Jefferies’ Top Crowded Software Long Positions: Top 10 Stocks

6. ServiceNow, Inc. (NYSE:NOW)

Number of Hedge Fund Holders In Q2 2024: 97

Shares Short % Of Outstanding: 1.88%

ServiceNow, Inc. (NYSE:NOW) is one of the biggest SaaS companies in the world. The firm provides products that enable users to automate their business processes and manage human resource operations, IT operations, and others. The firm has raked in $1.1 billion in trailing twelve-month net income and its shares are up 33.5% year to date. Since it’s a SaaS stock, ServiceNow, Inc. (NYSE:NOW)’s narrative depends on its ability to sustain revenue levels, maintain profitability, grow its customer base, and increase the portion of larger deals within the overall mix. ServiceNow, Inc. (NYSE:NOW) appears to be executing well on these fronts. During the second quarter, the firm grew customers with annual recurring revenue greater than $20 million by 40% and its committed remaining performance obligations by 31% to a whopping $18.6 billion. The latter is a particularly important metric since it measures the money that ServiceNow, Inc. (NYSE:NOW) is nearly guaranteed to receive in the future. This helps evaluate the firm’s future cash flows.

Polen Capital mentioned ServiceNow, Inc. (NYSE:NOW) in its Q1 2024 investor letter. Here is what the fund said:

“We trimmed our positions in Adobe and ServiceNow earlier in the quarter as we believe positive AI narratives had driven the valuations of both companies higher than we felt was comfortable relative to their weighting in the Portfolio. We believe both companies will likely have incremental revenue and profits from generative AI products they incorporate into their offerings, such as Firefly for Adobe and Now Assist for ServiceNow. However, we do not expect them to be substantial revenue contributors in the near term. As such, we felt it was prudent to reduce the weightings and reallocate to other positions at better valuations.”