ServiceNow (NYSE 🙂 offers enterprise cloud computing solutions for businesses worldwide. These include services that are designed, structured, consolidated, managed, and automated.

I believe in NOW stock. (See TipRanks Analysts’ Top Stocks for More Information)

21st Century’s Defining Tech

ServiceNow claims it wants to become the “defining enterprise-software company of the 21st Century.”

According to its 6,900 customers, 80% of Fortune 500 companies are represented. It is working towards this goal. The company also boasts 1,200 customers, whose average annual revenues are $3.5M.

In the end, long-time shareholders can be trusted.

Over $257,000 has been earned on an investment of $10,000 over 10 years. It is one of the top-performing companies during that time period. This is right: it offers a greater return on investment over high-flying companies like Alphabet, Microsoft (NASDAQ), Alphabet (NASDAQ), and Amazon (NASDAQ).

The company achieved this feat by expanding its customer base, offering more services to customers, providing amazing services and investing in growth.

How to Scale up Profitability

Over the past 10 years, revenue grew by more than 2,000% and gross profit increased 2,430%. This was in addition to the increase in share price. NOW has a 97% renewal percentage, which is in addition to growing their customer base.

This key metric will help you outperform your stock in SaaS. SaaS companies tend to spend much of their revenue on selling and marketing expenses (S&M). This investment can be prudent as long as customers are being gained at a rapid pace.

By having AN extremely high renewal rate, the S&M expenses are not being used to replace current customers as they drop off (customer churn). Instead, the investment in S&M goes to growth. This shows that even at its current price, the company is still incredibly valuable.

The company remains committed to new customer acquisition. The S&M department is by far the largest by employee head count. Subscription revenues continue to rise by more than 30% every quarter, year over year. For Fiscal Year 2021, the company expects 29% growth.

This is a significant feat considering the company’s size. In 2021, the company expects to generate $5.5 billion in subscription revenues. Bullish analysts are still forecasting $5.8 billion for 2021 and $7.31 trillion in 2022.

ServiceNow is very attractive at its current price. ServiceNow continues to expand at an incredible rate and generates tremendous cash flow. The Fortune 500 relies on ServiceNow to manage its workflow systems and customer retention.

Wall Street’s Take

Wall Street analysts have a strong opinion about NOW stock. They give it a Strong Buy consensus rating based on 20 Buys and two Holds. There are no Sell ratings.

The average NOW price target of $678.48 implies 7.8% upside potential.

Summary about ServiceNow

ServiceNow is an incredible investment that has proven to be a great return on shareholders’ capital.

This stock is still a great investment, even after this downturn.

The forward sales of the company are only 18.9x, which is close to historical averages. It may seem high for some conventional scales until you consider that the company continues to grow at over 30% annually and is now profitable.

Short interest is below 2% of the total float. This means that there is very little bearish sentiment. ServiceNow has the potential to outperform the wider market over the next few years.

Disclosure: Bradley Guichard held a position at the time this article was published in Securities.

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