ServiceNow, Inc. (NOW): investment thesis checklist
What a value investor writing down why they own ServiceNow, Inc. would be relying on, read from its filings: the figures that have carried the business, the lines a reader might set on them, and the published tests it meets today. A list to write against, not a view on the company.
1. The figures the case would rest on
- Return on equity: 13.5% in FY2025; between -76.6% and 29.5% over 10 filed years, median 6.3%. Does the thesis need it to stay inside that range?
- Free cash flow yield: 2.9% in FY2025; between 1.2% and 2.9% over 9 filed years, median 1.9%. Does the thesis need it to stay inside that range?
- EV to EBIT: 87.18x in FY2025; between 87.18x and 1334.07x over 3 filed years, median 562.37x. Does the thesis need it to stay inside that range?
- Price to earnings: 91.73x in FY2025; between 84.11x and 932.97x over 7 filed years, median 154.76x. Does the thesis need it to stay inside that range?
- Gross margin: 77.5% in FY2025; between 71.3% and 79.2% over 10 filed years, median 77.3%. Does the thesis need it to stay inside that range?
- Operating margin: 13.7% in FY2025; between -27.5% and 13.7% over 10 filed years, median 4.4%. Does the thesis need it to stay inside that range?
- Net debt to EBITDA: -0.52x in FY2025; between -0.52x and 9.03x over 4 filed years, median 1.03x. Does the thesis need it to stay inside that range?
- Revenue growth, 5-year CAGR: 24.1% in FY2025; between 24.1% and 51.3% over 9 filed years, median 33.5%. Does the thesis need it to stay inside that range?
- Share count change: 0.4% in FY2025; between 0.2% and 10.9% over 8 filed years, median 1.2%. Does the thesis need it to stay inside that range?
2. What must stay true: guardrails a reader might set
Each line is drafted from ServiceNow, Inc.'s own current figure, never from a level we think a business should clear, and replayed over its filed years. They are a reader's to keep, edit or drop.
Debt to Equity stays at or below 0.24x
Today 0.19x. Replayed over 4 filed years, it would have broken in 3; most recently FY2020, at 0.75x (10-K, filed 2021-02-12).
Revenue Growth 1Y stays at or above 0%
Today 20.88%. Replayed over 9 filed years, it held in every one.
Return on Invested Capital stays at or above 9.69%
Today 12.11%. This indicator depends on inputs (market price, multi-statement composites) whose history is not deep enough to re-derive it with the same formula as the live value, so no honest retro-test exists for it.
3. What would break it
- A filed year in which debt to equity rose above 0.24x.
- A filed year in which revenue growth 1y fell below 0%.
- A filed year in which return on invested capital fell below 9.69%.
4. The published tests it meets today
Of 30 tests value investors published: 0 met, 29 not met, 1 we could not complete. Counts, never a score.
What this cannot tell you
What the numbers say today, not the day one stops being true. The reasons are not written down.
An account adds
One email the night a number you wrote down breaks. Silence otherwise.
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How this is computedA computation on accounts filed with the SEC, not a recommendation and not advice. Past filings do not indicate future results. Risk disclaimer.