Tech-Star ServiceNow + deutsches Decacorn = Kursexplosion?

Many people know the term “unicorn” from reports in the commercial media. These are all start-ups that have achieved company valuations of more than $1 billion in financing rounds. Decacorns are actually rarer, after all, the magic cap of valuation is 10 billion U.S. dollars. In fact, there is a German technology start-up company in Celonis, which can also achieve such an evaluation in the summer.

The software developed by Celonis can perform so-called process mining. Business processes are digitally mapped and analyzed for hidden process knowledge. In this way, customers can check each process in a targeted manner. This enables companies to identify the sources of errors and inefficiencies in their processes and initiate countermeasures.

Partnership between Celonis and ServiceNow

Happen at this time Serve immediately (Nasdaq stock code: NASB) is at the scene. The company provides technology to map the processes in the workflow. A major advantage of these solutions is the ability to use a central platform across system boundaries. In addition, the graphical user interface does not require too much programming knowledge. Standard solutions cover the needs of more and more sectors and industries, and can be individually expanded.

Celonis and ServiceNow provide products that complement each other. Therefore, the newly reached partnership is also meaningful to customers, because this combination provides them with a complete toolbox for automated processes. The joint solution should be launched in the first half of 2022. In addition, the two experts hope to cooperate closely in development, marketing and sales.

As a small highlight, we can also see the participation of the ServiceNow program in Celonis. I think the products of the two companies complement each other well. According to Gartner analysts, the hyper-automated software market is expected to grow to nearly $860 billion by 2025. Both companies are in a good position to benefit from the growing digital needs of all companies and gain significant market share.

Grow up by the moat

Through the latest cooperation, ServiceNow is strengthening its moat. The technology group owns 80% of Fortune 500 companies among its 6,900 global corporate clients. The deeper ServiceNow is integrated into the processes of these companies, the more difficult it is to compete. Even if the partnership with Celonis is not exclusive, the US group around former SAP CEO Bill McDermott has laid an important foundation for more exclusivity.

ServiceNow’s goal is to more than triple its sales by 2026 compared to 2020. The free cash flow rate of return in FY2021 is expected to be 1.5%, and the valuation is not cheap. Strong growth makes this a reality. By 2026, free cash flow will be approximately $5 billion, which seems realistic. This corresponds to a free cash flow rate of return of 4.2% based on the value of the company today.

This means that ServiceNow stock is currently a holding position for me. However, if the stock price drops, I will buy more.