Using an unlevered Free Cash Flow to Firm (FCFF) model, we project ServiceNow, Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 20.2% to 16.3% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 80, DPO 29, DIO 60). At a 9.3% WACC with mid-year discounting, the terminal value (98% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 26.8x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $70.09 per share, suggesting NOW is overvalued by 32.6% at the current price of $104.02.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 1,360 | 1,613 | 1,921 | 2,217 | 2,577 | 2,641 |
| (−) Net Interest | 42 | 50 | 60 | 69 | 80 | 82 |
| (+) D&A | 673 | 825 | 991 | 1,180 | 1,389 | 1,424 |
| EBITDA | 2,075 | 2,488 | 2,972 | 3,466 | 4,046 | 4,147 |
| (−) Tax | 0 | 0 | 0 | 0 | 0 | — |
| (−) CapEx | 1,162 | 1,378 | 1,642 | 1,894 | 2,202 | — |
| (−) ΔWC | 1,373 | 707 | 861 | 825 | 1,006 | — |
| Free Cash Flow (FCF) | -460 | 403 | 469 | 747 | 838 | — |
| Peers' EBITDA Multiple | 26.8x | |||||
| Terminal Value | 111,183 | |||||
| WACC / Discount Rate | 9.25% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | -440 | 353 | 376 | 548 | 563 | 71,451 |
| Enterprise Value | 72,852 | |||||
| Projection Period | 1,400 | 1.9% | ||||
| Terminal Value | 71,451 | 98.1% | ||||
| (−) Current Net Debt | (523) | |||||
| Equity Value | 73,375 | |||||
| (÷) Outstanding Shares | 1047M | |||||
| Fair Price | $70 | -32.6% | ||||
| WACC \ EV/EBITDA Exit Multiple | 22.8x | 24.8x | 26.8x | 28.8x | 30.8x |
|---|---|---|---|---|---|
| 7.2% | $66 | $71 | $77 | $82 | $88 |
| 8.2% | $63 | $68 | $73 | $79 | $84 |
| 9.2% | $60 | $65 | $70 | $75 | $80 |
| 10.2% | $57 | $62 | $67 | $72 | $77 |
| 11.2% | $55 | $59 | $64 | $69 | $73 |
Current price: $104.02. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.