m
  -450
  -334
  -434
  -585
  -767
  -985
  -1,238
  -1,530
  -1,861
  -2,231
  -2,641
  -3,081
  -3,569
  -4,095
  -4,657
  -5,256
  -5,890
  -6,558
  -7,261
  -7,997
  -8,767
  -9,570
  -10,407
  -11,277
  -12,183
  -13,125
  -14,103
  -15,120
  -16,176
  -17,275
  -18,417
Tax expense, $m
  2
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Net income, $m
  -452
  -334
  -434
  -585
  -767
  -985
  -1,238
  -1,530
  -1,861
  -2,231
  -2,641
  -3,081
  -3,569
  -4,095
  -4,657
  -5,256
  -5,890
  -6,558
  -7,261
  -7,997
  -8,767
  -9,570
  -10,407
  -11,277
  -12,183
  -13,125
  -14,103
  -15,120
  -16,176
  -17,275
  -18,417

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  899
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  2,034
  1,570
  2,121
  2,801
  3,623
  4,597
  5,734
  7,039
  8,515
  10,165
  11,989
  13,984
  16,149
  18,480
  20,973
  23,624
  26,430
  29,387
  32,493
  35,747
  39,147
  42,694
  46,389
  50,234
  54,233
  58,390
  62,709
  67,198
  71,863
  76,712
  81,754
Adjusted assets (=assets-cash), $m
  1,135
  1,570
  2,121
  2,801
  3,623
  4,597
  5,734
  7,039
  8,515
  10,165
  11,989
  13,984
  16,149
  18,480
  20,973
  23,624
  26,430
  29,387
  32,493
  35,747
  39,147
  42,694
  46,389
  50,234
  54,233
  58,390
  62,709
  67,198
  71,863
  76,712
  81,754
Revenue / Adjusted assets
  1.226
  1.226
  1.226
  1.226
  1.226
  1.226
  1.226
  1.226
  1.226
  1.226
  1.226
  1.226
  1.226
  1.226
  1.226
  1.226
  1.226
  1.226
  1.226
  1.226
  1.226
  1.226
  1.226
  1.226
  1.226
  1.226
  1.226
  1.226
  1.226
  1.226
  1.226
Average production assets, $m
  218
  300
  406
  536
  693
  879
  1,097
  1,346
  1,629
  1,944
  2,293
  2,675
  3,089
  3,534
  4,011
  4,518
  5,055
  5,620
  6,215
  6,837
  7,487
  8,165
  8,872
  9,608
  10,372
  11,167
  11,993
  12,852
  13,744
  14,672
  15,636
Working capital, $m
  271
  -868
  -1,173
  -1,549
  -2,003
  -2,542
  -3,171
  -3,892
  -4,708
  -5,620
  -6,629
  -7,732
  -8,929
  -10,218
  -11,596
  -13,062
  -14,614
  -16,249
  -17,966
  -19,765
  -21,645
  -23,607
  -25,650
  -27,776
  -29,987
  -32,285
  -34,673
  -37,155
  -39,735
  -42,416
  -45,204
Total debt, $m
  508
  274
  770
  1,382
  2,121
  2,999
  4,022
  5,196
  6,524
  8,009
  9,651
  11,447
  13,395
  15,493
  17,737
  20,123
  22,648
  25,309
  28,105
  31,033
  34,093
  37,286
  40,611
  44,072
  47,671
  51,412
  55,299
  59,339
  63,537
  67,902
  72,440
Total liabilities, $m
  1,647
  1,413
  1,909
  2,521
  3,260
  4,138
  5,161
  6,335
  7,663
  9,148
  10,790
  12,586
  14,534
  16,632
  18,876
  21,262
  23,787
  26,448
  29,244
  32,172
  35,232
  38,425
  41,750
  45,211
  48,810
  52,551
  56,438
  60,478
  64,676
  69,041
  73,579
Total equity, $m
  387
  157
  212
  280
  362
  460
  573
  704
  851
  1,016
  1,199
  1,398
  1,615
  1,848
  2,097
  2,362
  2,643
  2,939
  3,249
  3,575
  3,915
  4,269
  4,639
  5,023
  5,423
  5,839
  6,271
  6,720
  7,186
  7,671
  8,175
Total liabilities and equity, $m
  2,034
  1,570
  2,121
  2,801
  3,622
  4,598
  5,734
  7,039
  8,514
  10,164
  11,989
  13,984
  16,149
  18,480
  20,973
  23,624
  26,430
  29,387
  32,493
  35,747
  39,147
  42,694
  46,389
  50,234
  54,233
  58,390
  62,709
  67,198
  71,862
  76,712
  81,754
Debt-to-equity ratio
  1.313
  1.750
  3.630
  4.930
  5.860
  6.520
  7.010
  7.380
  7.660
  7.880
  8.050
  8.190
  8.290
  8.380
  8.460
  8.520
  8.570
  8.610
  8.650
  8.680
  8.710
  8.730
  8.750
  8.770
  8.790
  8.800
  8.820
  8.830
  8.840
  8.850
  8.860
Adjusted equity ratio
  -0.451
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -452
  -334
  -434
  -585
  -767
  -985
  -1,238
  -1,530
  -1,861
  -2,231
  -2,641
  -3,081
  -3,569
  -4,095
  -4,657
  -5,256
  -5,890
  -6,558
  -7,261
  -7,997
  -8,767
  -9,570
  -10,407
  -11,277
  -12,183
  -13,125
  -14,103
  -15,120
  -16,176
  -17,275
  -18,417
Depreciation, amort., depletion, $m
  83
  68
  89
  115
  147
  184
  228
  278
  334
  397
  467
  535
  618
  707
  802
  904
  1,011
  1,124
  1,243
  1,367
  1,497
  1,633
  1,774
  1,922
  2,074
  2,233
  2,399
  2,570
  2,749
  2,934
  3,127
Funds from operations, $m
  256
  -266
  -345
  -469
  -621
  -800
  -1,011
  -1,253
  -1,527
  -1,834
  -2,174
  -2,547
  -2,951
  -3,388
  -3,855
  -4,352
  -4,879
  -5,434
  -6,018
  -6,630
  -7,269
  -7,937
  -8,632
  -9,356
  -10,109
  -10,891
  -11,704
  -12,549
  -13,428
  -14,340
  -15,290
Change in working capital, $m
  96
  -241
  -304
  -376
  -454
  -539
  -628
  -721
  -816
  -912
  -1,008
  -1,103
  -1,197
  -1,289
  -1,378
  -1,466
  -1,551
  -1,635
  -1,718
  -1,799
  -1,880
  -1,961
  -2,043
  -2,126
  -2,211
  -2,298
  -2,388
  -2,482
  -2,579
  -2,681
  -2,788
Cash from operations, $m
  160
  -25
  -40
  -93
  -166
  -261
  -382
  -531
  -710
  -922
  -1,166
  -1,443
  -1,754
  -2,099
  -2,477
  -2,886
  -3,327
  -3,799
  -4,301
  -4,831
  -5,389
  -5,976
  -6,589
  -7,230
  -7,898
  -8,593
  -9,316
  -10,067
  -10,848
  -11,659
  -12,502
Maintenance CAPEX, $m
  0
  -44
  -60
  -81
  -107
  -139
  -176
  -219
  -269
  -326
  -389
  -459
  -535
  -618
  -707
  -802
  -904
  -1,011
  -1,124
  -1,243
  -1,367
  -1,497
  -1,633
  -1,774
  -1,922
  -2,074
  -2,233
  -2,399
  -2,570
  -2,749
  -2,934
New CAPEX, $m
  -124
  -83
  -105
  -130
  -157
  -186
  -217
  -249
  -282
  -316
  -349
  -382
  -414
  -446
  -477
  -507
  -537
  -566
  -594
  -622
  -650
  -678
  -707
  -735
  -765
  -795
  -826
  -858
  -892
  -927
  -964
Cash from investing activities, $m
  -108
  -127
  -165
  -211
  -264
  -325
  -393
  -468
  -551
  -642
  -738
  -841
  -949
  -1,064
  -1,184
  -1,309
  -1,441
  -1,577
  -1,718
  -1,865
  -2,017
  -2,175
  -2,340
  -2,509
  -2,687
  -2,869
  -3,059
  -3,257
  -3,462
  -3,676
  -3,898
Free cash flow, $m
  52
  -151
  -206
  -305
  -430
  -586
  -775
  -1,000
  -1,262
  -1,563
  -1,903
  -2,283
  -2,703
  -3,162
  -3,660
  -4,196
  -4,768
  -5,376
  -6,019
  -6,696
  -7,407
  -8,151
  -8,929
  -9,740
  -10,584
  -11,462
  -12,375
  -13,325
  -14,311
  -15,335
  -16,400
Issuance/(repayment) of debt, $m
  -2
  -234
  495
  612
  740
  877
  1,023
  1,174
  1,329
  1,485
  1,641
  1,796
  1,948
  2,098
  2,244
  2,386
  2,525
  2,662
  2,796
  2,928
  3,060
  3,192
  3,325
  3,461
  3,599
  3,741
  3,888
  4,040
  4,199
  4,364
  4,538
Issuance/(repurchase) of shares, $m
  66
  1,003
  489
  653
  850
  1,082
  1,352
  1,660
  2,008
  2,396
  2,823
  3,281
  3,786
  4,328
  4,906
  5,521
  6,170
  6,854
  7,572
  8,323
  9,107
  9,925
  10,776
  11,662
  12,583
  13,540
  14,535
  15,569
  16,643
  17,760
  18,921
Cash from financing (excl. dividends), $m  
  -56
  769
  984
  1,265
  1,590
  1,959
  2,375
  2,834
  3,337
  3,881
  4,464
  5,077
  5,734
  6,426
  7,150
  7,907
  8,695
  9,516
  10,368
  11,251
  12,167
  13,117
  14,101
  15,123
  16,182
  17,281
  18,423
  19,609
  20,842
  22,124
  23,459
Total cash flow (excl. dividends), $m
  -11
  618
  779
  960
  1,159
  1,373
  1,599
  1,835
  2,075
  2,318
  2,561
  2,794
  3,031
  3,263
  3,490
  3,711
  3,928
  4,140
  4,349
  4,555
  4,760
  4,965
  5,173
  5,383
  5,598
  5,819
  6,047
  6,284
  6,531
  6,789
  7,059
Retained Cash Flow (-), $m
  180
  -1,003
  -489
  -653
  -850
  -1,082
  -1,352
  -1,660
  -2,008
  -2,396
  -2,823
  -3,281
  -3,786
  -4,328
  -4,906
  -5,521
  -6,170
  -6,854
  -7,572
  -8,323
  -9,107
  -9,925
  -10,776
  -11,662
  -12,583
  -13,540
  -14,535
  -15,569
  -16,643
  -17,760
  -18,921
Prev. year cash balance distribution, $m
 
  899
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  514
  290
  307
  309
  291
  248
  174
  67
  -78
  -262
  -487
  -755
  -1,065
  -1,417
  -1,810
  -2,243
  -2,714
  -3,223
  -3,768
  -4,347
  -4,959
  -5,603
  -6,279
  -6,985
  -7,721
  -8,488
  -9,285
  -10,112
  -10,971
  -11,862
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  493
  265
  267
  255
  226
  180
  118
  42
  -45
  -137
  -231
  -322
  -405
  -476
  -531
  -570
  -591
  -594
  -580
  -552
  -513
  -465
  -412
  -356
  -300
  -248
  -199
  -156
  -120
  -89
Current shareholders' claim on cash, %
  100
  50.0
  38.1
  29.2
  22.4
  17.2
  13.3
  10.3
  8.0
  6.3
  4.9
  3.9
  3.0
  2.4
  1.9
  1.5
  1.2
  0.9
  0.7
  0.6
  0.5
  0.4
  0.3
  0.2
  0.2
  0.2
  0.1
  0.1
  0.1
  0.1
  0.1

ServiceNow, Inc. is provider of enterprise cloud computing solutions that define, structure, manage and automate services for global enterprises. The Company offers a set of cloud-based services that automate workflow within and between departments in an enterprise. It provides workflow solutions, and focuses on service management for customer support, human resources, security operations and other enterprise departments. The platform also enables customers to create, by themselves or with its partners, their own service-oriented business applications throughout the enterprise. The Company delivers its software through the Internet as a service. It markets its services to enterprises in a range of industries, including financial services, consumer products, information technology services, healthcare, government, education and technology. It operates data centers in Australia, Brazil, Canada, Hong Kong, the Netherlands, Singapore, Switzerland, the United Kingdom and the United States.

FINANCIAL RATIOS  of  ServiceNow (NOW)

Valuation Ratios
P/E Ratio -44.8
Price to Sales 14.6
Price to Book 52.4
Price to Tangible Book
Price to Cash Flow 126.6
Price to Free Cash Flow 562.8
Growth Rates
Sales Growth Rate 38.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 39.3%
Cap. Spend. - 3 Yr. Gr. Rate 17.7%
Financial Strength
Quick Ratio NaN
Current Ratio 0.1
LT Debt to Equity 131.3%
Total Debt to Equity 131.3%
Interest Coverage 0
Management Effectiveness
Return On Assets -23.5%
Ret/ On Assets - 3 Yr. Avg. -16.5%
Return On Total Capital -46.7%
Ret/ On T. Cap. - 3 Yr. Avg. -29.5%
Return On Equity -94.8%
Return On Equity - 3 Yr. Avg. -59.3%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 71.3%
Gross Margin - 3 Yr. Avg. 67.4%
EBITDA Margin -26.4%
EBITDA Margin - 3 Yr. Avg. -19.7%
Operating Margin -30.3%
Oper. Margin - 3 Yr. Avg. -23%
Pre-Tax Margin -32.4%
Pre-Tax Margin - 3 Yr. Avg. -25.8%
Net Profit Margin -32.5%
Net Profit Margin - 3 Yr. Avg. -26.1%
Effective Tax Rate -0.4%
Eff/ Tax Rate - 3 Yr. Avg. -1.6%
Payout Ratio 0%

NOW stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the NOW stock intrinsic value calculation we used $1391 million for the last fiscal year's total revenue generated by ServiceNow. The default revenue input number comes from 2016 income statement of ServiceNow. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our NOW stock valuation model: a) initial revenue growth rate of 38.4% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for NOW is calculated based on our internal credit rating of ServiceNow, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of ServiceNow.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of NOW stock the variable cost ratio is equal to 116.6%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for NOW stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for ServiceNow.

Corporate tax rate of 27% is the nominal tax rate for ServiceNow. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the NOW stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for NOW are equal to 15.6%.

Life of production assets of 3.5 years is the average useful life of capital assets used in ServiceNow operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for NOW is equal to -45.1%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $387 million for ServiceNow - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 170.726 million for ServiceNow is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of ServiceNow at the current share price and the inputted number of shares is $20.7 billion.

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ZEN Zendesk 33.94 0.63  str.sell

COMPANY NEWS

▶ ServiceNow Reaches 80-Plus Relative Strength Rating Benchmark   [Dec-07-17 03:00AM  Investor's Business Daily]
▶ ServiceNow's Uptrend Is Still Going Strong   [Nov-27-17 01:03PM  TheStreet.com]
▶ 5 Companies That Microsoft Could Put on Its Shopping List   [Nov-25-17 05:20PM  TheStreet.com]
▶ Is It Too Late To Buy ServiceNow Inc (NOW)?   [Nov-15-17 07:27PM  Simply Wall St.]
▶ ServiceNow to Present at Upcoming Investor Conferences   [Nov-10-17 08:00AM  Business Wire]
▶ ETFs with exposure to ServiceNow, Inc. : November 9, 2017   [Nov-09-17 12:59PM  Capital Cube]
▶ Top NasdaqGM Growth Stocks To Buy   [Nov-08-17 11:02AM  Simply Wall St.]
▶ ServiceNow Profit Beats, Billings Upside Light, Investors Take Profits   [Oct-25-17 05:19PM  Investor's Business Daily]
▶ ServiceNow reports 3Q loss   [04:57PM  Associated Press]
▶ ServiceNow scoops up San Mateo mobile platform startup   [09:48AM  American City Business Journals]
▶ ServiceNow, Inc. to Host Earnings Call   [08:05AM  ACCESSWIRE]
▶ ETFs with exposure to ServiceNow, Inc. : October 16, 2017   [Oct-16-17 09:57AM  Capital Cube]
▶ ETFs with exposure to ServiceNow, Inc. : October 5, 2017   [Oct-05-17 11:12AM  Capital Cube]
▶ 3 Stocks That Look Just Like Salesforce in 2002   [Sep-27-17 09:00AM  Motley Fool]
▶ ServiceNow Is NOW Poised for a Breakout   [Aug-31-17 01:05PM  TheStreet.com]
▶ Why ServiceNow Could Be Actionable At New High   [04:48AM  Investor's Business Daily]
▶ ServiceNow reports 2Q loss   [Jul-26-17 10:33PM  Associated Press]
▶ [$$] Tech M&A: thrift shop picks   [Jun-19-17 06:55AM  Financial Times]
▶ The 3 Best IT Services Companies to Buy in 2017   [Jun-02-17 09:28PM  Motley Fool]
▶ ServiceNow Price Target Hiked On Improving Margins, Cash Flow   [May-25-17 04:08PM  Investor's Business Daily]
▶ 3 Stocks That Look Just Like Google in 2004   [May-20-17 01:18PM  Motley Fool]
▶ ETFs with exposure to ServiceNow, Inc. : May 11, 2017   [May-11-17 05:15PM  Capital Cube]
▶ ServiceNow Launches Trusted Security Circles   [08:00AM  Business Wire]
▶ ServiceNow Launches Cloud Management   [08:00AM  Business Wire]
▶ Stocks To Buy And Watch: Top IPOs, Big And Small Caps, Growth Stocks   [May-09-17 10:33AM  Investor's Business Daily]
▶ Boeing, ServiceNow Get Price-Target Hikes; McDonald's A Buy   [04:40PM  Investor's Business Daily]
▶ ServiceNow reports 1Q loss   [Apr-26-17 04:52PM  Associated Press]
▶ ServiceNow's New CEO To Debut On Q1 Earnings Call   [10:06AM  Investor's Business Daily]
Financial statements of NOW
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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