Servicenow-CIS-SAM thinking - Certified Implementation Specialist - Software Asset Management Updated: 2024 | ||||||||||||||||||||||||||||||||||||
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Exam Code: Servicenow-CIS-SAM Certified Implementation Specialist - Software Asset Management thinking January 2024 by Killexams.com team | ||||||||||||||||||||||||||||||||||||
Servicenow-CIS-SAM Certified Implementation Specialist - Software Asset Management The ServiceNow Certified Implementation Specialist – Software Asset Management Professional (SAM) test Specification defines the purpose, audience, testing options, exam content coverage, test framework, and prerequisites to become a ServiceNow SAM Implementation Specialist. Exam Purpose The ServiceNow Certified Implementation Specialist – Software Asset Management (SAM) Professional test certifies that a successful candidate has the skills and essential knowledge to contribute to the configuration, implementation, and maintenance of the ServiceNow SAM Professional application. Exam content is divided into Learning Domains that correspond to key syllabus and activities typically encountered during ServiceNow implementations. In each Learning Domain, specific learning objectives have been identified and are tested in the exam. The following table shows the learning domains, weightings, and sub-skills measured by this test and the percentage of questions represented in each domain. The listed subskills should NOT be considered an all-inclusive list of test content. Learning Domain % of Exam 1 Software Asset Core Overview & Fundamentals • Software Asset Management Basics • Process Architecture • Application Introduction and Recommended Practices 14% 2 Data Integrity – Attributes and Sources for the Data • Importing Data • Software Discovery and Normalization • Content Service 28% 3 Practical Management of Software Compliance • Products and Models • License Metrics, Entitlements, and Allocations • Software Reconciliation 30% 4 Operational Integration of Software Processes • Contract and Change Management • Service Catalog and Procurement • Software Remediation 13% 5 Extending SAM • Software Model Lifecycle and Retirement • Software Installation Optimization • Reporting, Implementation, and Maintenance 15% Total 100% Exam Structure The test consists of 60 questions. For each question on the examination, there are multiple possible responses. The person taking the test reviews the response options and selects the most correct answer to the question. Multiple Choice (single answer) For each multiple-choice question on the exam, there are at least four possible responses. The candidate taking the test reviews the response options and selects the one response that most accurately answers the question. Multiple Select (select all that apply) For each multiple-select question on the exam, there are at least four possible responses. The question will state how many responses should be selected. The candidate taking the test reviews the response options and selects ALL responses that accurately answer the question. Multiple-select questions have two or more correct responses. Exam Results After completing and submitting the exam, a pass or fail result is immediately calculated and displayed to the candidate. More detailed results are not provided to the candidate. Exam Retakes If a candidate fails to pass an exam, they may register to take the test again up to three more times for a cost of $100. | ||||||||||||||||||||||||||||||||||||
Certified Implementation Specialist - Software Asset Management ServiceNow Implementation thinking | ||||||||||||||||||||||||||||||||||||
Other ServiceNow examsServiceNow-CSA ServiceNow Certified System Administrator 2023Servicenow-CAD ServiceNow Certified Application Developer Servicenow-CIS-CSM Certified Implementation Specialist - Customer Service Management Servicenow-CIS-EM Certified Implementation Specialist - Event Mangement Servicenow-CIS-HR Certified Implementation Specialist - Human Resources Servicenow-CIS-RC Certified Implementation Specialist - Risk and Compliance Servicenow-CIS-SAM Certified Implementation Specialist - Software Asset Management Servicenow-CIS-VR Certified Implementation Specialist - Vulnerability Response Servicenow-PR000370 Certified System Administrator Servicenow-CIS-ITSM Certified Implementation Specialist IT Service Management ServiceNow-CIS-HAM Certified Implementation Specialist - Hardware Asset Management CIS-RCI ServiceNow Certified Implementation Specialist ? Risk and Compliance (CIS-RCI) CAS-PA ServiceNow Certified Application Specialist ? Performance Analytics CIS-FSM ServiceNow Certified Implementation Specialist ? Field Service Management CIS-VRM ServiceNow Vendor Risk Management CIS-CPG ServiceNow Certified Implementation Specialist ? Cloud Provisioning and Governance (CIS-CPG) | ||||||||||||||||||||||||||||||||||||
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Servicenow-CIS-SAM Dumps Servicenow-CIS-SAM Braindumps Servicenow-CIS-SAM Real Questions Servicenow-CIS-SAM Practice Test Servicenow-CIS-SAM dumps free ServiceNow Servicenow-CIS-SAM Certified Implementation Specialist - Software Asset Management http://killexams.com/pass4sure/exam-detail/Servicenow-CIS-SAM Question: 53 Which of the following are NOT features of the Publisher workbench navigation tree? (Choose two.) A. Expand and collapse tree links B. List of all publishers C. Software model compliance icons D. Filter products E. Compliance toggle switch F. List of all publishers out of compliance Answer: BF Reference: https://docs.servicenow.com/bundle/orlando-software-asset-management/page/product/software-asset-management2/concept/sam-license- workbench.html Question: 54 Which of the following license metrics require allocations in order to maintain compliance? (Choose two.) A. Per Core B. Per User C. Per Named Device D. Per Named User E. Per Core (with CAL) F. Per Application Instance G. Named User Plus Answer: BD Question: 55 ServiceNow Discovery has 4 phases: Scanning; Classification; Identification; and Exploration. In which phase is the software running on a device identified? A. Classification B. Scanning C. Exploration D. Identification Answer: A Reference: https://docs.servicenow.com/bundle/orlando-it-operations-management/page/product/discovery/concept/c_GetStartedWithDiscovery.html Question: 56 When receiving an order, which data point is mandatory? A. Assigned To B. Cost C. Asset Tag D. Serial Number Answer: C Reference: https://docs.servicenow.com/bundle/orlando-it-service-management/page/product/procurement/task/t_ReceiveAnAsset.html Question: 57 Which of the following data elements are key to an effective Software Asset Management practice within ServiceNow? (Choose four.) A. Software allocations B. Software models C. Foundation data D. Software contracts E. Software entitlements Answer: ABCE Question: 58 HOTSPOT Match the best practice method for the amount of data: Hot Area: Answer: Question: 59 What are three ways to get software asset data into ServiceNow? A. Clone, Background Script, Discovery B. Import Data, Plugin, Clone C. Discovery, Import Data, Manual D. Plugin, Background Script, Manual Answer: C Question: 60 Software Asset Lifecycle has __________ components. A. 8 B. 6 C. 7 D. 5 Answer: A For More exams visit https://killexams.com/vendors-exam-list Kill your test at First Attempt....Guaranteed! | ||||||||||||||||||||||||||||||||||||
I've written about ServiceNow (NYSE:NOW) a couple of times, and I am continually impressed every time I revisit them. I first bought shares in 2018, with that lot up 280% from purchase. I've added to that position, and the company is in my kids' long-term portfolios. Among software companies, NOW ranks with Adobe (ADBE) and Salesforce (CRM) in relative safety while maintaining double-digit revenue growth. The strength of the company's growth combined with its wide-moat and financial stability commands a premium in the market. The performance has been incredible, and the metrics look great, so what could go wrong? What I am looking at is an ultimately inevitable growth cliff. When a company like NOW hits 85% of customer penetration in the Fortune 500, the next question is where the company goes next. For one thing, as new software launches in generative AI bolster the company's offerings in areas like HR, customer service, and operations, upsell continues to be a strong suit for NOW. Typically, successful software as a service (SAAS) companies operate on a land-and-expand strategy, where the initial offering (in this case, IT services management) gets the foot in the door and the company continues to roll out and upsell. Looking above, with a historical 97-99% retention rate for customers and high net revenue retention, early customer cohorts have continued to grow their subscriptions over time. This provides a nice tailwind to revenue growth to make up for any churn and smooth out new customer acquisition. Looking over the past 10 years, though, revenue growth has slowed. It's inevitable, and as NOW has grown into a mega-cap, it's highly likely we see revenue growth rates continue to trend down slowly over the medium-to-long term. However, recent deal flow has remained impressive. The company reported in its most recent quarter closing 83 deals with over $1M in annual contract value (ACV), with 14 of the top 20 deals including all 7 workflows (ITSM, ITOM, ITAM, security and risk, customer, employee, and creator). There's no stronger sign of a company's reputation than new customers' willingness to dive in on the whole stack. Additionally, the company closed 19 Federal deals >$1M in ACV with 3 of those over $10M including a deal with the Air Force ranking in as their third largest in company history. Although opportunities with the government aren't going to break open a company-altering growth avenue, churn is negligible with a 99% retention rate. With that deal flow, subscription revenue growth came in at 24.5% yoy, with Federal growing 75%. Management discussed opportunities in industry-specific solutions like legal, finance, and procurement. I think industry-specific solutions are nice, but they also aren't going to set the world on fire for growth, considering the company's size at this juncture. However, internationally, the company generates around 26% of revenues in EMEA and 11% in APAC at this point, so strong traction outside the US is good to see for long-term growth. Some additional color from the earnings call:
The company's incorporation of generative AI into its offerings is good to see for maintaining its edge going forward. All the talk about growth would be for naught if NOW's offerings lost their lead against the competition. The company's website has some good videos showing use cases, but it's about what you'd likely expect. Customers, employees, etc. are able to use a chat box (AI assistant) to accomplish tasks that may have required scrolling an FAQ page or talking to a live person before. Additionally, they are leveraging AI to auto-summarize tickets, articles, etc. which I think could have some pretty substantial productivity gains. Here's some discussion on AI from the earnings call:
All that is to say NOW continues to impress me. My main concern as the company branches out into customer service and HR is the specter of competition from other major software companies, notably CRM. I think NOW has proven itself capable of competing, but growth will not be as easy against entrenched SaaS-native operators as it was stealing share from the legacy offerings. That being said, I don't see a growth cliff in the near term. Deal flow remains strong, and the company's new offerings continue to push out the TAM further and further. Looking at valuations across the space, the high-growth cohort has ticked back up into the tail end of the year, but overall valuations are about average compared with the long-term averages. NOW falls into the mid-growth cohort (just shy of the 25% cutoff for this grouping). Looking at the scatter plot of growth versus valuation (against sales) above NOW falls out above the mean, but deservedly so. For one thing, the company is actually profitable on a GAAP basis, which is not the norm. Looking at some comps, the company is growing way faster but is priced about the same as ADBE. It's also growing faster and priced about the same as PLTR and TEAM, as well. NOW's operating metrics against PLTR's aren't even comparable, but I'll leave you to draw whatever conclusions you want from that. Most of the companies residing below the curve are more speculative and less safe. As far as profitability, NOW's GAAP operating margin is only at 8%. The company still spends 37% of its revenues on sales and marketing and 24% on R&D, which are aggressive but relatively in line with other SaaS companies. Its G&A expenses are at 10% of revenues against the median of 16%, which is a good sign of cost controls. However, stock-based compensation of 18% of revenues is still pretty substantial and shows the company is heavily investing in personnel to maintain its growth rates. I'd anticipate there are many levers the company can pull to Boost profitability further once growth slows down, but ultimately the company is still trying to dominate as many areas as it can. I am happy to see management has a $1.2B share repurchase authorization in place to offset dilution for shareholders from SBC. Earnings growth rates have been strong from a small base, and the company has historically traded for high-flying 100X earnings. The concern with a company trading for such a lofty multiple is the ease with which it could compress. In the blink of an eye, the company could go from trading at 67X earnings today to 30X earnings, and some would still call the company expensive. This is a risk you'll have to swallow to invest in many of these types of companies, and it's a very real one. All it takes is a big enough speed bump in the company's growth rates or a bad outlook. However, at current projections, if the company maintains its current P/E ratio, earnings should grow at around a 20% per year clip. In order to illustrate the valuation risk, if the company were to trade at 47X earnings in 2025, despite the incredible earnings growth rates, investors would get zero return out of the stock. Despite that risk, NOW is a great growth story. I've got the company in all my portfolios, and I intend to continue holding it for the long term. The valuation has ticked up a little in the recent past, but it's a buy with the long-term in mind. I covered ServiceNow (NYSE:NOW) last January, concluding that the stock should reach $150B market cap over the next handful of years. Less than one year later, the stock is just about there. This is yet another case study of the irrationality of the market herd. In July of 2022, sentiment on ServiceNow was extremely negative, as CEO Bill McDermott expressed concern in "macro crosswinds" and "elongated sales cycles". What has ServiceNow done since? In April of this year, it slightly reduced its long term guidance from $16B+ in revenue by 2026 to $15B+. The long term revenue trajectory should be the most important input for investors assessing the business' value. This should have been a negative revelation, yet the stock has soared as ServiceNow has outperformed near term expectations, raising current year guidance throughout the year. ServiceNow is an easy business to get excited about. ServiceNow's early leaders determined the platform was far more useful beyond being a traditional IT help desk. ServiceNow is an entire workflow solution, meaning it can transfer information from one party to another in a variety of applications. In addition to IT service management, this includes managing IT operations and assets, employee requests, and customer requests. ServiceNow seems to perpetually discover new avenues where its platform can be useful, which gives investors more confidence in our year growth and performance. ServiceNow has blasted past the organic revenue growth trajectories of behemoths like Salesforce (CRM), Adobe (ADBE), and Oracle (ORCL) by continuing to penetrate the world's best enterprise and government customers. ServiceNow had its best quarter ever for new government deals:
It's easy to be suspicious of CEOs like Bill McDermott that talk a big game, McDermott has repeatedly testified that his dream of making ServiceNow the defining enterprise software company of this century, but thus far, execution has been about as good as it gets. McDermott has continually expressed customer centricity as the reason for ServiceNow's success. McDermott shared a colorful antidote at a recent investor conference of an experience running a retail business as a teenager:
The numbers back up McDermott's claims. As an example, in this chart shared at Investor Day each year, ServiceNow's customer cohort from 2010 is spending over 25x this year than they spent their first year as a customer: It's hard not to like ServiceNow's fundamentals, it's even harder not to like its charismatic CEO. Sentiment ebbs and flows, the principles of valuation do not. Valuation:ServiceNow (along with the broader market) is just beginning to crest to new highs following the November 2021 peak and subsequent rate-driven sell-off. As software valuations compressed in 2022, the debate over whether or not to classify stock-based compensation as an expense raged. It's become clearer that it should indeed be expensed, even if not a cash outflow. Here's why:
If we average out ServiceNow's stock price at the end of each quarter in 2022, we reach a price of about $592/share. Multiply this by 2.7 million shares issued, and this equals nearly $1.6B, or just slightly above the $1.4B stock-based compensation expense added back to free cash flow. This is real value that has been transferred from shareholders to employees. In previous assessments, I may have been a bit too generous, valuing the business. This seemed to matter when valuations were falling, but investors have decided to turn a blind eye as prices have risen again. ServiceNow trades at a steep multiple of 54x this year's FCF, 91x if excluding stock-based compensation. This compares to 80x and 216x at the peak of 2021, respectively. This is fuel for the bulls, the argument that multiples have significantly compressed at the same valuation because of significant growth. Sticking To Principles:It's easy to get drawn into ServiceNow's spectacular narrative and want to own the stock. But when the sky starts falling, as it periodically does in the financial markets, the sole source of conviction becomes very simple math. The bulk of ServiceNow's value is locked up in distant future earnings. The fundamentals and management team are elite, but the possibility of a long period of underperformance after a huge rally is notable. New investors should consider waiting for a better entry point. It's very difficult to rate such a high quality businesses as a sell, but the valuation is stretched enough the investors should begin to consider the limits on their own risk tolerances if multiples continue to expand. ISG to Publish Reports on ServiceNow Partner Ecosystem Upcoming ISG Provider Lens™ reports will evaluate providers of consulting, implementation and ongoing support services for ServiceNow platform deployments Information Services Group (ISG) (Nasdaq: III), a leading global technology research and advisory firm, has launched a research study examining the extensive ServiceNow ecosystem of partners working with a growing number of enterprises to transform siloed business processes for improved workflows. The study results will be published in a comprehensive series of ISG Provider Lens™ ServiceNow Ecosystem Partners reports, scheduled to be released in April 2024. The reports will cover companies offering services for consulting, implementing, integrating and providing managed solutions utilizing the ServiceNow platform. Enterprise buyers will be able to use information from the reports to evaluate their current vendor relationships, potential new engagements and available offerings, while ISG advisors use the information to recommend providers to the firm’s buy-side clients. ServiceNow is growing rapidly, demonstrating the platform’s ability to meet customer requirements. Enterprise customers are optimizing efficiency by embedding technology components, and service providers are crafting tailored, intelligent workflow solutions to propel businesses forward, adopting ServiceNow capabilities to develop bespoke solutions catering to the needs of vertical industries. "Strategic partnerships driving solutions amplify ServiceNow's trajectory in workflow engineering,” said Jan Erik Aase, partner and global leader, ISG Provider Lens Research. “Through these collaborations, the integration of GenAI and machine learning enhances predictive analytics, propelling enterprises towards more efficient and intelligent operations." ISG has distributed surveys to more than 190 ServiceNow service providers. Working in collaboration with ISG’s global advisors, the research team will produce three quadrants representing the ServiceNow services the typical enterprise is buying, based on ISG’s experience working with its clients. The three quadrants are:
Geographically focused reports from the study will cover the global ServiceNow market and examine products and services available in the U.S., Brazil, Europe and Australia. ISG analysts Ashwin Gaidhani (Europe), Phil Hassey (Australia), Sidney Nobre (Brazil) and Tapati Bandopadhyay (U.S.). will serve as authors of the reports. A list of identified providers and vendors and further details on the study are available in this digital brochure. Companies not listed as ServiceNow services providers can contact ISG and ask to be included in the study. All 2024 ISG Provider Lens™ evaluations feature expanded customer experience (CX) data that measures real enterprise experience with specific provider services and solutions, based on ISG’s continuous CX research. Enterprise customers wishing to share their experience about a specific provider or vendor are encouraged to register here to receive a personalized survey URL. Participants will receive a copy of this report in return for their feedback. About ISG Provider Lens™ Research The ISG Provider Lens™ Quadrant research series is the only service provider evaluation of its kind to combine empirical, data-driven research and market analysis with the real-world experience and observations of ISG's global advisory team. Enterprises will find a wealth of detailed data and market analysis to help guide their selection of appropriate sourcing partners, while ISG advisors use the reports to validate their own market knowledge and make recommendations to ISG's enterprise clients. The research currently covers providers offering their services globally, across Europe, as well as in the U.S., Canada, Brazil, the U.K., France, Benelux, Germany, Switzerland, the Nordics, Australia and Singapore/Malaysia, with additional markets to be added in the future. For more information about ISG Provider Lens research, please visit this webpage. A companion research series, the ISG Provider Lens Archetype reports, offer a first-of-its-kind evaluation of providers from the perspective of specific buyer types. About ISG ISG (Information Services Group) (Nasdaq: III) is a leading global technology research and advisory firm. A trusted business partner to more than 900 clients, including more than 75 of the world’s top 100 enterprises, ISG is committed to helping corporations, public sector organizations, and service and technology providers achieve operational excellence and faster growth. The firm specializes in digital transformation services, including automation, cloud and data analytics; sourcing advisory; managed governance and risk services; network carrier services; strategy and operations design; change management; market intelligence and technology research and analysis. Founded in 2006, and based in Stamford, Conn., ISG employs more than 1,600 digital-ready professionals operating in more than 20 countries—a global team known for its innovative thinking, market influence, deep industry and technology expertise, and world-class research and analytical capabilities based on the industry’s most comprehensive marketplace data. For more information, visit www.isg-one.com.
Press Contacts: Will Thoretz, ISG Julianna Sheridan, Matter Communications for ISG View source version on businesswire.com: https://www.businesswire.com/news/home/20231128344098/en/
For the cloud-software provider ServiceNow, this year's advances in artificial intelligence have opened a lot of doors. The software-as-a-service provider is "aggressively pursuing our ambition to absolutely be an AI-first company," Chris Bedi, the chief digital-information officer at ServiceNow, told Business Insider. "We know we're early innings, especially with gen AI, but we are pushing on it hard." This story is available exclusively to Business Insider subscribers. Become an Insider and start memorizing now. Have an account?
The $140 billion company's cloud-based offerings include service management, operations management, and business management. And Bedi said he knows that if generative AI, or gen AI, is used correctly, it will save hours of work and help bolster the careers of workers using it. Part of integrating and understanding AI is training ServiceNow's 22,000 employees. The company had its first AI learning day recently, which brought the whole company together. It included panels of both internal and external speakers to "demystify it a bit and supply a learning path," Bedi said. While ServiceNow focuses on gen-AI solutions and use cases, it also measures employee satisfaction. "Do they feel like it's actually additive to their job or is it kind of a nonstarter?" Bedi asked. "Humans don't necessarily run to the technology — they sometimes run away from it," he said. "We're trying to move fast while we're bringing our human capital along." Bedi said teams involved in IT, HR, and customer-support operations don't feel threatened by generative AI. "Their sentiment is around 64% of them believe it's helping boost productivity," he said. The teams that heavily rely on gen AI are seeing "it's freeing up 25% to 30% of their time, but we're using that time so they can serve our clients better. So they're actually viewing it as a career progression for them." The challenge that ServiceNow and all companies face is around fast innovation, "but also we take care of governance, safety, and ethics" around AI, Bedi said. ServiceNow wants to "create better experiences because we all know experiences done the right way can drive the right behavioral and economic impacts." The company also said, "we shouldn't have any decision made without an accompanying AI-based recommendation," Bedi added. Bedi's insights are part of BI's year-end leadership package, "Looking Ahead 2024," which digs into vision, strategy, and challenges across corporate America. The following interview has been edited for length and clarity. What are you looking forward to most for 2024? I'll use one word: innovation. I think that there is so much technology capability available to CIOs and CTOs around the world, and just using all of it to innovate in a way that serves customers better, drives the company forward, frees employees up from the toil they've been in. That, to me, is going to be really fun. What is your biggest concern for 2024? I'll be the broken-record CDIO and say cyber. It's just not getting easier [protecting against cyber attacks and data hacks], it's getting harder. And so that's one thing, but also data [can also be manipulated] which then change algorithmic outputs, data labeling, wipeouts — stuff like that. I worry about threats which are yet to emerge. What is one thing you think you got right in 2023? We started experimenting and doing stuff with gen AI super early. And it's yielding benefit now because we're alive on like 15 things across five or six departments. So jumping on it early. What is one thing you think you got wrong in 2023? I would say underestimating how quickly gen AI would progress. It went a lot faster than I thought. It's amazing to think that it was just last November, December. And the speed has been amazing. Someone forgot to tell ServiceNow (NOW 0.68%) that the cloud software industry has been slowing down in 2023. The digital transformation platform's revenue growth has actually been accelerating throughout the last year, and the stock has picked up steam as 2024 approaches. Shares of ServiceNow are up 80% in 2023 with just weeks left to go until the new year. A high valuation has prevented many investors from pulling the trigger on buying this top cloud stock. After an epic run, is it still a top buy for 2024? A next-gen platform for the future of workServiceNow provides numerous solutions for businesses to manage their workforce and customer experiences. Its platform spans digital workflow management tools, from AI that helps find bottlenecks that are slowing down the completion of tasks to cloud observability solutions that help with app performance. ServiceNow landed on the radar of many investors this past summer after an expanded partnership was struck with Nvidia. ServiceNow said it would adopt Nvidia's latest and greatest AI systems to Boost its own platform, and in turn, Nvidia would expand its use of ServiceNow in its own workflow management for developing more powerful chips and generative AI systems. This type of AI used to automate more employee tasks is powering "digital transformation" among big customers. In a year like 2023 where cost-cutting has been a top priority in the corporate world, it's helped keep demand high for ServiceNow's software. And, after the bear market of 2022, the company's revenue growth has been ratcheting up again.
Even better, though, has been ServiceNow's rapid progress on profitability. Generally accepted accounting principles (GAAP) income from operations was $492 million in the first nine months of 2023, compared to just $200 million in the same period in 2022. Free cash flow (FCF) was $1.36 billion in the first nine months of 2023 (a healthy FCF profit margin of 21%), with the discrepancy between GAAP profitability primarily driven by employee stock-based compensation. As for that employee stock-based compensation, ServiceNow management reported it repurchased $282 million worth of stock in Q3 2023. This is part of the company's first-ever stock repurchase program, which is aimed at offsetting the impact of dilution from ongoing employee stock-based compensation. About $1.2 billion worth of stock repurchase authorization remained at the end of the quarter. Expect some turbulence, but a top cloud stock for the long term?After the big run-up in stock price in 2023, ServiceNow trades for a high premium of 90 times trailing-12-month earnings per share, or about 60 times trailing-12-month FCF. Of course, part of the premium exists because ServiceNow's profit margins are expected to rise rapidly over the course of the next few years. To wit, shares trade for a bit more reasonable 55 times Wall Street analysts' expectation for 2024 earnings per share. ServiceNow is nevertheless an expensive stock as we head into the new year. That can cause some turbulence in stock price, including steep sell-offs if ServiceNow misses some short-term financial estimates from one quarter to the next. However, given the company's fast-and-steady growth for years, and leadership in cloud-based and AI-powered software, investors are rightfully optimistic about the business's trajectory. As I explained this time last year, I think a stock like ServiceNow is best bought in batches over the course of time, perhaps using a dollar-cost averaging plan. This still seems like the right strategy for those investors interested in the long-term potential (a decade and beyond) for ServiceNow. Summary ServiceNow provides cloud-based software-as-a-service management applications to automate and track workflows across the enterprise, including IT, human resources, facilities, and field service, among others. The company markets to enterprises in industries ranging from financial services and consumer products to healthcare and technology. About 95% of revenue comes from subscription software sales, with the remainder from professional services. About 30% of the company's revenue is generated outside of the U.S. ServiceNow went public on June 29, 2012 at $18 per share. Subscribe to Yahoo Finance Plus Essential for full access Exclusive reports, detailed company profiles, and best-in-class trade insights to take your portfolio to the next level Someone forgot to tell ServiceNow (NYSE: NOW) that the cloud software industry has been slowing down in 2023. The digital transformation platform's revenue growth has actually been accelerating throughout the last year, and the stock has picked up steam as 2024 approaches. Shares of ServiceNow are up 80% in 2023 with just weeks left to go until the new year. A high valuation has prevented many investors from pulling the trigger on buying this top cloud stock. After an epic run, is it still a top buy for 2024? A next-gen platform for the future of workServiceNow provides numerous solutions for businesses to manage their workforce and customer experiences. Its platform spans digital workflow management tools, from AI that helps find bottlenecks that are slowing down the completion of tasks to cloud observability solutions that help with app performance. ServiceNow landed on the radar of many investors this past summer after an expanded partnership was struck with Nvidia. ServiceNow said it would adopt Nvidia's latest and greatest AI systems to Boost its own platform, and in turn, Nvidia would expand its use of ServiceNow in its own workflow management for developing more powerful chips and generative AI systems. This type of AI used to automate more employee tasks is powering "digital transformation" among big customers. In a year like 2023 where cost-cutting has been a top priority in the corporate world, it's helped keep demand high for ServiceNow's software. And, after the bear market of 2022, the company's revenue growth has been ratcheting up again.
Data source: ServiceNow. YOY = year over year. Even better, though, has been ServiceNow's rapid progress on profitability. Generally accepted accounting principles (GAAP) income from operations was $492 million in the first nine months of 2023, compared to just $200 million in the same period in 2022. Free cash flow (FCF) was $1.36 billion in the first nine months of 2023 (a healthy FCF profit margin of 21%), with the discrepancy between GAAP profitability primarily driven by employee stock-based compensation. As for that employee stock-based compensation, ServiceNow management reported it repurchased $282 million worth of stock in Q3 2023. This is part of the company's first-ever stock repurchase program, which is aimed at offsetting the impact of dilution from ongoing employee stock-based compensation. About $1.2 billion worth of stock repurchase authorization remained at the end of the quarter. Expect some turbulence, but a top cloud stock for the long term?After the big run-up in stock price in 2023, ServiceNow trades for a high premium of 90 times trailing-12-month earnings per share, or about 60 times trailing-12-month FCF. Of course, part of the premium exists because ServiceNow's profit margins are expected to rise rapidly over the course of the next few years. To wit, shares trade for a bit more reasonable 55 times Wall Street analysts' expectation for 2024 earnings per share. ServiceNow is nevertheless an expensive stock as we head into the new year. That can cause some turbulence in stock price, including steep sell-offs if ServiceNow misses some short-term financial estimates from one quarter to the next. However, given the company's fast-and-steady growth for years, and leadership in cloud-based and AI-powered software, investors are rightfully optimistic about the business's trajectory. As I explained this time last year, I think a stock like ServiceNow is best bought in batches over the course of time, perhaps using a dollar-cost averaging plan. This still seems like the right strategy for those investors interested in the long-term potential (a decade and beyond) for ServiceNow. Should you invest $1,000 in ServiceNow right now? Before you buy stock in ServiceNow, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now... and ServiceNow wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than tripled the return of S&P 500 since 2002*. *Stock Advisor returns as of December 7, 2023 Nicholas Rossolillo and his clients have positions in Nvidia. The Motley Fool has positions in and recommends Nvidia and ServiceNow. The Motley Fool has a disclosure policy. Is ServiceNow Stock a Top Buy for 2024? was originally published by The Motley Fool | ||||||||||||||||||||||||||||||||||||
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