NYSE : NOW OUR TEAM Carol Fuss Matthew Yardley OUTLINE - PowerPoint PPT Presentation

NYSE : NOW

OUR TEAM Carol Fuss Matthew Yardley

OUTLINE • ServiceNow Overview • Enterprise Cloud Computing • Strengths and Strategy • Growth Opportunities • Risk Analysis • Financial Analysis • Valuation • Our Recommendation

PRICE HISTORY Ticker: NOW $100.00 $90.00 $80.00 $70.00 $60.00 $50.00 $40.00 $30.00 $20.00 $10.00 $0.00 06/29/12 12/29/12 06/29/13 12/29/13 06/29/14 12/29/14 06/29/15 12/29/15 06/29/16 12/29/16

SERVICENOW PLATFORM

ENTERPRISE SOFTWARE INDUSTRY

MARKET CAPITALIZATION

TOPLINE GROWTH

STRENGTHS & OPPORTUNITIES • SaaS Business Model • First Movers and Industry Pioneers • Dedicated Business Units • Ready Made Platform

GROWTH OPPORTUNITIES • Forbes Global 2,000 (G2K) • Upsells • Renewal Rates • Emerging Product Mix • Multi-Product Customer • Research & Development

G2K PENETRATION 735 704 680 654 633 604 574 556 533 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 13% 37% 58% 44% G2K Penetration North America EMEA APAC & Other

UPSELLS 400 14% 13% Contracts > $1M Q/Q Growth 350 11% 11% 12% 11% 11% 300 10% 7% 9% 250 8% 8% 200 341 6% 302 150 272 244 227 4% 204 100 188 169 157 2% 50 0 0% Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16

RENEWAL RATE 99% 99% 100% 97% 97% 97% 90% 80% 70% Q4-15 Q1-16 Q2-16 Q3-16 Q4-16

PRODUCT MIX Service Management ITOM Other 17 17 25 27 29 12 16 13 12 21 71 67 60 59 54 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16

MULTI PRODUCT CUSTOMERS Mult-Product Customers Single-Product Customers 72% 69% 67% 65% 62% 59% 56% 53% 49% Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16

RESEARCH & DEVELOPMENT

KEY RISKS • Cyber Security • Convertible Debt • Management Turnover • Operational History of New Products • Patents • Exchange Rates

CYBER SECURITY BrightPoint Security

MANAGEMENT TURNOVER Frank Slootman CEO John Donahoe Designated CEO

CONVERTIBLE DEBT • Expires November 2018 • Cash, Stock, Combination • Selective Scenarios for Pre Conversion

DEBT SCENARIOS

VALUATION • Financial Analysis • DCF • Comparables • Multiples

FINANCIAL ANALYSIS

FINANCIAL ANALYSIS

FINANCIAL ANALYSIS

DCF • WACC 15.36% • Terminal Growth Rate 13.5% • Tax Rate 40% • Terminal Value $14.8B

DCF WITH CONVERTIBLE DEBT

DCF SENSITIVITIES

MULTIPLES

TARGET PRICE

WHY IS SERVICENOW A HOLD? • International Expansion G2K • R&D • Strategic Partnerships • Cyber Security • Patents • Management

APPENDIX: MAIN SLIDES FINANCIALS • • PRICE HISTORY IS MANAGEMENT • • PLATFORM BS MANAGEMENT • • INDUSTRY MRKT CAP CF MANAGEMENT • • TOPLINE GROWTH WACC • • STENGTHS DCF MANAGEMENT • • GROWTH OPPS DCF BASE CASE • • G2K DCF DOWNSIDE • • UPSELLS SENSITIVITIES MANAGEMENT • • RENEWALS SENSITIVITIES BASE CASE • • PRODUCT MIX SENSITIVITIES DOWNSIDE • • MULTI-PROD CUST. DEBT SCENARIOS • R&D COMPARABLE COMPANIES • KEY RISKS • CA, INC. • CYBER SECURITY • WORKDAY, INC. • MANAGEMENT • SALESFORCE.COM, INC. • CONVERTIBLE DEBT OTHER • FINANCIAL ANALYSIS • KEY ASSUMPTIONS • DCF • INSTITUTIONAL HOLDERS • SENSITIVITIES • MULTIPLES • TARGET PRICE • WHY HOLD?

INCOME STATEMENT

BALANCE SHEET

STATEMENT OF CASH FLOW

WACC

DCF MANAGEMENT

DCF BASE CASE

DCF DOWNSIDE

SENSITIVITIES: MANAGEMENT

SENSITIVITIES BASE CASE

SENSITIVITIES DOWNSIDE

DEBT SCENARIOS

CA, INC.

WORKDAY, INC.

SALSEFORCE.COM, INC.

TOP 5 INSTITUTIONAL HOLDERS

KEY ASSUMPTIONS