It’s time for our 2015 Top Picks! We start off the season with an information technology company that is pioneering a sea-change in taking customer service to the next level.
ServiceNow (NOW)
from Cabot Market Letter
ServiceNow is a small-ish ($670 million in revenue in 2014) software provider that’s likely to grow many times its current size. The company makes software that makes it easier for IT (and, increasingly, every other department) to service its “customers”—i.e., employees that need help.
Instead of sending emails or leaving voice messages and having to follow-up, the software allows employees to login and report the issue, then come back and check on the status at their convenience. Across large enterprises, ServiceNow’s platform is saving incredible time and money, as well as creating a central location for managers to review what’s really needed and going wrong.
Profits have been flat as management invests in the business (the sales force is up 50% over the past year!). But revenues are growing north of 60%, thanks to insane renewal rates (98%!), a steady addition of new and often huge customers (473 of the Global 2000 are signed on), and because current customers keep expanding their ServiceNow use—as well as paying more (after three years, they average spending three times as much as their initial purchase).
It’s a huge idea, and the stock looks ready to blast off.
Michael Cintolo, Cabot Market Letter, www.cabot.net, 978-745-5532