As CEO Frank Slootman announces plans to step down, we think the company will be in capable hands with former eBay CEO John Donahoe.
09:35 AM | Email Article
On Feb. 27, ServiceNow
announced that President, CEO, and Chairman of the Board Frank Slootman will be stepping down from his CEO and management responsibilities effective April 3, 2017. Slootman will continue in his role of chairman of the board moving forward. In his place, ServiceNow has tapped former eBay CEO John Donahoe to lead the company, whose reputation for successful tech leadership precedes him. Our investment thesis remains unchanged in light of these developments, though we expect to receive more color on this move during ServiceNow’s presentation at the Morgan Stanley TMT Conference on March 1. We are maintaining our narrow moat and positive moat trend ratings, and our $105 fair value estimate remains unchanged. Shares are retreating modestly in early trading following this news, and with shares approaching 4-star territory, further weakness could represent an attractive entry point for investors.
Rodney Nelson is an equity analyst for Morningstar.
Slootman has led ServiceNow for six years, taking the reins from ServiceNow founder Fred Luddy in 2011. In that time, Slootman led ServiceNow through its initial public offering in 2012 and grew revenue more than tenfold from $128 million in 2011 to $1.39 billion in fiscal 2016, while ServiceNow’s stock rose more than 400% from its IPO price to its all-time high achieved this month. The company has also successfully expanded its total addressable market to roughly $60 billion by moving beyond its core ITSM product and into sticky product verticals such as ITOM and enterprise service management.
We think the company should be in good hands with Donahoe, who began his career at Bain and Company before eventually becoming CEO at both Bain and eBay. In his time at eBay, Donahoe made a string of successful moves, including the acquisition of properties such as StubHub and spinning off payments processor PayPal, more than doubling the share price in his seven-year run.
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