![]() ![]() So even if NOW's market share rises to 30%, which we don't see happening until 2014 at the earliest, NOW's ITSM business should be generating less than $600m in revenue with limited additional growth opportunities. At $207m of LTM revenue, NOW appears to already control 10% to 15% of the market. ![]() Given emerging competition from other SaaS ITSM service providers, we believe that the company will have a difficult time exceeding 30% market share. Furthermore, Gartner's research predicts that only 50% of IT organizations will move to SaaS by 2015, implying that the total market opportunity for NOW's ITSM business is less than $1 billion. Leading technology research firm Gartner estimates that the IT Service Management market opportunity is $1.5 billion, and is growing at a modest 7% per year. An old short report of ServiceNow by Kerrisdale Capital highlights this confusion: “ The overall ITSM market size is only $1.5 billion, less than one-third of NOW's $4.7 billion market capitalization. When on the IPO roadshow for the company, analysts at Gartner kept telling potential investors that ServiceNow had a small TAM of only $1.5B. Slootman employed this strategy perfectly at ServiceNow. By expanding the TAM, you lengthen your growth runway because there are more people who are capable of using your software. One core idea that Slootman has used across both ServiceNow and Snowflake is the idea of expanding the TAM. ![]()
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