NOW · Enterprise Software · Workflow Automation
ServiceNow, Inc.
BuyThe business
ServiceNow runs the digital workflows that large enterprises depend on to operate. What began in IT service management has expanded into a horizontal platform spanning HR, customer service, security, and increasingly AI-assisted operations. Once embedded, it becomes the connective tissue of how an organisation runs — and that is very hard to rip out.
The flywheel
Every new workflow a customer builds on the platform deepens their dependence and raises switching costs. More usage produces more data and more integrations, which make the platform more valuable to the next department that adopts it. Land-and-expand economics turn each customer into a compounding annuity that grows for years after the initial sale.
Why we own it
- Best-in-class net revenue retention — customers reliably spend more over time.
- Capital-light, high-margin model that converts growth into expanding free cash flow.
- Mission-critical software with structurally high switching costs.
- A credible path to becoming the workflow layer for enterprise AI.
Key risks
- Premium valuation leaves little room for execution missteps.
- Enterprise IT budgets are sensitive to macro conditions.
- Competition from platform incumbents bundling adjacent capabilities.
Our recommendation
A high-quality compounder with the recurring revenue, switching costs, and cash generation we prize. We accumulate on weakness and size it as a long-term holding rather than a trade.
This note reflects the views of Flywyl as of May 2026 and is provided for informational purposes only. It is not investment advice, an offer, or a solicitation to buy or sell any security. Views and positioning may change without notice. Past performance does not guarantee future results, and all investments carry risk of loss. Figures and qualitative ratings are illustrative of our internal framework and should be independently verified.