Alexander Bittan
Long-Term Frontier-Technology Investor, Neuralink/Anduril/Perplexity
ServiceNow's 15% post-earnings drop is an opportunity because AI is being monetized, not cannibalized. It beat the high end of guidance on revenue, subscription revenue, operating margin and 44% FCF margin, raised its subscription guide and lifted its AI revenue target to $1.5 billion. Now Assist customers spending $1M+ grew 130%, and half of net new business is non-seat-based. The margin cut came from the Armis deal, whose 100bp hit AI efficiencies halved. RPO rose 23.5% to $27.7 billion. x.comÂ
ServiceNow's unexpected expense surge makes its rich valuation more vulnerable in a struggling software sector. Revenue rose 21%, but spending drove an EPS miss and one quarter of guided cRPO deceleration; wider market conditions could hurt near term. The 20% selloff looks excessive, and few software companies should benefit as much from AI. Management could deliver over 3-5 years, though the stock is only close to a buy again now; below $100 looks good for the long term. x.com x.com x.com x.comÂ
ServiceNow's third-quarter subscription revenue, cRPO and operating-margin beats make its double-digit selloff look overdone. After a 77% rise from April lows, it needed a big beat and raise; lower fourth-quarter cRPO guidance and back-loaded implications for $30-$32 billion in subscription growth by 2030 leave the stock in show-me mode. x.comÂ
ServiceNow's growth and deteriorating margins do not justify its valuation. It grew 3% quarter over quarter against a 107x trailing GAAP P/E, and its margins continue to deteriorate. It remains a great company, but is mostly saturated relative to that valuation. x.com x.com x.comÂ
Cost fears and CRPO misunderstandings caused ServiceNow's selloff. The stock is definitely undervalued; the market's reaction is ridiculous. x.comÂ
ServiceNow looks very reasonably valued at around 20x forward earnings while growing about 20%, near one of its lowest multiples in years even as execution stays exceptionally strong. Revenue grew about 24%, earnings beat and guidance rose modestly, extending a run of consistent compounding few enterprise software businesses can match. A lower multiple often reflects falling expectations while the economics keep improving, not a problem with the business. x.comÂ
ServiceNow's costs are rising far faster than revenue without the RPO acceleration management promised. Q3 revenue rose 21%, while total cost of revenue climbed 56% and net income fell 45%; stock compensation appears to be using about half of free cash flow. The selloff looks deserved, though the shares are now closer to fair value. Sustainable margins and measurable returns remain the test. x.com x.com x.com x.com x.com x.comÂ
ServiceNow is a great business at a great price, now at its lowest valuation multiple ever. Revenue has doubled from $7 billion to $14 billion since 2022 while the stock sits roughly where it was then. SaaS narrative headwinds persist, but the business is doing great, and once sentiment shifts the shares could trade significantly higher. Unlike Nike, whose stock rightly reflects a declining business, ServiceNow is still growing. x.com x.com x.comÂ
ServiceNow looks like a buy below $100, trading at its lowest multiple in over a decade despite 20%+ growth, gross margins above 75% and a 40% free cash flow margin. Heavy insider buying and a sticky customer base add to the case that the market is being inefficient. x.comÂ
ServiceNow's guidance growth is set to fall by another fifth next quarter, a poor trajectory rather than a buying opportunity after earnings. x.comÂ
ServiceNow keeps selling more to existing customers over time, one of the biggest reasons to be bullish long term. Its 2011 customer cohort's annual contract value grew from an indexed $100 to $3,730 by Q3 2026, or 37.3x, even including customer losses. x.comÂ