Goldman Sachs’ Top Fund Manager Stock Picks: 25 Best Overweight Stocks

4. ServiceNow, Inc. (NYSE:NOW)

Number of Hedge Fund Investors In Q2 2024: 97

Mutual Fund Overweight Percentage: 0.16%

ServiceNow, Inc. (NYSE:NOW) is a SaaS company that provides process automation, IT operations management, human resource management, and other associated products. The firm is one of the biggest of its kind since it generated $1.1 billion in trailing twelve month net income. Profitability, along with growth and cost control, is one of the pillars of SaaS evaluation which means that the discussion surrounding ServiceNow, Inc. (NYSE:NOW) now focuses on its ability to sustain revenues, retain its customer base, and increase its individual deal values. The company appears to be performing well on these fronts as during its Q2, ServiceNow, Inc. (NYSE:NOW) grew its committed remaining performance obligations by 31% to $18.6 billion. During the same three month period, its customers with annual recurring revenue greater than $20 million jumped by 40%. This indicates that ServiceNow, Inc. (NYSE:NOW) is seeing sizeable demands for its products, and the continued strong performance of the shares which are up by 28% depends on a strong economy and low interest rates.

During the Q2 2024 earnings call, ServiceNow, Inc. (NYSE:NOW)’s management shared key details about its contract performance:

“We closed 88 deals greater than 1 million in net new ACV in the quarter, representing 26% growth year-over-year. This includes six new logos, two of which were G2K customers. We continue to see robust large deal momentum in the quarter closing 14 deals over 5 million in net new ACV and four deals over 10 million. Our focus on selling a comprehensive platform continue to drive more multiproduct deals, as 14 of our top 20 deals included eight or more products. We now have 1,988 customers paying us over 1 million in ACV. In addition, the number of customers paying us 20 million or more grew nearly 40% year-over-year. As Bill highlighted, our Gen AI net new ACV to date continues to trend ahead of any new product family launched for the comparable period.

Our Plus SKU saw more than a 30% price uplift over Pro in Q2. Furthermore since launch, we’re seeing a greater than 3x increase in average deal size versus the comparable Pro upgrade. NowAssist cogeneration capabilities within creative workflows remain a powerful productivity tool of choice as well, appearing in over 70% of our Gen AI deals. Best of all, customers are going live fast. We’re learning with them, releasing innovations based on that feedback at a very fast clip to get them to value. In July, BT Group announced that its NowAssist pilot help agents write case summaries and review complex nodes faster, cutting both times by 55%. This helped drive down the average time to resolve cases by a third. We are just scratching the surface of the opportunity as the vast majority of Gen AI sales are direct.”