DCF Studio

    NOW · NYQ · Technology

    ServiceNow, Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 26.19

    Market price

    USD 106.01

    Implied upside

    -75.3%

    10-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · Price 2026-11-02 · Accounts to 2025-12-31

    AdjustedCapital expenditure runs at 7.6% of revenue against depreciation of 5.7%. A perpetuity has to be a steady state, so the forecast tapers capex to maintenance at depreciation plus the reinvestment terminal growth requires (g/ROIC of NOPAT), and the terminal year carries on from there. The bridge is shown under Terminal Value.

    Current EV/EBITDA of 41.4x sits outside a defensible 3-20x band, so the exit multiple is capped at 20.0x. A multiple that far out usually means EBITDA is the wrong denominator for this business.

    Value Per Share

    Perpetuity growth
    USD 26.19-75.3%
    Exit multiple
    USD 63.15-40.4%
    Market price
    USD 106.01

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn2bnFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35CAGR
    RevenueUSD 16.2bnUSD 19.3bnUSD 22.5bnUSD 25.7bnUSD 29.0bnUSD 32.1bnUSD 34.8bnUSD 37.1bnUSD 38.7bnUSD 39.7bn+10.5%
    EBITUSD 1.6bnUSD 1.9bnUSD 2.2bnUSD 2.5bnUSD 2.9bnUSD 3.2bnUSD 3.4bnUSD 3.7bnUSD 3.8bnUSD 3.9bn+10.5%
    NOPATUSD 1.3bnUSD 1.6bnUSD 1.8bnUSD 2.1bnUSD 2.3bnUSD 2.6bnUSD 2.8bnUSD 3.0bnUSD 3.1bnUSD 3.2bn+10.5%
    Add depreciation & amortisationUSD 930.7mUSD 1.1bnUSD 1.3bnUSD 1.5bnUSD 1.7bnUSD 1.8bnUSD 2.0bnUSD 2.1bnUSD 2.2bnUSD 2.3bn+10.5%
    Less capital expenditureUSD -1.2bnUSD -1.5bnUSD -1.7bnUSD -2.0bnUSD -2.2bnUSD -2.5bnUSD -2.7bnUSD -2.9bnUSD -3.1bnUSD -3.2bn+11.1%
    Capex, % of revenue7.6%7.6%7.7%7.7%7.8%7.8%7.8%7.9%7.9%8.0%-
    Less increase in working capitalUSD -588.2mUSD -602.4mUSD -637.4mUSD -653.1mUSD -645.1mUSD -609.9mUSD -545.7mUSD -452.6mUSD -333.3mUSD -192.8m-11.7%
    Free cashflow to firmUSD 418.5mUSD 583.7mUSD 736.2mUSD 909.9mUSD 1.1bnUSD 1.3bnUSD 1.5bnUSD 1.7bnUSD 1.9bnUSD 2.1bn+19.7%
    Discount factor0.95790.87900.80660.74020.67920.62330.57190.52480.48160.4419-
    Present valueUSD 400.9mUSD 513.0mUSD 593.8mUSD 673.5mUSD 748.5mUSD 815.3mUSD 870.1mUSD 909.7mUSD 931.7mUSD 934.5m-
    Present Value Of The ForecastUSD 7.4bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.89%US 10-year Treasury (^TNX), 2026-11-02
    Equity risk premium4.23%Damodaran, January 2026
    Beta0.989Reported 0.984, pulled toward 1.0 (Blume)
    Cost of equity9.08%Risk-free + beta x equity risk premium
    Cost of debt5.29%Risk-free + 40bp, the spread for a AAA rating at 79.3x interest cover. Book interest / average debt was lower, at 1.0%.
    Market capitalisationUSD 110.0bn97.9% of capital
    Total debtUSD 2.4bn2.1% of capital, book value as a proxy
    Tax rate18.5%Effective, capped at statutory
    WACC8.98%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 26.19

    69% of EV

    Forecast FCFF, final year
    USD 2.1bn
    Capex at depreciation, working capital in reinvestment
    USD 3.2bn
    Less reinvestment at g/ROIC (27.8% of NOPAT)
    USD -890.7m
    Capitalised
    USD 2.3bn
    ROIC (WACC floor)
    9.0%
    Terminal value, undiscounted
    USD 36.5bn
    Terminal value, discounted
    USD 16.1bn
    Enterprise value
    USD 23.5bn
    Less net debt
    USD -3.9bn
    Equity value
    USD 27.4bn

    Exit at 20.0x EBITDA

    Value per shareUSD 63.15

    88% of EV

    Terminal value, undiscounted
    USD 124.1bn
    Terminal value, discounted
    USD 54.8bn
    Enterprise value
    USD 62.2bn
    Less net debt
    USD -3.9bn
    Equity value
    USD 66.1bn

    Spread between methods: 83%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    6.98%36.9137.0537.3137.7438.41
    7.98%30.9030.6430.3930.1729.98
    8.98%26.8526.5226.1925.8625.53
    9.98%23.8923.6123.3223.0422.76
    10.98%21.5021.2621.0220.7820.54

    Outlined: this model. Green text: above today's price of 106.01. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputActualModelImplied
    Revenue growth, a year22.4%11.6%32.7%
    EBIT margin13.7%9.9%38.5%
    Discount rate-9.0%4.1%
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    Yahoo Finance and RBA data. General information, not advice. Methodology.