24/7 Wall Street Insights

• The growth of modern administrative and document related duties in the industrialized world has continued to grow exponentially over the past few centuries.
• Computers and digitization have added to the detail and complexity of tasks required to stay on top of the myriad elements.
• Companies like ServiceNow are indispensable for large organizations to manage their workflows and documentation, especially now that many corporations are multi-national.
• ServiceNow’s phenomenal growth and future developments in the use of AI are potential justifications for a future forward stock split announcement.
• For investors seeking dividends, click here for a free report on two high dividend stocks.

As nations grow in power and scope, the bureaucracy and administrative duties needed to manage organizations in both the private and public sectors have continued to expand exponentially since the late 18th century. Recordkeeping on paper led to huge libraries of documentation that still have far to go in being digitized for more accessible catalog storage. The digital era has given rise to even more complex workflows, especially as corporations have become transnational in operation and ownership.

In order to help navigation through the Byzantine digital public and private corporate structures along with the corresponding labyrinths of documentation, a number of companies have emerged in the IT Service Management sector.  These companies include familiar names like: BMC Helix ITSM, Broadcom, SAP, Jira, DocuSign, and ServiceNow (NYSE: NOW).

An S&P 500 member, ServiceNow also was listed as the top innovative company of 2018 by Forbes. It has a number of factors of late that, when added to the equation, make a strong case for a forward stock split announcement in 2024. 

From Glidesoft to ServiceNow

ServiceNow was originally founded in San Diego, CA as Glidesoft Inc. by Fred Luddy 9current ServiceNow Chairman) in 2003. Luddy had served as CTO for IT service company Peregrine Systems, which went out of business after an accounting scandal. With the help of venture capital from JMI Equity, Glidesoft would relocate to Santa Clara as ServiceNow, expand to Chicago, New York, Atlanta, London, and Frankfurt, and launch its IPO in 2012 with Morgan Stanley.

PaaS in the Cloud

ServiceNow’s technology operates in what has been described as “Platform-as-a-Service” or PaaS. Operating exclusively in the cloud, enterprise and technical management systems, including IT management and Customer Help functions are all bundled into the system and customized for each client.

The ServiceNow platform lives in the cloud on a Configuration Management Database (CMDB). The CMDB houses master, transactional, and enterprise data, and tracks all laptops, smart phones, and dedicated desktop computer stations connected to the customized client ServiceNow software from which those devices may receive and send data. 

The data itself is housed in different application modules that are organized according to the client’s needs. Some of the module examples might be categorized as: 

• Business Continuity Planning
• Risk Management and Compliance
• Audit
• Vendor Management
• Corporate Governance
• ….and so on…

The software analyzes and delivers quantitative reports based on management executives’ data assessment requests. 

Why ServiceNow Is A Ripe Stock Split Prospect

ServiceNow has forged a position for itself as one of the premier IT Service Management companies in the sector. It has accomplished a number of milestones that has propelled its stock to high ROI profitable levels, but also has made the right moves to forge ahead towards even bigger and better horizons. As a result, there are several market, corporate, and financial reasons that could justify a forward stock split announcement in the not too distant future.

• Market: Since its 2012 IPO, ServiceNow shares have risen 2,970%. ServiceNow has never undergone a stock split, and market price at the time of this writing is roughly $740. A 4-for-1 forward stock split would be the equivalent of getting 4 quarters for one dollar, and would hypothetically reduce the price to $185. Investors who buy stocks prefer to get more shares for a lower price, since a stock appreciation multiplies ROI the greater number of shares one owns. A 5 point rise on 100 shares = $500 profit, whereas on 400 shares, it would be $2,000. $185 per share is a much more affordable and attractive price for the individual investor. 
• Generative AI – Generative AI is the subsector of AI where AI is used for creating original art, music, text, images, etc. In ServiceNow’s case, they have incorporated Generative AI in its client customization and other functions to provide a better user experience.  ServiceNow’s use of AI is still only roughly 18 months in its infancy, so further developments and more significant breakthroughs are anticipated.  The stock has risen over 75% since the introduction of AI to the ServiceNow PaaS software. 
• NowAssist Strategic Alliances – ServiceNow’s NowAssist is its interactive AI powered Chatbot software for Field Service Management of incident reports and resolutions to client  Customer Service personnel. IBM, MIcrosoft, Nvidia and Hitachi are among the biggest new customers, further spotlighting ServiceNow as the “go-to” IT Service Management provider for Fortune 500 companies.

Additionally…

• Revenue growth has averaged 35% annually over the past decade. 
• Subscription growth (highest margins) has increased 24% since 2023.
• Analysts forecast EPS to grow 29% ahead of revenues.

 

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