ServiceNow, Inc.NOWNYSE
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DCF Valuation
⚠️Model Warnings
- •Terminal value represents 86% of enterprise value. Valuation highly sensitive to long-term assumptions.
DCF Valuation Summary
Hold
Base Case: $98.74 per share
-6.8%
Upside to Target
Bear Case
$59.18
Base Case
$98.74
Current
$105.90
Bull Case
$136.57
Weighted Average Cost of Capital (WACC)
Cost of Equity (CAPM)
Risk-Free Rate (Rf)4.50%
Beta (β)0.98
Market Risk Premium4.50%
*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)
Cost of Equity (Re)8.90%
Cost of Debt
Pre-tax Cost of Debt0.64%
Tax Rate22.69%
After-tax Cost of Debt0.49%
Equity Weight (E/V)97.17%
Debt Weight (D/V)2.83%
WACC Calculation
WACC = (E/V × Re) + (D/V × Rd × (1-Tc))
WACC = (97.17% × 8.90%) + (2.83% × 0.49%)
= 8.66%
10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)
| Year | Year 1 | Year 3 | Year 5 | Year 7 | Year 10 |
|---|---|---|---|---|---|
| Revenue | $16.0B | $22.6B | $30.3B | $38.4B | $46.2B |
| EBIT | $1.7B | $2.5B | $3.3B | $4.2B | $5.1B |
| Tax | $397M | $562M | $752M | $956M | $1.1B |
| NOPAT | $1.4B | $1.9B | $2.6B | $3.3B | $3.9B |
| + Depreciation | $666M | $943M | $1.3B | $1.6B | $1.9B |
| - Capex | $809M | $1.1B | $1.5B | $1.9B | $2.3B |
| - Δ NWC | $269M | $364M | $430M | $395M | $167M |
| Free Cash Flow | $941M | $1.3B | $1.9B | $2.5B | $3.3B |
| Discount Factor | 0.920 | 0.779 | 0.660 | 0.559 | 0.436 |
| Present Value | $866M | $1.1B | $1.2B | $1.4B | $1.5B |
FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital
Terminal Value Calculation
Perpetuity Growth Method
Year 10 FCF$3.3B
Terminal Growth Rate7.07%
WACC8.66%
TV = FCF₁₀ × (1+g) / (WACC-g)
Terminal Value$178.4B
PV of Terminal Value$77.7B
Exit Multiple Method
Year 10 EBITDA$7.0B
Exit Multiple (EV/EBITDA)33.3x
TV = EBITDA₁₀ × Exit Multiple
Terminal Value$232.3B
PV of Terminal Value$101.2B
Valuation Summary
Perpetuity Growth Method
PV of Projected FCFs$12.4B
PV of Terminal Value$77.7B
Enterprise Value$90.1B
(-) Net Debt-$523M
Equity Value$90.6B
Shares Outstanding$1.0B
Price per Share$87.41
Exit Multiple Method
PV of Projected FCFs$12.4B
PV of Terminal Value$101.2B
Enterprise Value$113.6B
(-) Net Debt-$523M
Equity Value$114.1B
Shares Outstanding$1.0B
Price per Share$110.07
Base Case Fair Value
$98.74
Average of perpetuity growth and exit multiple methods
Sensitivity AnalysisPrice per Share
| WACC ↓ / Growth → | 6.07% | 6.57% | 7.07% | 7.57% | 8.07% |
|---|---|---|---|---|---|
| 6.66% | $90.86 | $87.67 | $84.63 | $81.73 | $78.95 |
| 7.66% | $90.86 | $87.67 | $84.63 | $81.73 | $78.95 |
| 8.66% | $69.83 | $83.89 | $84.63 | $81.73 | $78.95 |
| 9.66% | $50.22 | $56.54 | $65.30 | $78.25 | $78.95 |
| 10.66% | $39.43 | $42.87 | $47.27 | $53.09 | $61.16 |
How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.
Scenario Analysis
Bear Case
$59.18
-44.1% vs current
- • -25% vs analyst consensus
- • Terminal growth: 6.6%
- • Beta: 1.22
Base Case
$98.74
-6.8% vs current
- • Analyst consensus
- • Terminal growth: 7.1%
- • Beta: 0.98
Bull Case
$136.57
29.0% vs current
- • +25% vs analyst consensus
- • Terminal growth: 7.6%
- • Beta: 0.83
Key Assumptions & Drivers✓ Using Analyst Consensus Estimates• Technology Sector
Growth Assumptions (Select Years)
Year 1 Revenue Growth20.23%
Year 3 Revenue Growth19.20%
Year 5 Revenue Growth16.57%
Year 7 Revenue Growth11.44%
Year 10 Revenue Growth3.75%
Terminal Growth Rate7.07%
Margin & Efficiency
EBIT Margin10.96%
Tax Rate22.69%
Capex / Revenue5.07%
NWC / Revenue10.00%
Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.
Institutional-Grade Methodology
Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta
Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 18x EV/EBITDA (S&P 500: 22x P/E)
This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.