Independent research on the U.S. markets, Baptista Research

Baptista Research

Independent research on the U.S. markets

Baptista Research is an independent financial research house focused on the U.S. markets. We provide equity research as well as credit research reports on the top-listed U.S. companies with most of our focus on technology, consumer goods and services, automobiles, industrials, oil and gas, pharma, and healthcare. Our research has served more than 3000 institutional investors including mutual funds, hedge funds, banks, family offices, and various buy-side firms. We operate a research subscription service where institutions, as well as retail investors, can have priority access to all our research. We also have a wide distribution of our research reports across some of the top global financial platforms. Apart from equity research and credit research, we also provide advisory services with respect to mergers & acquisitions (M&A), private equity/ venture capital fundraising, valuation reports, and investment management services for corporates.
Baptista Research is owned and managed by Ishan Majumdar, an ex-Venture Capitalist/ Investment Banker, a Chartered Accountant, and a Masters’ degree holder in Management from HEC Paris. Ishan has nearly a decade of experience in Mergers and Acquisitions, Leveraged Buyouts (LBOs), Venture Capital Investing, Corporate Strategy, and Valuation in front-office roles at the likes of BNP Paribas CIB, Credit Agricole CIB, Groupe Danone, and TIW Private Equity. He has worked on and closed multiple acquisition deals, leveraged buyouts, and start-up investment transactions.

Equity Bottom-Up

<ul><li>ServiceNow, led by CEO Bill McDermott, has exhibited strong performance in the third quarter of 2024, consistently outstripping financial forecasts and proving its resilience and strategic acumen in a tough economic landscape.</li><li>The company reported a substantial growth in subscription revenue, up by 22.5% in constant currency, surpassing the upper end of the forecast by 200 basis points.</li><li>This growth seems to stem from widespread customer adoption and expansion of ServiceNow's integrated platforms across various enterprise functions, manifesting in several large-scale deals and increasing annual contract value from customers.</li></ul>

ServiceNow, led by CEO Bill McDermott, has exhibited strong performance in the third quarter of 2024, consistently outstripping financial forecasts and proving its resilience and strategic acumen in a tough economic landscape.The company reported a substantial growth in subscription revenue, up by 22.5% in constant currency, surpassing the upper end of the forecast by 200 basis points.This growth seems to stem from widespread customer adoption and expansion of ServiceNow's integrated platforms across various enterprise functions, manifesting in several large-scale deals and increasing annual contract value from customers.

ServiceNow Inc.: The NVIDIA Partnership & Other Factors To Capitalize On GenAI! - Major Drivers

External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

<ul><li>ServiceNow announced 3Q24 results: total revenue increased by 22% YoY to US$2.80bn, 2% ahead of Bloomberg consensus estimate; non-GAAP net income was up by 29% YoY to US$775mn, 7% ahead of consensus estimate due to top-line outperformance and opex efficiencies.</li><li>3Q24 cRPO grew by 23.5% YoY at constant currency, which was 150bps above previous guidance, driven by the large deal momentum and solid adoption of GenAI solutions.</li><li>For 4Q24E, management guided subscription revenue/cRPO to grow by 20.5/21.5% YoY on a constant currency basis, and non-GAAP OPM to be stable YoY at 29%. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

ServiceNow announced 3Q24 results: total revenue increased by 22% YoY to US$2.80bn, 2% ahead of Bloomberg consensus estimate; non-GAAP net income was up by 29% YoY to US$775mn, 7% ahead of consensus estimate due to top-line outperformance and opex efficiencies.3Q24 cRPO grew by 23.5% YoY at constant currency, which was 150bps above previous guidance, driven by the large deal momentum and solid adoption of GenAI solutions.For 4Q24E, management guided subscription revenue/cRPO to grow by 20.5/21.5% YoY on a constant currency basis, and non-GAAP OPM to be stable YoY at 29%. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

ServiceNow (NOW US) - Solid 3Q24 Results; Riding on GenAI Tailwind

<ul><li>ServiceNow's second quarter of 2024 financial results indicate strong operational and financial momentum, with notable increases in important metrics despite a backdrop of an internal investigation and leadership changes.</li><li>The management presented a robust narrative of growth, leveraging its GenAI strategy, which contributed significantly to their overall performance.</li><li>The company reported a 23% year-over-year growth in subscription revenue at constant currency, surpassing their own guidance.</li></ul>

ServiceNow's second quarter of 2024 financial results indicate strong operational and financial momentum, with notable increases in important metrics despite a backdrop of an internal investigation and leadership changes.The management presented a robust narrative of growth, leveraging its GenAI strategy, which contributed significantly to their overall performance.The company reported a 23% year-over-year growth in subscription revenue at constant currency, surpassing their own guidance.

ServiceNow Inc.: Expanding Market Reach Through Partnerships and Cloud Solutions & Other Major Drivers

Thematic (Sector/Industry)

<ul><li>US internet and software companies delivered mixed performances in 1Q24 in terms of revenue growth: advertising and cloud services revenue growth saw a reacceleration trend, while SaaS services revenue growth edged down slightly. However, the optimization in labour cost, increase in economies of scale and operating efficiency improvement continue to drive YoY margin expansion, which looks likely to sustain in 2Q24, in our view, but will face higher comps in 2H24.</li><li>AI-related monetization and profitability expansion remain the key investment themes for US internet and software stocks, while the sectors’ stock performance reacts positively to interest rate cuts , albeit the expectation might have been partly reflected in price.</li><li>Our stock picks are Microsoft (MSFT US; BUY; well positioned to ride on the tide of rapid development of Gen AI and related monetization), Amazon (AMZN US; BUY; solid margin expansion could exceed market expectation), and ServiceNow (NOW US; BUY; steady current remaining performance obligations (cRPO) growth and profitability expansion likely to sustain).</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

US internet and software companies delivered mixed performances in 1Q24 in terms of revenue growth: advertising and cloud services revenue growth saw a reacceleration trend, while SaaS services revenue growth edged down slightly. However, the optimization in labour cost, increase in economies of scale and operating efficiency improvement continue to drive YoY margin expansion, which looks likely to sustain in 2Q24, in our view, but will face higher comps in 2H24.AI-related monetization and profitability expansion remain the key investment themes for US internet and software stocks, while the sectors’ stock performance reacts positively to interest rate cuts , albeit the expectation might have been partly reflected in price.Our stock picks are Microsoft (MSFT US; BUY; well positioned to ride on the tide of rapid development of Gen AI and related monetization), Amazon (AMZN US; BUY; solid margin expansion could exceed market expectation), and ServiceNow (NOW US; BUY; steady current remaining performance obligations (cRPO) growth and profitability expansion likely to sustain).Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Internet - AI and Margin Expansion Still Key Themes

<ul><li>ServiceNow had a strong first quarter in 2024, outperforming guidance on all top-line and profitability metrics.</li><li>The company’s subscription revenue grew by 24.5% year-over-year on a constant currency basis.</li><li>Current remaining performance obligations (CRPO) rose by 21% year over-year in constant currency, which was above the company’s guidance.</li></ul>

ServiceNow had a strong first quarter in 2024, outperforming guidance on all top-line and profitability metrics.The company’s subscription revenue grew by 24.5% year-over-year on a constant currency basis.Current remaining performance obligations (CRPO) rose by 21% year over-year in constant currency, which was above the company’s guidance.

ServiceNow Inc: How Will The Adoption of GenAI Technology Impact Their Future Revenues & Profitability? - Major Drivers

United States

ServiceNow, Inc. provides enterprise information technology (IT) management software. The Company designs, develops, and produces prepackaged computer software, cloud services, and IT service management platform. ServiceNow serves customers throughout the United States.

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Servicenow Inc (NOW US)

ServiceNow Inc.: The NVIDIA Partnership & Other Factors To Capitalize On GenAI! - Major Drivers

ServiceNow, led by CEO Bill McDermott, has exhibited strong performance in the third quarter of 2024, consistently outstripping financial...

Baptista Research

ServiceNow (NOW US) - Solid 3Q24 Results; Riding on GenAI Tailwind

ServiceNow announced 3Q24 results: total revenue increased by 22% YoY to US$2.80bn, 2% ahead of Bloomberg consensus estimate

CMB International

ServiceNow Inc.: Expanding Market Reach Through Partnerships and Cloud Solutions & Other Major Drivers

ServiceNow's second quarter of 2024 financial results indicate strong operational and financial momentum, with notable increases in important...

Baptista Research

Internet - AI and Margin Expansion Still Key Themes

US internet and software companies delivered mixed performances in 1Q24 in terms of revenue growth: advertising and cloud services revenue growth...

CMB International

ServiceNow Inc: How Will The Adoption of GenAI Technology Impact Their Future Revenues & Profitability? - Major Drivers

ServiceNow had a strong first quarter in 2024, outperforming guidance on all top-line and profitability metrics. The company’s subscription...

Baptista Research

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