Berman Capital Advisors Increases ServiceNow Position

Berman Capital Advisors LLC increased its position in ServiceNow Inc (NYSE:NOW) by 6.9% during the second quarter of 2019, according to the firm’s most recent Form 13F filing with the U.S. Securities and Exchange Commission (SEC). After purchasing an additional 219 shares during the quarter, the firm held a total of 3,384 shares in the information technology services provider, valued at approximately $928,000 at the end of the quarter.

Broader Institutional Investor Activity

Several other institutional investors also adjusted their ServiceNow holdings around the same period:

• Marshall Wace LLP opened a new position in ServiceNow during Q1 2019, valued at approximately $724,000.
• Arcadia Investment Management Corp MI increased its stake by 219.5% in Q2 2019, acquiring an additional 1,855 shares to reach a total of 2,700 shares valued at $741,000.
• Dock Street Asset Management Inc. initiated a new position in Q1 2019 valued at approximately $937,000.
• Roman Butler Fullerton & Co. grew its stake by 4.9% in Q1 2019, adding 133 shares for a total of 2,857 shares valued at $704,000.
• Glaxis Capital Management LLC opened a new position in Q1 2019 valued at approximately $2,075,000.

As of the time of this report, approximately 92.95% of ServiceNow’s outstanding stock was held by hedge funds and other institutional investors.

Stock Performance and Key Financial Ratios

Shares of NYSE:NOW opened at $263.82 on the Friday preceding publication. Key metrics at that time included:

• 50-day moving average: $285.13
• 52-week low: $147.63
• 52-week high: $303.17
• Market capitalisation: $48.55 billion
• P/E ratio: 1,319.10
• PEG ratio: 21.78
• Beta: 1.30
• Quick ratio: 1.13
• Current ratio: 1.13
• Debt-to-equity ratio: 0.88

Q2 2019 Earnings Results

ServiceNow reported its Q2 2019 earnings on Wednesday, 24 July 2019. Key highlights included:

• EPS: ($0.01), beating the Zacks consensus estimate of ($0.03) by $0.02.
• Revenue: $833.90 million, slightly ahead of the analyst consensus of $831.50 million.
• Year-over-year revenue growth: 32.1% compared to the same quarter in 2018.
• Return on equity: 4.44%
• Net margin: 0.09%

For context, ServiceNow reported EPS of $0.49 in the same quarter the prior year. Analysts at the time collectively expected full-year EPS of $0.43 for the current fiscal year.

Analyst Ratings and Price Targets

Multiple Wall Street research firms issued updated commentary on ServiceNow shares around the time of publication:

• Barclays raised its price target from $270.00 to $280.00 with an Overweight rating (April 25th research note).
• Jefferies Financial Group raised its price target from $285.00 to $330.00 with a Buy rating (July 25th research note).
• Deutsche Bank raised its price target from $285.00 to $305.00 with a Buy rating (May 7th research note).
• Cowen raised its price target from $260.00 to $280.00 with an Outperform rating (April 25th research note).
• Piper Jaffray Companies raised its price target from $260.00 to $270.00 with an Overweight rating (April 25th research note).

In aggregate, four analysts held a Hold rating, twenty-six issued a Buy rating, and two assigned a Strong Buy rating. The consensus price target stood at $287.86 with an overall consensus rating of Buy.

Insider Transactions

Two notable insider sales were reported around this period:

• Michael Scarpelli (insider) sold 25,899 shares on 16 May 2019 at an average price of $278.41, totalling $7,210,540.59. Following the sale, Scarpelli directly held 37,071 shares valued at approximately $10,320,937.11. The transaction was filed with the SEC.
• Chirantan Jitendra Desai (insider) sold 1,560 shares on 8 August 2019 at an average price of $263.05, totalling $410,358.00. Following the sale, Desai held 3,094 shares valued at approximately $813,876.70.

Over the preceding quarter, company insiders collectively sold 116,647 shares of stock valued at approximately $32,406,691. Insiders held approximately 1.00% of the company’s outstanding stock at the time of reporting.

About ServiceNow

ServiceNow, Inc. provides enterprise cloud computing solutions that define, structure, manage, and automate services for enterprises worldwide. The company offers IT service management (ITSM) applications alongside digital workflow products covering customer service, human resources, security operations, integrated risk management, and other enterprise functions. ServiceNow trades on the New York Stock Exchange under the ticker symbol NOW.

Note: All financial data in this article reflects conditions as of August 2019 and should not be used as current investment guidance.

Venture capital investment in the DevOps space has grown substantially in recent years. Already anchored by large technology companies such as Google, Microsoft and Amazon, the DevOps market has moved well beyond a niche sector for startups and into the mainstream enterprise. The surge of investor attention since mid-2018 signals that many in the VC community view DevOps as a significant, durable opportunity rather than a passing trend.

The Market Opportunity

DevOps has matured into a recognised investment category in its own right, comparable in scope to sectors like healthcare or media technology. According to data from Crunchbase, hundreds of vendors worldwide now offer solutions and services within the DevOps marketplace, and some VC firms have dedicated partners specifically tasked with building DevOps-focused portfolios.

The investment thesis is built on a straightforward premise: a company’s ability to compete increasingly depends on its software capabilities. DevOps is the methodology that determines how effectively an organisation can build, test, release and iterate on software. This makes it relevant not just for software-native companies but for virtually every business that relies on digital systems to operate.

There are also distinct layers of opportunity within the market. Early infrastructure investments in internet platforms and cloud computing have given rise to cloud-native architectures, microservices, containers and serverless computing. But there is an equally important opportunity in helping enterprises modernise legacy systems. Most large organisations cannot simply discard their existing technology stack — mainframe infrastructure, for example, remains critical in many industries. DevOps, applied well, spans both new and legacy technology, enabling organisations to release software on business demand regardless of the underlying stack. As today’s cloud platforms eventually give way to the next wave of disruption, DevOps-mature organisations are better positioned to absorb that change.

What Investors Should Look For

For a VC assessing a potential DevOps investment, the following considerations are particularly important.

1. Look for Companies That Practice What They Preach

Continuous improvement is a core DevOps principle. During due diligence, VCs should ask whether the vendor actually applies DevOps practices to its own engineering and delivery processes. A company selling DevOps tooling that runs on a waterfall release cycle internally is a red flag. Teams that genuinely adopt a DevOps mindset build learning organisations — they measure outcomes, iterate on failures, and ship better products faster. Companies that are not building this internal culture are likely losing ground to competitors that are.

2. Evaluate All Three Pillars: Process, Tools and People

DevOps success rests on three interdependent pillars: process, tooling and people. The market is relatively well served on the first two — there are many vendors addressing operating models and automation toolchains. The underinvested area is people.

Even a technically strong DevOps implementation fails without practitioners who understand how to apply DevOps principles in practice. Skilled DevOps engineers are consistently among the most in-demand technical roles, and training, enablement and skills development platforms represent a meaningful gap in the current vendor landscape. Investment opportunities that address all three pillars — not just tooling — are more likely to generate strong returns, because they help customers achieve lasting organisational change rather than simply purchasing software.

3. Invest in Where the Market Is Heading, Not Just Where It Is

DevOps borrowed heavily from lean manufacturing principles, with a strong emphasis on metrics, throughput and waste reduction. The next evolution of the discipline involves applying AI and machine learning to DevOps workflows — automating anomaly detection, predicting deployment risk and optimising pipeline performance.

The logical extension of DevOps is also expanding horizontally. DevSecOps integrates security practices directly into the development pipeline. Broader concepts like BizDevSecOps aim to align business strategy with the technical value stream. These emerging paradigms create space for next-generation solutions, and VCs who identify category leaders early in these adjacent spaces stand to benefit disproportionately.

4. Offer More Than Capital

The DevOps software delivery lifecycle is broad, spanning development, testing, integration, deployment, monitoring and operations. Each stage has its own subcategory of specialised vendors. A VC that simply identifies the category leader and writes a cheque is taking a straightforward but limited approach.

The most effective VC partners bring more than money. They help portfolio companies build community presence, contribute to ecosystem development and establish best practices that raise the profile of the company within the industry. Strategic introductions, technical advisory support, and help building a high-performance internal culture all accelerate growth in ways that capital alone cannot. In a market as ecosystem-driven as DevOps — where integrations, partnerships and open-source contributions significantly affect a vendor’s credibility — this kind of hands-on involvement is a genuine differentiator.

Why DevOps Is a Durable Investment Theme

A common concern with fast-growing technology sectors is whether the investment thesis is sustainable or whether it reflects a temporary bubble. DevOps is unusual in that it is inherently metrics-driven. Every DevOps transformation targets measurable outcomes — deployment frequency, lead time for changes, mean time to recovery, change failure rate. These metrics make it straightforward to validate whether value is being created. When a portfolio company can demonstrate consistent improvement in these indicators for its customers, the return on investment becomes verifiable rather than speculative.

That measurability is one of the strongest arguments for DevOps as a long-term investment category. It is not a methodology that organisations adopt and then discard — it is an operational capability that compounds over time. Organisations that invest in DevOps become progressively faster, more reliable and more competitive, which in turn creates sustained demand for the tooling, platforms and services that enable it.

For venture capitalists, the DevOps market offers a combination of broad applicability, measurable customer value and a genuine skills and tooling gap that is still being filled. The investors most likely to succeed are those who understand the technical depth of the space, look beyond obvious tooling plays, and bring strategic value to the companies they back.