NOW Inc. (DNOW): Business Model Canvas [11-2024 Updated]

In the ever-evolving landscape of the energy sector, NOW Inc. (DNOW) stands out with its innovative business model that strategically aligns with both traditional and emerging markets. This comprehensive approach encompasses key partnerships with major oil and gas companies and a robust digital platform, DigitalNOW®, enhancing its service offerings. Discover how DNOW leverages its resources and activities to deliver tailor-made solutions, ensuring strong customer relationships and diverse revenue streams.

NOW Inc. (DNOW) - Business Model: Key Partnerships

Collaborations with major oil and gas companies

NOW Inc. has established partnerships with major oil and gas companies to enhance its service offerings and expand its market reach. These collaborations are critical as they facilitate access to large-scale projects and resources. For instance, DNOW collaborates with firms such as Chevron and ExxonMobil, which allows them to supply vital energy products and services across various segments of the oil and gas industry. The partnerships help DNOW in leveraging shared technology and expertise, ensuring they stay competitive in a dynamic market.

Partnerships with suppliers across 40 countries

DNOW maintains a robust supplier network consisting of thousands of vendors located in approximately 40 countries. This extensive supply chain is crucial for sourcing a wide range of products and services. In 2024, DNOW reported a total revenue of $1.802 billion, with a significant portion attributed to its global supplier relationships, which enable the company to respond quickly to market demands and mitigate risks associated with supply chain disruptions.

Country	Number of Suppliers	Key Products
United States	1,500	Pipe, valves, fittings
Canada	800	Drilling equipment
Brazil	400	Production tools
Saudi Arabia	300	Pressure control equipment
Other Countries	1,200	Various industrial supplies

Alliances for energy transition projects

As part of its strategic focus on energy transition, DNOW has formed alliances aimed at developing sustainable energy solutions. These partnerships are aligned with global efforts to reduce carbon emissions and promote renewable energy sources. In 2024, DNOW highlighted its commitment to energy evolution projects, which are expected to drive growth in its product offerings and customer base. The company plans to target new customers involved in renewable energy sectors, expanding beyond traditional oil and gas markets.

Relationships with technology providers for digital solutions

DNOW has partnered with several technology providers to enhance its digital capabilities. These relationships focus on integrating advanced digital solutions into its operations, including e-commerce platforms and data management systems. The DigitalNOW® platform is a key initiative that allows customers to leverage technology for supply chain optimization, thereby improving overall operational efficiency. As of September 30, 2024, DNOW reported an increase in its digital sales channels, contributing to a revenue increase of 3.1% compared to the previous year.

NOW Inc. (DNOW) - Business Model: Key Activities

Distribution of oilfield and industrial products

NOW Inc. operates as a global distributor of energy products and industrial applications, servicing approximately 80 countries. In the third quarter of 2024, the company reported total revenue of $606 million, with $482 million generated from the United States, $65 million from Canada, and $59 million from international operations. The distribution includes a wide range of products used across various sectors, including upstream drilling, midstream transmission, and downstream refining.

Management of supply chain and materials

Effective supply chain management is crucial for DNOW, which leverages a network of thousands of suppliers across 40 countries. The company reported an inventory level of $364 million as of September 30, 2024. This management involves optimizing procurement processes to ensure timely delivery of products to customers while minimizing costs. The company's efforts in enhancing inventory efficiency contributed to a net cash provided by operating activities of $176 million for the nine months ended September 30, 2024.

Development of digital procurement platforms

DNOW has invested in digital platforms, such as its DigitalNOW® platform, which integrates e-commerce, data visualization, and supply chain optimization tools. This platform aims to assist customers in resolving operational challenges and maximizing their asset returns. The focus on digital transformation is aligned with the company's strategy to enhance customer engagement and streamline procurement processes.

Engagement in customer support and after-sales services

Customer support is integral to DNOW's business model, ensuring that clients receive ongoing assistance post-purchase. The company reported net income attributable to DNOW Inc. of $13 million for the three months ended September 30, 2024, reflecting its commitment to maintaining strong customer relationships. Additionally, DNOW's engagement in after-sales services helps build long-term partnerships and drive repeat business.

Key Activity	Description	Financial Impact (Q3 2024)
Distribution of Products	Global distribution network serving energy and industrial markets.	$606 million in total revenue
Supply Chain Management	Management of supplier network across 40 countries.	Inventory valued at $364 million
Digital Procurement	Development of digital platforms to optimize procurement.	Part of operational improvements contributing to $176 million cash from operations
Customer Support	Ongoing assistance and after-sales services for customers.	Net income of $13 million

NOW Inc. (DNOW) - Business Model: Key Resources

Network of approximately 165 global locations

NOW Inc. operates a network of approximately 165 global locations, strategically positioned to serve clients in the energy and industrial markets across nearly 80 countries. This extensive footprint facilitates efficient distribution and supply chain operations, enhancing the company's ability to meet customer demands in various regions.

Skilled workforce of about 2,550 employees

The company employs a skilled workforce of around 2,550 employees. This workforce is critical for delivering high-quality services and products, leveraging expertise across multiple sectors within the energy industry, including upstream, midstream, and downstream operations.

Diverse supplier base for product offerings

NOW Inc. maintains a diverse supplier base, comprising thousands of vendors from approximately 40 countries. This diversity allows the company to offer a wide range of products and services tailored to the specific needs of its customers, ensuring reliability and quality in its supply chain.

Proprietary DigitalNOW® technology platform

NOW Inc. has developed the proprietary DigitalNOW® technology platform, which integrates advanced technology solutions for e-commerce, data visualization, data management, and supply chain optimization. This platform enhances operational efficiency and provides customers with innovative tools to maximize their return on assets.

Key Resource	Description	Impact on Business
Global Locations	Approximately 165 locations worldwide	Facilitates efficient distribution and customer service
Workforce	Skilled workforce of about 2,550 employees	Ensures high-quality service delivery across sectors
Supplier Base	Diverse suppliers from around 40 countries	Enhances product offerings and supply chain reliability
DigitalNOW® Platform	Proprietary technology for operational efficiency	Improves customer engagement and operational optimization

As of September 30, 2024, NOW Inc. generated a net income attributable to DNOW Inc. of $13 million on revenues of $606 million for the quarter, reflecting an increase of 3.1% in revenue and a decline of $22 million in net income compared to the same quarter in 2023.

The company’s balance sheet as of September 30, 2024, shows total assets of $1.587 billion, with cash and cash equivalents amounting to $261 million. This financial position supports its operational capabilities and investment in key resources.

NOW Inc. (DNOW) - Business Model: Value Propositions

Comprehensive suite of products for energy and industrial sectors

NOW Inc. provides a diverse range of products tailored for the energy and industrial sectors, including over 1.5 million SKUs available through its distribution network. In the third quarter of 2024, the company reported total revenue of $606 million, with $482 million from the U.S. market alone, reflecting a year-over-year increase of 7.6% in U.S. revenue.

Tailored solutions for procurement and inventory management

DNOW offers tailored procurement solutions designed to optimize inventory management for its customers. As of September 30, 2024, the company held $364 million in inventories. The DigitalNOW® platform enhances supply chain efficiency, allowing customers to leverage data management tools for better operational decision-making.

Support for energy transition initiatives

In alignment with global energy transition trends, DNOW is actively supporting initiatives aimed at reducing carbon emissions and enhancing sustainability. The company is involved in projects related to carbon capture and renewable energy sources. The strategic focus on energy transition is expected to expand DNOW's customer base beyond traditional oil and gas sectors.

Strong after-sales support and customer service

DNOW emphasizes robust after-sales support, which is critical for customer retention and satisfaction. The company reported a net income of $13 million for the three months ended September 30, 2024. This commitment to service is supported by a dedicated customer service team and comprehensive training programs for end-users.

Value Proposition	Details	Financial Impact
Comprehensive Product Suite	Over 1.5 million SKUs for energy and industrial sectors	$606 million total revenue (Q3 2024)
Tailored Procurement Solutions	DigitalNOW® platform for supply chain optimization	$364 million in inventory (Q3 2024)
Energy Transition Support	Involvement in carbon capture and renewable energy projects	Targeting new customer segments
After-sales Support	Dedicated customer service and training programs	$13 million net income (Q3 2024)

NOW Inc. (DNOW) - Business Model: Customer Relationships

Direct engagement through dedicated sales teams

NOW Inc. employs dedicated sales teams focused on building relationships with clients in the energy and industrial sectors. For the nine months ended September 30, 2024, the U.S. segment generated revenue of $1,429 million, reflecting a 7.4% increase compared to the same period in 2023, primarily driven by enhanced customer engagement strategies and incremental revenue from acquisitions.

Digital interactions via e-commerce platforms

The company leverages its DigitalNOW® platform to facilitate e-commerce interactions, allowing customers to access products and services efficiently. As of September 30, 2024, DNOW's total revenues reached $606 million, with a significant portion attributed to online transactions.

Personalized customer service and technical support

Customer service is a priority, with DNOW offering personalized support and technical assistance tailored to client needs. For the three months ended September 30, 2024, DNOW generated a net income of $13 million on revenues of $606 million, indicating a strong performance supported by effective customer service initiatives.

Long-term partnerships with key clients

NOW Inc. focuses on establishing long-term partnerships with key clients, particularly in energy transition projects. The acquisition of Whitco Supply, LLC for $185 million in early 2024 has enhanced DNOW's ability to meet evolving customer needs, particularly in energy evolution investments.

Metric	Q3 2024	Q3 2023	Change (%)
U.S. Revenue	$482 million	$448 million	7.6%
Canada Revenue	$65 million	$68 million	-4.4%
International Revenue	$59 million	$72 million	-18.1%
Total Revenue	$606 million	$588 million	3.1%
Net Income	$13 million	$35 million	-62.9%

As of September 30, 2024, DNOW's cash and cash equivalents were $261 million, indicating a solid liquidity position to support customer relationship initiatives.

NOW Inc. (DNOW) - Business Model: Channels

Direct sales through physical locations

As of September 30, 2024, DNOW operates a network of approximately 300 locations across the United States, Canada, and internationally. In the third quarter of 2024, DNOW reported revenue of $482 million from the U.S. segment, reflecting a 7.6% increase compared to the same quarter in 2023. The company’s operating profit from U.S. operations was $25 million during the same period.

E-commerce via DigitalNOW® platform

DNOW leverages its DigitalNOW® platform to enhance its e-commerce capabilities. The platform offers customers access to a range of products and services, enabling streamlined purchasing processes. In the nine months ended September 30, 2024, DNOW's total revenue reached $1.802 billion, with e-commerce contributing significantly to this growth. The platform's integration allows for better data management and supply chain optimization, which is critical in the competitive energy sector.

Distribution through third-party logistics partners

DNOW partners with third-party logistics providers to distribute its products efficiently. For the three months ending September 30, 2024, the company reported a cost of products sold amounting to $471 million, which includes expenses related to logistics and distribution. This partnership model allows DNOW to maintain flexibility in its supply chain while optimizing delivery times to customers.

Marketing through industry events and trade shows

DNOW actively participates in various industry events and trade shows, which serve as vital channels for marketing its products and services. In 2024, DNOW's marketing efforts included participation in over 15 major trade shows, which have historically contributed to increased brand visibility and customer engagement. These events are crucial for networking and establishing relationships within the energy sector.

Channel Type	Description	Revenue Contribution	Operating Profit (Q3 2024)
Direct Sales	Physical locations across U.S., Canada, and International markets	$482 million	$25 million
E-commerce	DigitalNOW® platform for online transactions	Significant portion of total revenue ($1.802 billion)	N/A
Distribution	Third-party logistics partnerships	$471 million (cost of products)	N/A
Marketing	Participation in industry events and trade shows	N/A	N/A

NOW Inc. (DNOW) - Business Model: Customer Segments

Oil and Gas Companies (Upstream, Midstream, Downstream)

NOW Inc. serves a diverse range of oil and gas companies across the upstream, midstream, and downstream sectors. For the three months ended September 30, 2024, revenue from the United States segment was $482 million, reflecting an increase of 7.6% compared to the same period in 2023, primarily driven by incremental revenue from acquisitions.

The operating profit for the U.S. segment during the same period was $25 million, a decline of $4 million from the previous year, influenced by increased expenses related to acquisitions. The global oil and gas industry continues to be a significant customer segment, with fluctuating rig counts impacting demand. As of October 25, 2024, the U.S. rig count was reported at 585 rigs, a slight decrease from previous quarters.

Industrial Sectors (Chemical, Mining, Utilities)

NOW Inc. also targets various industrial sectors, including chemical processing, mining, and utilities. The company reported a revenue of $65 million from Canada for the three months ended September 30, 2024, which was a decline of 4.4% from the same period in 2023. This decline was attributed to weaker project activity and unfavorable foreign exchange impacts.

In the industrial distribution market, DNOW's offerings are utilized across maintenance projects and capital expenditures, highlighting the importance of this segment in generating consistent revenue streams.

Emerging Energy Markets (Renewables, Carbon Capture)

Emerging energy markets represent a growing focus for NOW Inc., particularly in renewables and carbon capture technologies. The company acknowledges the shift in customer interests toward energy transition investments aimed at reducing carbon emissions. This strategic pivot is expected to provide new opportunities for growth, as larger customers lead investments in energy evolution projects. The company aims to expand its product offerings to meet these evolving needs.

As part of this strategy, DNOW is targeting new customers beyond traditional oil and gas sectors, recognizing the increasing demand for renewable energy sources and carbon management solutions.

Engineering and Construction Firms

Engineering and construction firms are a critical customer segment for NOW Inc., particularly for capital and maintenance projects. The company provides supply chain and materials management solutions tailored to the requirements of these firms. The revenue generated from this segment is vital for maintaining a balanced portfolio amidst fluctuations in the energy sector.

For the nine months ended September 30, 2024, DNOW's total revenue was reported at $1.802 billion, with significant contributions from engineering and construction projects.

Customer Segment	Revenue (Q3 2024)	Operating Profit (Q3 2024)	Year-over-Year Change	Key Insights
Oil and Gas Companies	$482 million	$25 million	+7.6%	Growth driven by acquisitions, but impacted by increased expenses.
Industrial Sectors	$65 million	$3 million	-4.4%	Decline due to weaker project activity and foreign exchange impacts.
Emerging Energy Markets	N/A	N/A	N/A	Focus on renewables and carbon capture as growth opportunities.
Engineering and Construction Firms	N/A	N/A	N/A	Critical for capital and maintenance projects, contributing to overall revenue.

NOW Inc. (DNOW) - Business Model: Cost Structure

Costs related to inventory and logistics

For the three and nine months ended September 30, 2024, the cost of products was $471 million and $1,400 million, respectively, compared to $454 million and $1,361 million for the corresponding periods in 2023. This increase was primarily driven by the rise in revenue during the period. The cost of products encompasses the cost of inventory sold, vendor considerations, inventory allowances, amortization of intangibles, and both inbound and outbound freight costs.

Operational expenses for physical locations

Warehousing, selling, and administrative expenses for the three and nine months ended September 30, 2024, were $107 million and $313 million, respectively, compared to $97 million and $297 million in the same periods of 2023. The increase was largely attributed to expenses linked to an acquisition completed in the first quarter of 2024. These expenses include costs related to branch locations, distribution centers, regional expenses, compensation, benefits, and corporate general selling and administrative costs.

Technology development and maintenance costs

For the nine months ended September 30, 2024, the company incurred stock-based compensation expenses totaling $9 million, compared to $11 million for the same period in 2023. This reduction reflects adjustments in the technology development and maintenance costs associated with the company's operations.

Employee salaries and benefits

Employee salaries and benefits are included within the warehousing, selling, and administrative expenses. The total compensation costs for employees as part of these expenses were not explicitly detailed, but they are a significant portion of the overall operational expenses.

Cost Category	Q3 2024 (in millions)	Q3 2023 (in millions)	9M 2024 (in millions)	9M 2023 (in millions)
Cost of Products	$471	$454	$1,400	$1,361
Warehousing, Selling, and Administrative Expenses	$107	$97	$313	$297
Stock-Based Compensation	$3	$4	$9	$11

Overall, the cost structure of NOW Inc. reflects a focus on managing inventory and logistics while also navigating operational expenses associated with physical locations and technology maintenance.

NOW Inc. (DNOW) - Business Model: Revenue Streams

Sales of industrial and oilfield products

For the three months ended September 30, 2024, DNOW reported revenue of $606 million, with $482 million coming from the United States, $65 million from Canada, and $59 million from international operations. This represented an increase of $18 million, or 3.1%, compared to the same period in 2023.

Service fees from supply chain management solutions

DNOW offers supply chain management solutions to enhance operational efficiency. The effective implementation of these services contributes to a portion of DNOW's overall revenue, although specific figures for service fees were not disclosed in the latest reports. However, the company's focus on optimizing supply chain solutions is evident in their operational strategies.

E-commerce transactions via DigitalNOW®

The DigitalNOW® platform serves as DNOW's e-commerce solution, facilitating online transactions for their industrial and oilfield products. As of September 30, 2024, e-commerce transactions have become increasingly significant, aligning with industry trends that favor digital solutions. The platform's growth is part of DNOW's strategy to leverage technology for better customer service.

Long-term contracts with major clients for ongoing supply

DNOW maintains long-term contracts with several major clients, providing a steady revenue stream. For the nine months ended September 30, 2024, DNOW generated $1,802 million in revenue, with significant contributions from long-term contracts. These agreements help stabilize cash flows and enhance predictability in revenue generation.

Revenue Source	Q3 2024 Revenue (in millions)	Q3 2023 Revenue (in millions)	Change (in millions)	Percentage Change
U.S. Sales	$482	$448	$34	7.6%
Canada Sales	$65	$68	($3)	(4.4%)
International Sales	$59	$72	($13)	(18.1%)
Total Revenue	$606	$588	$18	3.1%

Updated on 16 Nov 2024

Resources:

1. NOW Inc. (DNOW) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of NOW Inc. (DNOW)' financial performance, including balance sheets, income statements, and cash flow statements.
2. SEC Filings – View NOW Inc. (DNOW)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.