Taiwan Semiconductor (TSM) is the world’s largest contract semiconductor manufacturer with a 5...
ServiceNow: The Cloud, Data and Security
06/05/2017 2:54 am EST
There have been a number of stars during the latest earnings season, part of a generally robust performance from the tech sector, says Rob DeFrancesco, editor of Tech-Stock Prospector.
In the software sector, ServiceNow (NOW) — a holding in our Vulture Portfolio — had an exemplary quarter, sending the shares in early May to a new all-time high of $98.19.
The stock has advanced 78% since being added to the portfolio in August 2014 at $55. ServiceNow over the past few years has done an outstanding job transforming itself into a multi-product cloud vendor, while continuing to build share in its core service automation segment.
In the first quarter, 53% of ServiceNow’s new annual contract value (ACV) still came from IT service management (ITSM), while emerging products (focused on automating analytics, HR, security and customer service) represented 34%, up from 25% in Quarter 4 of 2016 and just 17% in the year ago quarter.
New ACV from IT operations management kicked in the remaining 13%. With as much as 75% of net new ACV each quarter coming from existing customers, ServiceNow’s broader portfolio of products is enabling the company to obtain deeper penetration into accounts.
Overall, 73% of customers now license more than one ServiceNow product, vs. 65% a year ago and 50% two years ago. Of the 20 largest deals in the March quarter, 16 of them included three or more products.
The company’s renewal rate is an enviable 97%. ServiceNow continues to steadily expand its base of global 2000 customers, putting it on pace to reach its goal of 1,000 by 2020.
Plenty of ServiceNow’s Quarter 1 metrics were favorable, with revenue growth accelerating 100 basis points sequentially to 36%. Billings of $529.2 million rose 40% and easily topped the high end of the guidance range of $490 million to $495 million.
For the second quarter, the company guided revenue to a range of $458 million to $463 million, above the consensus at the time of $450.8 million. For 2017, top-line growth is expected to come in at 34% to 35%.
Related Articles on TECHNOLOGY
The problem with reading (and writing) about Microsoft (MSFT) is that we all understand the company ...
As global payment patterns keep shifting from cash to digital networks, Visa (V) is one of the compa...
Two top picks in the commercial cybersecurity area are Fortinet (FTNT) and Palo Alto Networks (PANW)...