Double digit growth, strong moat, high quality business and market leader at IT Service Management. This is clearly a very strong company at a price well below intrinsic value.
Here are the numbers (Should be part of all ValueInvesting analysis) :
Net Gain Margin: \~11%
Operating Cash Flow: $5.44B (FY2025)
Free Cash Flow: $4.64B (FY2025)
Debt / Equity: \~60%
Cash / Equity: \~48%
Revenue Growth: +21% YoY
Free Cash Flow Growth: +35% YoY
Operating Cash Flow Growth: +27.6% YoY
Moat: NOW has a “land-and-expand” business model. Once deeply integrated into a company’s workflows, data, and processes, switching costs become pretty high. This gives NOW a clear MOAT over its competitors.
Main weakness: Net gain isn't spectacular. Debt increased significantly after several acquisition, whose products now complements NOW's product range.
Valuation: NOW's PS, PB and Price to Cashflow has never been lower in the past. Even with the Discounted Cashflow Calculation it's below intrinsic value.
I know we talked about NOW before, but in my opinion it's strongest company among all beaten down SaaS companies like ADBE, PAYC, TTD, INTU, ... And the stock is still available for a reasonable price.